TILT Holdings Secures Funding to Develop Vertical Strategy in Pennsylvania
TILT Holdings Inc. secures funding for its Pennsylvania subsidiary, Standard Farms, to develop and operate three medical marijuana dispensaries in the Commonwealth of Pennsylvania under a new permit. The funding, up to $10.5 million, is provided by an experienced retailer and operator. The Note will bear interest at 20% initially, increasing to 30% and then 40% as milestones are achieved. The loan is secured by Standard Farms' retail assets and equity interests held by Baker Technologies, Inc.
TILT Holdings secures substantial funding of up to $10.5 million to develop and operate three medical marijuana dispensaries in Pennsylvania, expanding its market presence.
The agreement with an experienced retailer and operator indicates a strong partnership that could provide valuable guidance and support for TILT's success in the Pennsylvania market.
The funding demonstrates confidence in TILT's Standard Farms subsidiary and its ability to compete in the vibrant medical marijuana marketplace of Pennsylvania.
The high initial interest rate of 20% on the Note, increasing to 40% within six months after the opening of a retail location, could lead to significant interest expenses for Standard Farms.
In the event of default under the Note, Standard Farms may face severe consequences, including accelerated payment obligations, potential multiplied balances, and the exercise of all remedies by the Lender.
The security interest granted to the Lender in Standard Farms' retail assets and equity interests could pose risks in case of default or financial challenges faced by the company.
PHOENIX, May 09, 2024 (GLOBE NEWSWIRE) -- TILT Holdings Inc. (“TILT” or the “Company”) (Cboe: TILT) (OTCQB: TLLTF), a global provider of cannabis business solutions including inhalation technologies, cultivation, manufacturing, processing, brand development and retail, announced today that an experienced retailer and operator (the “Lender”) will lend capital to TILT’s Pennsylvania subsidiary, Standard Farms (“Standard Farms”) in order for Standard Farms to construct and operate dispensaries under Pennsylvania’s Senate Bill 773. Under the Commonwealth of Pennsylvania’s (the “Commonwealth”) Medical Marijuana Program, independent cultivators can apply for one permit that will allow for three dispensary locations.
“We applaud the Commonwealth for providing a positive path forward for a small independent grower like TILT’s Standard Farms to compete in this vibrant marketplace,” stated TILT Chief Executive Officer, Tim Conder. “We are thrilled to have reached an agreement with an experienced retailer and operator to help fund this undertaking and provide construction and operational guidance along the way to ensure our success.”
Standard Farms has been a grower and processor in the Pennsylvania market since 2019 and provides its own Standard Farms house brand and brand partner products such as Old Pal and Level to the majority of dispensaries across the state.
Under the terms of a Secured Promissory Note (the “Note”), Standard Farms can borrow up to
The Note will mature on December 31, 2027, and will initially bear interest at
Because the capital is to fund the construction and operation of the new dispensaries, the Note is secured by a first priority security interest in the retail assets of Standard Farms (the “Borrower Collateral”), and a second priority security interest in the equity interests of Standard Farms that are held by the Company’s subsidiary Baker Technologies, Inc. (the “Baker Collateral”). The Lender entered into a Consent, Collateral Release and Subordination Agreement with TILT’s existing creditors to subordinate the Lender’s interest in the Baker Collateral and release the existing creditors’ interest in the Borrower Collateral. The Lender’s security interest is further described in in a Security Agreement, dated May 2, 2024, by and among Standard Farms, the Lender and Baker Technologies, Inc. (the “Security Agreement”).
The Note and the Security Agreement include usual and customary loan provisions including: affirmative and negative covenants, events of default, representations and warranties. In the case of an event of default under the Note, Standard Farms may become obligated to pay a multiplied balance of up to four times the then-outstanding obligations under the Note, all obligations under the Note may be accelerated and all remedies may be exercised by Lender. All obligations under the Note are guaranteed by the Company, which guarantee shall terminate if and when a first priority security interest in the properly held retail assets of a wholly-owned subsidiary of Standard Farms is activated. In order to provide collateral free from prior liens, under the terms of the loan documents, Lender will have a first-priority security interest in the equity interests of any such wholly-owned subsidiary that may be held by Standard Farms.
