High Tide Signs Letter Of Intent For $23.8M Non-Dilutive Credit Facilities With ConnectFirst Credit Union

High Tide Inc. HITI HITI (FSE:2LYA), has entered into a non-binding letter of intent with Connect First Credit Union Ltd. for CA$30 million ($23.8 million) in credit facilities over an initial 5-year term. The company intends to use the proposed credit facilities to replace the company's existing credit facility with its current bank lender. The proposed credit facilities are comprised of CA$15 million of term debt, and a mergers and acquisitions revolving master line of CA$15 million. The company expects to repay its existing facility with its current bank lender and repaying other existing debt upon securing the proposed credit facilities with connectFirst, with the remaining proceeds from the term debt proceeds going to fund continued organic growth and general working capital requirements.

Proposed Credit Facilities

• The term debt will be accessible on request by High Tide. The term debt will be interest only for 12 months followed by blended principal and interest payments.

• The proposed credit facilities include the CA$15 million revolving M&A Master Line to support future mergers and acquisitions initiatives. The M&A Master Line will have a 5-year term on each draw down, with blended principal and interest payments beginning on each draw down.

• The interest rate under the proposed credit facilities is a 5-year fixed rate of 5.19% per annum for the term debt and connectFirst prime + 2.50% per annum for the M&A Master Line.

• The proposed credit facilities will have a quarterly tested financial covenant, a debt to equity ratio of less than 2:1. Additionally, the proposed credit facilities will have one annually tested covenant, a debt service coverage ratio of not less than 1.25:1, a monthly current ratio covenant of not less than 1.25:1, and an annually tested covenant, a funded debt to EBITDA ratio of not more than 4:1 beginning with the fiscal year ending October 31, 2022. High Tide's 12-month forecast projects it to be comfortably in compliance with all financial covenants.

The company expects to close on the proposed credit facilities during the first half of June 2022, subject to certain pre-disbursement conditions and satisfaction of other customary conditions precedent.

Photo: Courtesy of CNW Group/High Tide Inc.

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