[PRESS RELEASE] – LONG BEACH, Calif., and TORONTO, July 16, 2025 – Glass House Brands Inc., one of the fastest-growing, vertically integrated cannabis companies in the U.S., 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. 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 per share at any time, and ultimately, exchangeable into the company’s publicly traded equity shares on a one-for-one basis at any time.
GH Group also will have a five-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, (ii) the average daily trading volume of the equity shares exceeds 1 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 nonparticipating 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 were 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.
