Glass House Brands Announces Preferred Equity Refinancing

Core Viewpoint - Glass House Brands Inc. announced a recapitalization and non-brokered private placement of Series E Convertible Preferred Stock, aimed at replacing existing Series B and C Preferred Stock, with a total offering anticipated to be approximately $77.5 million [1][4]. Group 1: Offering Details - The Series E Preferred Stock will have a face value of $1,000 per share and will offer an annual dividend rate of 12%, paid quarterly [2]. - Investors can convert Series E Preferred Stock into Class B common stock at a conversion price of $9.00 per share, and ultimately exchange it for the Company's publicly-traded equity shares on a one-for-one basis [2]. - GH Group has a 5-year redemption right for the Series E Preferred Stock under specific conditions, including a minimum share price of $12.00 and an average daily trading volume exceeding one million shares [2]. Group 2: Comparison with Previous Offerings - The previous Series B and C Preferred Stock issued in 2022 offered a cumulative annual dividend rate of 22.5%, which included a 10% annual dividend and 12.5% paid-in-kind [3]. Group 3: Subscription and Capital Inflow - The Offering is nearly fully subscribed, with over 75% of Series B and C investors exchanging into Series E Preferred Stock, resulting in approximately $14.7 million of new capital from new investors [4]. - GH Group will pay around $4.1 million in cash to fund the redemptions of non-participating Series B and C Preferred Stock [4]. Group 4: Related Party Transactions - Directors, officers, and significant shareholders exchanged existing Series B and C Preferred Stock for $12.9 million of Series E Preferred Stock, representing 16.6% of the total [5]. - The Company did not announce the recapitalization transaction more than 21 days before the expected closing date due to the timing of related party participation [5]. Group 5: Regulatory Information - The securities issued in the recapitalization have not been registered under the U.S. Securities Act of 1933 and cannot be offered or sold in the U.S. without registration or an exemption [6].