Feuerstein Kulick Advises Glass House Brands Inc. on a Senior Secured Term Loan for up to US$100 million

Rhea-AI Summary

Glass House Brands Inc. (GLASF) has secured a senior term loan agreement for up to US$100 million from a private credit investment fund. The initial draw of US$50 million has a variable interest rate starting at 10% per annum. Loan proceeds will fund the renovation of a 5.5 million square feet cultivation facility in Camarillo, California, and support general corporate purposes. The loan will be repayable in monthly installments beginning December 1, 2023. The agreement includes the issuance of 2,000,000 warrants exercisable at US$11.50 until June 26, 2026.

Positive

• Secured a senior term loan of up to US$100 million, enhancing liquidity for expansion.
• Initial draw of US$50 million will support a significant renovation project.
• Warrant issuance enhances investor interest and potential capital influx.

Negative

• Variable interest rate at 10% per annum poses cost uncertainty.
• Loan repayment begins in December 2023, could strain cash flow if revenues fail to grow.

NEW YORK, Dec. 13, 2021 /PRNewswire/ -- Feuerstein Kulick Advises Glass House Brands Inc. ("Glass House" or the "Company") (NEO: GLAS.A.U) (NEO: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF), one of the fastest- growing, vertically-integrated cannabis companies in the U.S., on a senior secured term loan agreement (the "Loan Agreement") with a U.S.-based private credit investment fund (the "Lender") for up to US$100 million (the "Loan"), with an initial draw of US$50 million (the "Initial Term Loan"). The Initial Term Loan has a variable interest rate currently set at 10% per annum, and in no event shall be more than 12% per annum. The gross proceeds of the Loan will be used to fund the phased retrofit of the Company's approximately 5.5 million square feet cultivation facility currently under renovation in Camarillo, California and for general corporate purposes.

The Initial Term Loan shall be repayable in monthly installments beginning on December 1, 2023, at an aggregate amount equal to 1.25% of the original principal amount of the Initial Term Loan. Two subsequent draws of US$25 million (the "Delayed Draw Term Loans") each will be available at future dates provided certain terms and conditions under the Loan Agreement have been met and shall be repayable in monthly installments beginning on December 1, 2023, at an aggregate amount equal to 1.25% of the original principal amount of the Delayed Draw Term Loans. The conditions of the Loan Agreement include the creation and issuance of 2,000,000 new Company warrants that will be freely tradable in Canada under the same CUSIP/ISIN as the Company's existing publicly traded warrants (NEO: GLAS.WT.U; OTCQX: GHBWF), and delivered to the Lender at closing, with each warrant exercisable at an exercise price of US$11.50 to acquire one subordinate voting share, restricted voting share or limited voting share, as applicable (NEO: GLAS.A.U) until June 26, 2026, subject to acceleration or redemption as set forth under the terms of the warrant agency agreement governing the warrants.

Samantha Gleit, Jason Cohen, and Dan Rich of Feuerstein Kulick LLP served as debt counsel to Glass House on the transaction. Feuerstein Kulick LLP is a boutique law firm that represents clients in all aspects of the legal cannabis space, including investors, funds, leading technology and ancillary companies, brands, license holders, and operators.

Media Contact: jbrown@dfmklaw.com

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SOURCE Feuerstein Kulick LLP

FAQ

What is the amount of the loan Glass House Brands secured?

Glass House Brands secured a loan agreement for up to US$100 million.

What will the proceeds from Glass House's loan be used for?

Proceeds will fund the renovation of a 5.5 million square feet cultivation facility and for general corporate purposes.

When does the repayment of the loan start for Glass House Brands?

Repayment of the loan begins on December 1, 2023.

What is the interest rate on the loan secured by Glass House?

The initial interest rate on the loan is set at 10% per annum.

What is the exercise price of the warrants issued under the loan agreement?

The warrants are exercisable at an exercise price of US$11.50.