High Times Cuts $28.6 Million In Debt With Stock Conversion

Hightimes Holding Corp., the owner of the long-running High Times magazine, announced the exercise of warrants and the conversion of outstanding notes into its Class A common stock, resulting in a reduction of approximately $28.6 million of its outstanding debt obligations.

High Times had been saddled with $25.6 million worth of 12% convertible notes as a result of the acquisition back in February 2017 from Trans High Corporation (THC). THC has agreed to immediately convert the debt into shares of Common stock at $11 per share. That is the same price that the public crowdfunding investors are paying.

Adam Levin, Chairman and Chief Executive Officer of Hightimes Holding, said, “This transaction enables us to simplify our balance sheet and further our business development efforts. We are pleased to have the support of some of our largest shareholders as we take this next step in the maturation of our company. The  confidence and support of our shareholders will help us to execute on our vision of becoming a dominant player in the cannabis industry.”

In addition, Hightimes said that its senior secured lender has agreed that once the Hightimes initial public offering occurs and the listing of its common stock on an approved securities exchange happens, the lender will exercise its warrants and use the exercise price to reduce approximately $3.0 million of Hightimes Holding’s senior secured debt.  

Eleanora Kennedy, one of Hightimes Holding’s largest investors, said, “We believe in the power of the brand, and are supportive of its growth under Adam’s leadership. We are especially excited to see the huge signals of confidence coming from the creators, and financiers, that helped develop this brand into what it is today. Our expansion seeks to bridge many of the gaps left open by the legalization movement, and the continued prohibition in some states and this sign of approval doubles down on our belief that we’re heading in the right direction.”

The crowdfunding Regulation a+ offering from Hightimes Holding has raised more than $13,200,000 from over 15,000 stockholders. With a minimum investment of $99, small investors were able to participate in the offering prior to the company going public. With many cannabis companies receiving lofty valuations, the High Times offering has become an accessible investment. Only the biggest investors have been able to get in early for most of the recently public company offerings. Generally, companies prefer a much smaller group of investors putting in much more money each. 

The company said the offering will remain open until January 31, 2019, but the organization may elect to list prior to that. The closing of the offering has been extended numerous times with each deadline expiring without the shares going public.

High Times has been on an acquisition binge since it began the crowdfunding campaign. It recently acquired DOPE Magazine in a deal valued at $11.2 million. The deal was a combination of stock and cash. The media company also acquired CULTURE and Green Rush Daily.  Scott McGovern, the founder of Green Rush Daily was named Executive Vice President at High Times when his company was acquired. However, McGovern is already out of the company and only worked at High Times for about a year.

History

THC Group was founded in 1974 and publishes the monthly magazine and produces events like the Cannabis Cup. High Times Holdings was created in December of 2016 to acquire Trans-High Corporation and its subsidiaries called the THC Group in a deal valued at $70 million. The High Times Group entered into an agreement with Green Rush Daily in August 2017 and the company also owns the domain 420.com.

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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