[PRESS RELEASE] – LONG BEACH, Calif., and TORONTO, July 16, 2025 – Glass House Brands Inc. (GH Group Inc.), one of the most vertically integrated and fastest growing cannabis companies in America, has announced a recapitalization of GH Group Inc.’s Series E convertible preferred stock, with a face value per share of $1,000 (the “Series E Stock”). The Series E Convertible Preferred stock will replace GH Group Inc.’s Series B and C Preferred Shares. Holders of Series B or Series C preferred stock who do not elect to convert into Series E Preferred stocks are redeemed. GH Group cancels Series B and Series C on a going-forward basis.
The Series E preferred stock dividend will be 12% annually, accruing and paid in quarterly installments. Series E Preferred stock can be converted into GH Group class B common stocks at a $9 conversion rate at any point in time. It is also exchangeable for one share of publicly traded equity at any given time.
GH Group will also have a 5-year redemption right in respect of Series Preferred stock if each of the following occurs: (i), the volume-weighted 60-day average price for the equity share is more than $12; (ii), the daily average trading volume of equity shares surpasses one million shares; and (iii), the equity share are traded on a US major exchange. When the company exercised its redemption rights, the Series E preferred stock’s redemption price would be the original price of the share plus all accrued or unpaid dividends.
Comparatively, the Series B and C preferred stock, issued in 2022 offered a cumulative dividend rate of 22.5%, including a 10% dividend per year and a 12.5% payment-in-kind of additional equity (PIK), at redemption.
More than 75% investors in Series B Preferred stock and Series C preferred Stocks of GH Group will exchange into Series E Preferred Shares, and all nonparticipating investors are redeemed fully. Around $14.7 million in new capital was raised by new investors. GH Group plans to pay $4.1 million cash in order to cover the relatively low percentage redemptions for Series B Preferred Stock and Series C Series C Preferred stock.
In the course of this transaction, certain directors and officers and those holding securities with more than 10 percent of voting rights of the firm exchanged their Series B and C preferred stock for a total of 12.9 million Series E shares (or 16.6%) of the total and bought a significant amount of Series E stocks. 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”).
It was not announced more than 21 business days in advance of the anticipated closing date. The recapitalization details and participation by the related parties had not been finalized until just before closing. In addition, the company wanted to complete the transaction quickly for good business reasons.
This company has relied on the exemptions available to it under MI 61 101. According to section 5.4 and section 5.6, the MI 61 101, the company can rely on exemptions from formal valuation and minority shareholder approval requirements.
Securities issued in connection with the recapitalization deal have not and will not register under the U.S. Securities Act of 1934, as amended or any state securities law. They may not be sold or offered, either directly or indirectly, within the United States without registration, or a valid exemption. This press release is not an offer or solicitation to purchase securities from any jurisdiction where such offers, sales or solicitations would be illegal.
The dollar values in the news release are all U.S. Dollars.