Harborside Inc. Announces Closing of First Tranche of Pelorus Debt Financing

OAKLAND– Harborside Inc. (CSE: HBOR), (OTCQX: HBORF), a California-focused, vertically-integrated cannabis enterprise, is pleased to announce the closing of the first tranche of its previously announced US$77.3 million debt financing with Pelorus Equity Group and to provide a business update, including with respect to the proposed acquisitions of UL Holdings Inc. and LPF JV Corporation to form StateHouse Holdings.

Highlights

• Closing of the first tranche $45.4 million of Pelorus Roll Up Financing out of the total expected of $77.3 million
• HSR 30-day waiting period for business combination with Loudpack and Urbn Leaf has expired
• Enhancement to planned renewable energy microgrid project

Roll Up Financing
On February 10, 2022, Harborside closed the first tranche of its Roll Up Financing with Pelorus on the terms described in the Company’s news release dated November 29, 2021.

Pelorus has funded a total of US$45.4 million pursuant to the first tranche of the Roll Up Financing, funded through three separate loans to Harborside, Loudpack and Urbn Leaf. Harborside has received approximately US$15.5 million, Loudpack has received approximately US$16.4 million, and Urbn Leaf has received approximately US$13.5 million of the aggregate funds advanced under the first tranche. From its share of the proceeds of the Roll Up Financing, Harborside repaid the $12.0 million outstanding under its senior secured revolving credit facility.

The closing of the second tranche of the Roll Up Financing, for expected proceeds of US$31.9 million, will occur at a time of the Company’s choosing following the closing of the Company’s proposed acquisitions of Loudpack and Urbn Leaf (collectively, the “Transactions”), and will be available for StateHouse’s growth initiatives.

Proceeds from the first tranche of the Roll Up Financing will be used to retire certain existing loans, to fund closing costs and interest reserves, and to provide additional working capital to the three companies. Proceeds from the second tranche will be used primarily for working capital purposes and for growth capital of StateHouse.

“With the Roll Up Financing, we are unlocking significant value from our combined real estate portfolio, and positioning StateHouse to be a leading consolidator of California’s cannabis sector,” said Matthew Hawkins, Chairman and interim CEO of Harborside. “We are pleased that Pelorus recognized the value of our assets, including over $100 million in real estate value and the potential of our growth strategy. We look forward to a long and productive partnership with the firm.”

“We believe that StateHouse will be well-positioned for long-term success in the California cannabis market,” said Travis Goad, Managing Partner of Pelorus. “We are excited to help the company achieve its growth objectives with this innovative financing solution, which is one of the first in our new lower cost stabilized lending program.”

Cautionary Note Regarding Forward-Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian and United States securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements include, among other things, statements with respect to the completion of a second tranche of the Roll Up Financing, the completion of the proposed Transactions and formation of StateHouse, the future success of Statehouse, timing for completion of the proposed Transactions and formation of StateHouse, whether the Company will receive shareholder approval at the Meeting, cost savings at the Solar Project, timing of completion of the Solar Project, future performance, growth, profitability, competitive position, and acquisition opportunities, and the Company’s corporate strategy moving forward.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: whether the Company will receive additional voting support agreements for matters to be considered by shareholders at the Meeting; implications of the ongoing COVID-19 pandemic on the Company’s operations; fluctuations in general macroeconomic conditions; fluctuations in securities markets; expectations regarding the size of the cannabis markets where the Company operates; changing consumer habits; the ability of the Company to successfully achieve its business objectives; plans for expansion and acquisitions; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; employee relations; the presence of laws and regulations that may impose restrictions on cultivation, production, distribution, and sale of cannabis and cannabis-related products in the markets where the Company operates; and the risk factors set out in the Company’s management discussion and analysis for the period ended September 30, 2021 and the Company’s listing statement dated May 30, 2019, which are available under the Company’s profile on www.sedar.com. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

The Company, through several of its subsidiaries, is indirectly involved in the manufacture, possession, use, sale, and distribution of cannabis in the recreational and medicinal cannabis marketplace in the United States. Local state laws where the Company operates permit such activities however, investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable United States federal money laundering legislation.

While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with recreational and medicinal cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve the Company of liability under United States federal law, nor will it provide a defense to any federal proceeding which may be brought against the Company. The enforcement of federal laws in the United States is a significant risk to the business of the Company and any proceedings brought against the Company thereunder may adversely affect the Company’s operations and financial performance.

This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The Company’s securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

The CSE has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

(This information is primarily sourced from HBOR.  Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).