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., today announced that it has entered into 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 (the “SoCal Facility”) and for general corporate purposes.
As previously announced, the Company completed the acquisition of the approximately 160-acre SoCal Facility with six on-site greenhouses in September 2021. The SoCal Facility includes approximately 125 acres of ultra-high-tech and efficient KUBO Ultra-Clima greenhouses, on-site well, water treatment facilities, automated roof washing system, supplemental lights, and natural gas cogeneration facilities producing power, heat, and CO2. The Company has planned the initial phase 1 of the SoCal Facility retrofit to include the conversion of two greenhouses, one of which will propagate nursery cuttings or clones to support the entire facility and the other which will have a capacity of 180,000 pounds of biomass per year. Phase I expansion will also include a packhouse and a distribution center which will support the growth of the Company’s wholesale biomass business.
To watch an updated video documenting the construction progress at the SoCal Facility, please visit https://ir.glasshousebrands.com/socal-greenhouse/.
“Since our inception, it has been our vision to become the largest cannabis brand-building platform in California and this loan agreement provides us with a non-dilutive infusion of capital to fund the complete retrofit of our SoCal Facility as we continue to pursue this goal,” said Kyle Kazan, Chairman and Chief Executive Officer of Glass House. “With support building across the country for cannabis regulatory reform, now is the right time for us to improve availability of our high-quality, sustainably grown California cannabis while significantly lowering our COGS through scale and automation. We have a planned total footprint of 6 million square feet and projected total biomass production of approximately 1.7 million pounds, which we believe would make Glass House Brands the largest and most efficient cannabis supplier in the U.S., by a wide margin. With this significant capacity we will be extremely well-positioned to supply cannabis consumers across the country, once that opportunity arises.”
Mr. Kazan added, “I’d like to thank our team who have worked tirelessly on this agreement. I’m extremely proud of your efforts.”
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.
