High Tide signs term sheet for $40 million credit facilities with major bank

High Tide Inc. (NASDAQ: HITI) announced it signed a term sheet with one of Canada's Big 5 chartered banks for $40 million in new senior secured credit facilities. The cannabis retailer expects to close the transaction within 60 days, subject to customary conditions.

The credit facilities will replace High Tide's existing senior credit facility with connectFirst Credit Union. The new arrangement consists of a $25 million committed revolver facility with a three-year maturity and a $15 million committed delayed draw term loan with seven-year amortization.

The revolver facility will refinance the company's loan with connectFirst, which is expected to have a balance of slightly over $6 million at closing, leaving approximately $19 million available. The term loan will refinance High Tide's existing $15 million second-lien debentures.

Interest rates will range between Prime plus 2% and Prime plus 3%, depending on the company's leverage. Financial covenants include maintaining senior funded debt to EBITDA below 2.0x, total funded debt to EBITDA below 3.0x, and a minimum fixed charge coverage ratio above 1.25x.

"Having a Big 5 Canadian bank step in as our senior lender marks a clear inflection point for High Tide," said Raj Grover, founder and chief executive officer. The company completed a multi-month process that included obtaining terms from multiple lenders.

High Tide operates Canna Cabana, which it describes as the largest cannabis retail chain in Canada with 221 domestic locations across five provinces. The company also operates e-commerce platforms and has expanded into Germany through its Remexian Pharma subsidiary.

The information is based on a company press release statement.

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