Canadian adult-use cannabis retail giant High Tide announced a bought-deal public offering worth 10 million Canadian dollars ($7.7 million) as it waits for a pending non-dilutive financing deal to close.
The offering is being made under the terms of a CA$100 million shelf prospectus High Tide filed in April 2021.
Underwriters led by Canadian firm Echelon Wealth Partners will buy 4.3 million units of High Tide for CA$2.32 per unit.
Each unit includes one High Tide share and one share purchase warrant, exercisable for five years at CA$2.73.
The underwriters have a 30-day option to buy nearly 650,000 more units for additional proceeds of up to CA$1.5 million, with the option of acquiring units, shares or warrants.
Shares of High Tide fell by more than 20% on Tuesday morning following the announcement.
In a Monday evening news release, High Tide CEO Raj Grover described the capital raise as a “proactive” measure as High Tide awaits the close of a non-dilutive CA$30 million credit facility announced this past April.
“Due diligence on this financing remains ongoing; however, this process is taking much longer than previously anticipated,” said Grover in a statement.
High Tide’s pending credit facility is meant to replace an existing credit facility “with a larger, less restrictive line — providing a boost to our balance sheet without diluting our existing shareholders,” the company said in April.
Net proceeds from the new bought-deal offering “will be used for constructing and opening new retail cannabis store locations, the repayment of debt and for general corporate and working capital purposes,” according to High Tide’s Monday release.
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The offering is expected to close on July 22.
High Tide trades as HITI on the Nasdaq and the TSX Venture Exchange.