About TILT
TILT helps cannabis businesses build brands. Through a portfolio of companies providing technology, hardware, cultivation and production, TILT services brands and cannabis retailers across 40 states in the U.S., as well as Canada, Israel, South America, and the European Union. TILT’s core businesses include Jupiter Research LLC, a wholly-owned subsidiary and leader in the vaporization segment focused on hardware design, research, development and manufacturing, and cannabis operations, Commonwealth Alternative Care, Inc. in Massachusetts, Standard Farms LLC in Pennsylvania, and Standard Farms Ohio, LLC in Ohio. TILT is headquartered in Phoenix, Arizona. For more information, visit www.tiltholdings.com.
Forward-Looking Information
This news release contains forward-looking information and statements (together, “forward-looking information”) under applicable Canadian and U.S. securities laws which are based on current expectations. Forward-looking information is provided for the purpose of presenting information about TILT management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information may include, without limitation, the expectations with respect to growth, customer demand and profitability, expectations relating to the Note, the Security Agreement and the Consent, Collateral Release and Subordination Agreement, Pennsylvania’s permit process and ability to locate and retain dispensary locations, the ability to optimize operations, the opinions or beliefs of management, prospects, opportunities, priorities, targets, goals, ongoing objectives, milestones, strategies, and outlook of TILT and its Standard Farm operations in Pennsylvania, and includes statements about, among other things, future developments, the future operations, strengths and strategy of TILT. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, "will", “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “seeks”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. These statements should not be read as guarantees of future performance or results. These statements are based upon certain material factors, assumptions and analyses that were applied in drawing a conclusion or making a forecast or projection, including TILT’s experience and perceptions of historical trends, the ability of TILT to maximize shareholder value, current conditions and expected future developments, as well as other factors that are believed to be reasonable in the circumstances.
Although such statements are based on management’s reasonable assumptions at the date such statements are made, there can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Accordingly, readers should not place undue reliance on the forward-looking information. TILT assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by applicable law.
By its nature, forward-looking information is subject to risks and uncertainties, and there are a variety of risk factors, many of which are beyond the control of TILT, and that may cause actual outcomes to differ materially from those discussed in the forward-looking statements. Such risk factors include, but are not limited to, TILT’s ability to continue as a going concern, TILT’s ability to operate its business without encountering any unforeseen delays, unexpected geological or other effects, including weather conditions, shipping transportation, equipment failures, permitting delays or labor or contract disputes, TILT’s ability to generate sufficient liquidity, TILT’s ability to enter into a forbearance agreement with noteholders, TILT’s ability to execute on its cost saving measures and initiatives and those risks described under the heading “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2023 with the United States Securities and Exchange Commission at www.sec.gov and on SEDAR+ atwww.sedarplus.com.
Company Contact:
Lynn Ricci, VP of Investor Relations & Corporate Communications
TILT Holdings Inc.
lricci@tiltholdings.com
Investor Relations Contact:
Sean Mansouri, CFA
Elevate IR
TILT@elevate-ir.com
720.330.2829
Media Contact:
MATTIO Communications
TILT@mattio.com
FAQ
What is the purpose of the funding secured by TILT Holdings for its Pennsylvania subsidiary, Standard Farms?
The funding is intended to develop and operate three medical marijuana dispensaries in the Commonwealth of Pennsylvania under a new permit.
Who will provide the capital to Standard Farms for the construction and operation of dispensaries in Pennsylvania?
An experienced retailer and operator will lend capital to Standard Farms for the development and operation of dispensaries in Pennsylvania.
What is the interest rate on the Note provided to Standard Farms by the Lender?
The Note initially bears interest at 20%, increasing to 30% upon opening a retail location and further to 40% six months after the Location Opening Date.
What assets secure the Note provided to Standard Farms for the funding of dispensaries?
The Note is secured by a first priority security interest in Standard Farms' retail assets and a second priority security interest in the equity interests of Standard Farms held by Baker Technologies, Inc.
What are the consequences of default under the Note for Standard Farms?
In case of default, Standard Farms may face obligations to pay a multiplied balance of up to four times the outstanding obligations, accelerated payment requirements, and the exercise of all remedies by the Lender.
