Glass House Brands Inc. (NEO: GLAS.A.U) (NEO: GLAS.WT.U) (OTCQX: GLASF) closed on the first tranche of the previously announced non-brokered private placement of Series B Preferred Stock for approximately $50 million. Glass House said it is using $10.0 million of the cash proceeds from the offering to repay an interim bridge loan from its senior lender and the balance for general working capital and transaction costs.
The initial closing of the offering included approximately $14.7 million of new money invested and roughly $22.6 million face value of existing Series A Preferred Stock exchanged for new Series B Preferred Stock. A total of 37,337 Series B Preferred Stock shares were issued, with an aggregate face value of approximately $37.4 million. The company expects to complete the Offering in the next 30 days, after which roughly $50.0 million of Series B Preferred Stock is expected to be outstanding.
Prior to the initial closing, Glass House had approximately $99.5 million outstanding in senior secured debt, unsecured convertible debt and preferred equity. Following the final closing of the offering, this amount is expected to increase to approximately $116 million.
“We feel fortunate to have successfully raised capital in this challenging market environment,” stated Kyle Kazan, Glass House Brands Chairman and CEO. “While the California cannabis industry struggles through commoditization amongst other issues, we are very grateful for the support we have received from our existing preferred stock investors who exchanged their Series A Preferred Stock for this Series B Preferred Stock along with the new investors in this Series B Preferred Stock round. We are thankful for the confidence bestowed on our company and management team. As we close out the remainder of this fund raise, we also are putting our full focus behind our stated target of achieving free cash flow positive operations excluding the capex for Phase II of the SoCal farm by the first quarter of 2023.”
Glass House stock has been lifted off its 52-week lows of $1.95 and was lately trading at $2.60. Earlier in August, Glass House reported financial results for its second quarter ending June 30, 2022, with sales falling by 12% to $16.5 million from $18.7 million for the same time period in 2021. On a positive note, sales increased 18% sequentially from $14.0 million in the first quarter. the loss from operations was $17 million, which increased sequentially from the first quarter’s loss of $13 million.