Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, today announced the receipt of binding subscriptions to date totaling approximately US$68 million for the issuance of 12% second lien notes (“Notes”) and warrants to purchase the Company’s subordinate voting shares (the “Warrants”) in a private offering (the “Offering”). Pursuant to the terms of the Offering the Company may issue additional Notes on the same terms, subject to market conditions and investor interest. The Notes will mature four years from the date of issuance, will bear interest of 12.0% per annum, payable in cash quarterly, and will be guaranteed by certain of the Company’s direct and indirect domestic subsidiaries and secured by second priority liens on certain assets of the Company and certain of the Company’s direct and indirect domestic subsidiaries. In connection with the Offering, the purchasers of the Notes will also receive four-year Warrants at 50% coverage with an exercise price to be determined at closing.
The Company expects the closing of the Offering to occur in late November or early December of this year. The Company intends to use the net proceeds from the Offering to redeem its outstanding existing 10% senior secured notes due January 2023 (the “2023 Notes”) and, to the extent there are remaining proceeds, for general corporate purposes, including but not limited to working capital, capital expenditures and potential acquisitions. This press release shall not constitute a notice of redemption of the 2023 Notes.
Entities affiliated with Jim Cacioppo, Jushi’s Chief Executive Officer, Chairman and Founder, subscribed for US$3.0 million of the Notes, and Denis Arsenault, a significant stockholder of the Company subscribing for US$13.4 million of the Notes. None of the aforementioned subscribers were involved in pricing or setting the terms of the Offering.
The Notes and related guarantees and Warrants will be offered and sold in a private placement only to U.S. Accredited Investors and/or Qualified Institutional Buyers in reliance on the registration exemption provided by Rule 506(b) of Regulation D under the U.S. Securities Act and/or Section 4(a)(2) of the U.S. Securities Act and similar registration exemptions under applicable state securities or “blue sky” laws; accordingly, the Notes will be when issued, as applicable, “restricted securities” within the meaning of Rule 144(a)(3) of the U.S. Securities Act and will be subject to a statutory hold period lasting four months and one day following the closing date pursuant to applicable Canadian securities laws. The acceptance of the subscriptions by the Company and the closing of the transactions are subject to certain conditions, including the approval of Roxbury, LP (“Roxbury”) as agent for the lenders under the Company’s existing US$100 million Senior Secured Credit Facility, and there can be no assurance that the proposed Offering of Notes and Warrants will be completed or that the terms of the Offering will not be modified.
This press release does not constitute an offer to sell or the solicitation of an offer to buy the Notes, Warrants or any other securities and shall not constitute an offer, solicitation; or sale in any jurisdiction in which, or to any person to whom, such an offer, solicitation or sale is unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act. This press release contains information about pending transactions, and there can be no assurance that these transactions will be completed.