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Glass House Brands closes $15 million Series D

Glass House Brands has closed a non-brokered private placement of shares of Series D Preferred Stock, with a face value of $1,000 per share of GH Group, Inc. ("GH Group"), a subsidiary of the company. The final closing of the Offering included approximately $4.1 million of new capital in addition to the $10.9 million raised from the first tranche of the Series D Preferred Stock offering that closed on August 23, 2023.

Kyle Kazan, Glass House Co-Founder, Chairman, and CEO, stated, "We are proud that we were able to raise this capital ourselves in-house, saving cash that would otherwise have been used to pay significant brokerage fees and instead using it to invest in our business. We'd like to thank our investors for believing in our company's future growth and contributing to its success by fully funding our Series D Offering. This new capital, along with the nearly $22 million in operating cash flow generated in the first three quarters of 2023, has allowed Glass House to move forward rapidly with the retrofit of Greenhouse 5 at our SoCal Farm. I am reaffirming our guidance that we expect to commence planting in Q1 2024, with product sales to begin by Q2 2024. The addition of Greenhouse 5, while growing our cultivation capacity, will also help Glass House become more competitive relative to all growers, legal and illicit, allowing us to deliver the very best value to customers and to patients. We expect that it will also be a quantum leap in terms of our cash flow creation capabilities."

Holders of the Series D Preferred Stock will be entitled to an annual cash dividend at a rate of 15% for the first five years after the date of initial issuance of Series D Preferred Stock (the "Initial Issuance") and 20% 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 (each a "Warrant") of the company. Each Warrant entitles the holder to purchase one new equity share in the capital of the company (each, a "Warrant Share") 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 Second Closing of the Offering, certain directors and officers of the company and holders of securities carrying more than 10% of the company's voting rights subscribed for an aggregate of 70 shares of Series D Preferred Stock and will receive 14,000 Warrants therewith. Each subscription by a director, officer, or 10% 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 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 25% 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.

For more information:
Glass House Farms

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