Glass House Brands Secures $4.7M Via Private Placement

Glass House Brands Inc. GLASF GHBWF GLAS GLAS closed a non-brokered private placement of series C preferred stock, face value $1,000 per share, of GH Group, Inc., a subsidiary of the company. The financing raised $4.7 million of new capital on top of the approximately $26.5 million of incremental capital raised from the company's series B preferred stock offering that closed on December 6, 2022.

Holders of the series C preferred stock will be entitled to an annual dividend at a rate of 20% for the first two years after the date of initial issuance of series C preferred stock, 22.5% for the third year and, thereafter, 25% until the 54-month anniversary of the initial issuance. The dividend will accrue and be paid quarterly with an annual amount equal to 10% of the initial investment being payable in cash and the balance of the dividend being paid in kind, accumulating and compounding on a quarterly basis until paid; provided that if the series C preferred stock remains outstanding after the 54-month anniversary of the initial issuance, the annual dividend shall thereafter be payable solely in cash at a rate of 20%.

The issuance of each share of sries C Preferred Stock with a face value of $1,000 per share was accompanied by the delivery of 200 warrants of the company. Each warrant entitles the holder to purchase one new equity share in the capital of the company until August 31, 2027 at a price of $5.00 per warrant share subject to customary anti-dilution adjustments. The company has the option to accelerate the expiration of any unexercised warrants if the underlying equity shares of the company trade at a price of at least $12.00 per share, subject to customary anti-dilution provisions.

As part of the offering, the company's general counsel has subscribed for 100 series C preferred shares and will receive 20,000 warrants therewith. The subscription by the company's general counsel is considered to be a "related party transaction" for purposes of Multilateral Instrument 61-101 – Protection of minority security holders in special transactions.

The intended use of net proceeds from the offering of approximately $4.7 million is for working capital and general corporate purposes. Prior to closing of the offering, the company had approximately $116 million outstanding in senior secured debt, unsecured convertible debt and preferred equity. As of this final closing of the offering, this amount is expected to increase to approximately $121 million.

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