TREES CORPORATION CANN closed a $13.5 million senior secured convertible note offering. The notes will bear interest at an annual rate of 12% and will mature on September 16, 2026.
Investors have the option to convert up to 50% of the outstanding notes into TREES common stock at a fixed conversion price equal to $1.00 per share, a significant premium to the current market price. The proceeds will be used to fund capital expenditures and fuel the company’s plans for near-term acquisitions in the Colorado market.
While the equity markets for U.S. MSOs and single state operators have been challenged, it is a testament to our strategy and disciplined execution that the lead investor, after extensive due diligence, committed to fund our growth. The lead, an institutional-quality organization with a 20-year history, specializes in providing flexible and tailored capital solutions to help companies achieve their business objectives.
In connection with the offering, holders of the notes received warrants to purchase shares of TREES common stock, with coverage equal to 20% of the aggregate principal amount at $0.70 per share. The lead received an additional 10% warrant coverage. Payment on the notes is secured by substantially all of the assets of the company.
Adam Hershey, interim CEO, stated, “I’m thrilled with this funding round as an affirmation of the progress that we have made as a team in a short amount of time and the confidence in the TREES brand and its growth prospects. I’d like to thank both our employees for their hard work and our debt holders for their support and look forward to continuing to execute our growth strategy focused on the Colorado market.”