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Glass House Brands completes first tranche of $15 million Series D Preferred Stock offering

Grow Opportunity, Media Partners

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(CNW) Long Beach, Calif. and Toronto — Glass House Brands Inc., one of the fastest-growing, vertically-integrated cannabis companies in the U.S., today announces the closing of the first tranche of its non-brokered private placement of shares of Series D Preferred Stock, with a face value of $1,000 per share of GH Group, Inc., a subsidiary of the company. The company raised $10.9 million of new capital in connection with the first tranche and expects to raise an additional $4.1 million in one or more subsequent closings of tranches under the offering.

Kyle Kazan, Glass House co-founder, chairman and CEO stated: “We are very pleased with the strong investor interest in our Series D preferred equity offering. The deal is capped at $15 million and we have commitments for the entire amount. The capital from the Series D Preferred Stock has allowed us to begin the retrofit of Greenhouse 5 at the SoCal Farm, and we expect to have plants in the greenhouse during Q1 2024 and our first sale from Greenhouse 5 by Q2 2024. This additional scale is expected to lower our COGS in both Greenhouse 5 and 6.”

Kazan further related, “With very conservative underwriting, the return on this new invested capital should far exceed its cost, both in terms of dividend expense and dilution. And since we used internal resources to complete the raise, we were able to conserve funds which would have otherwise been paid to external brokers, thereby maximizing the capital for use within the company.”

Holders of the Series D Preferred Stock will be entitled to an annual cash dividend at a rate of 15 per cent for the first five years after the date of initial issuance of Series D Preferred Stock, and 20 per cent annually thereafter.


The issuance of each share of Series D Preferred Stock with a face value of $1,000 per share was accompanied by the delivery of 200 warrants of the company. Each warrant entitles the holder to purchase one new equity share in the capital of the company  for a period of five years from the initial issuance at a price of $6.00 per warrant share, subject to customary anti-dilution adjustments. The company has the option to accelerate the expiration of any unexercised warrants if the underlying equity shares of the company trade at a price of at least $12.00 per share for a period of 10 trading days out of a period of any 15 consecutive trading days, subject to customary anti-dilution provisions.

The warrants and the warrant shares issuable upon exercise of the warrants are subject to a four-month statutory hold period from the date of issuance of the warrants under applicable Canadian securities laws.

As part of the offering, certain directors and officers of the company and holders of securities carrying more than 10 per cent of the company’s voting rights subscribed for an aggregate of 3,140 shares of Series D Preferred Stock and will receive 628,000 warrants therewith. Each subscription by a director, officer or 10 per cent shareholder of the company is considered to be a “related party transaction” for purposes of multilateral instrument 61-101 – Protection of Minority Security Holders in Special Transactions (MI 61-101).

The company did not announce the transaction more than 21 days before the expected closing date of the first tranche as the details of the first tranche and the participation therein by related parties was not settled until shortly prior to the closing of the first tranche, and the company wished to close the first tranche on an expedited basis for sound business reasons.

The company is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The company is exempt from the formal valuation requirement in section 5.4 of MI 61-101 and the minority shareholder approval requirement in section 5.6 of MI 61-101 in reliance on section 5.5(a) and section 5.7(1)(a), respectively, of MI 61-101, as the fair market value of the transaction, insofar as it involves related parties, is not more than the 25 per cent of the company’s market capitalization.

The company intends to use the net proceeds from the offering of approximately $15 million to retrofit Greenhouse 5 for cannabis cultivation and to expand the nursery in Greenhouse 1, as well as for working capital and general corporate purposes.

All dollar amounts in this news release refer to U.S. dollars.

This post was originally published by our media partner here.

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