Glass House Brands Announces Preferred Equity Refinancing

Rhea-AI Summary

Glass House Brands (OTCQX:GLASF) has announced a significant refinancing through a recapitalization and non-brokered private placement of Series E Convertible Preferred Stock. The offering, valued at approximately $77.5 million, will replace the company's existing Series B and C Preferred Stock.

The new Series E Preferred Stock offers a 12% annual dividend rate, paid quarterly, compared to the previous 22.5% rate on Series B and C. It's convertible at $9.00 per share and includes a 5-year redemption right. Over 75% of existing investors are exchanging their holdings, with $14.7 million in new capital from new investors. The company will pay approximately $4.1 million in cash for Series B and C redemptions.

Positive

• None.

Negative

• $4.1 million cash outlay required for Series B and C redemptions
• Potential future dilution if preferred shares are converted to common stock

LONG BEACH, Calif. and TORONTO, July 16, 2025 (GLOBE NEWSWIRE) -- Glass House Brands Inc. (“Glass House” or the “Company”) (CBOE CA: GLAS.A.U) (CBOE CA: GLAS.WT.U) (OTCQX: GLASF) (OTCQX:GHBWF), one of the fastest-growing, vertically-integrated cannabis companies in the U.S., today announced a recapitalization and non-brokered private placement (collectively, the “Offering”) of Series E Convertible Preferred Stock, face value of $1,000 per share (the “Series E Preferred Stock”), of GH Group, Inc. (“GH Group”). The Series E Preferred Stock will replace GH Group’s existing Series B and Series C Preferred Stock. Any holders of Series B and Series C Preferred Stock who elected not to exchange into the Series E Preferred Stock are being redeemed by GH Group, which effectively cancels the Series B and Series C Preferred Stock on a go-forward basis.

Investors subscribing for Series E Preferred Stock will receive an annual 12% dividend rate, which will accrue and be paid quarterly. The Series E Preferred Stock is convertible into a new class of GH Group Class B common stock at a conversion price of $9.00 per share at any time, and ultimately, exchangeable into the Company’s publicly-traded equity shares (the “Equity Shares”) on a one-for-one basis at any time. GH Group also will have a 5-year redemption right with respect to the Series Preferred Stock upon the occurrence of each of the following: (i) the 60-day volume weighted average price of the Equity Shares is greater than or equal to $12.00, (ii) the average daily trading volume of the Equity Shares exceeds one million shares and (iii) the Equity Shares are trading on a major United States stock exchange. If the Company exercises its redemption right, the redemption price for the Series E Preferred Stock will be equal to the original purchase price per share plus any accrued and unpaid dividends.

By comparison, Series B and C Preferred Stock which were issued in 2022, offered a 22.5% cumulative annual dividend rate inclusive of a 10% annual dividend and 12.5% paid-in-kind (“PIK”) of additional preferred equity at the time of redemption.

The Offering is nearly fully subscribed and is anticipated to be approximately $77.5 million, with more than 75% of the investors of Series B and C Preferred Stock of GH Group exchanging into Series E Preferred Stock while all other non-participating Series B and Series C Preferred Stock investors of GH Group are redeemed in full. In total, approximately $14.7 million of new capital came from new investors. GH Group will pay approximately $4.1 million in cash to fund the relatively small percentage of redemptions of Series B and Series C Preferred Stock.

As part of the transaction, some directors and all officers of the Company and holders of securities carrying more than 10% of the Company’s voting rights exchanged existing Series B and Series C Preferred Stock for an aggregate of $12.9 million Series E Preferred Stock (or 16.6% of total) and purchased a substantial amount of additional Series E Preferred Stock. Each transaction with 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 did not announce the recapitalization transaction more than 21 days before the expected closing date as the details of the recapitalization transaction and the participation therein by related parties was not settled until shortly prior to the closing, and the Company wished to close the recapitalization transaction 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% of the Company’s market capitalization.

The securities issued pursuant to the recapitalization transaction have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or under any state securities laws, and may not be offered or sold, directly or indirectly, or delivered within the United States absent registration or an applicable exemption from such registration requirements. This news release does not constitute an offer to sell or a solicitation to buy such securities in any jurisdiction in which such offer, sale or solicitation would be unlawful.

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

About Glass House Brands Inc.

Glass House is one of the fastest-growing, vertically integrated cannabis companies in the U.S., with a dedicated focus on the California market and building leading, lasting brands to serve consumers across all segments. Whether it be through its portfolio of brands, which includes Glass House Farms, PLUS Products, Allswell and Mama Sue Wellness or its network of retail dispensaries throughout the state of California, which includes The Farmacy, Natural Healing Center and The Pottery, Glass House is committed to realizing its vision of excellence: outstanding cannabis products, produced sustainably, for the benefit of all. For more information and company updates, visit www.glasshousebrands.com/ and https://ir.glasshousebrands.com/contact/email-alerts/.

Forward Looking Statements

This news release contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking statements”). Forward-looking statements reflect current expectations or beliefs regarding future events or the Company’s future performance or financial results. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates”, “targets” or “believes”, or variations of, or the negatives of, such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-looking statements in this news release include, without limitation, statements regarding the design and implementation of the Performance Awards, the retention of key leadership team members, and the potential future growth in share price. All forward-looking statements, including those herein, are qualified by this cautionary statement. Although the Company believes that the expectations expressed in such statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the statements. Accordingly, readers should not place undue reliance on forward-looking statements. There are certain factors that could cause actual results to differ materially from those in the forward-looking information, including those risks disclosed in the Company’s Annual Information Form available on SEDAR+ at www.sedarplus.ca and in the Company’s Form 40-F available on EDGAR at www.sec.gov. For more information on the Company, investors are encouraged to review the Company’s public filings on SEDAR+ at www.sedarplus.ca. The forward-looking statements in this news release speak only as of the date of this news release or as of the date or dates specified in such statements. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

For further information, please contact:
Glass House Brands Inc.
Jon DeCourcey, Vice President of Investor Relations
T: (781) 724 6869
E: ir@glasshousebrands.com

Investor Relations Contact:
KCSA Strategic Communications
Phil Carlson
T: 212-896-1233
E: GlassHouse@kcsa.com

FAQ

What are the key terms of Glass House Brands' (GLASF) Series E Preferred Stock offering?

The Series E Preferred Stock offers a 12% annual dividend rate paid quarterly, with a conversion price of $9.00 per share and is exchangeable into equity shares on a one-for-one basis.

How much new capital did Glass House Brands raise in the 2025 refinancing?

Glass House Brands raised $14.7 million in new capital from new investors as part of the approximately $77.5 million total offering.

How does the new preferred stock dividend compare to Glass House's previous rates?

The new Series E Preferred Stock offers a 12% annual dividend rate, significantly lower than the previous Series B and C's 22.5% cumulative rate (10% annual dividend plus 12.5% PIK).

What percentage of existing Glass House preferred stockholders participated in the exchange?

Over 75% of existing Series B and C Preferred Stock investors chose to exchange their holdings for the new Series E Preferred Stock.

How much are Glass House insiders participating in the Series E offering?

Directors, officers, and major shareholders exchanged $12.9 million (16.6% of total) in existing preferred stock and purchased additional Series E Preferred Stock.