West L.A.-based High Times Holding Corp. is closing deals – but not the deal it most needs.
The parent company of cannabis lifestyle magazine High Times announced last week plans to purchase digital publication Green Rush Daily Inc. of New York for a cash and stock package worth an estimated $6.9 million, according to documents filed with the Securities and Exchange Commission.
But that deal is small potatoes compared to the reverse merger High Times is trying to pull off – a move that could get it listed on Nasdaq.
The company announced the merger with Origo Acquisition Corp. – a special purpose acquisition corporation, or so-called blank check company – last July but has been unable to consummate the deal, which valued High Times at $250 million.
Origo was delisted from Nasdaq in February for several rule violations and is currently trading on over the counter markets pending an appeal. Origo recently held a stockholders meeting to extend High Time’s deal sheet until June.
High Times has meanwhile announced a public stock offering to raise between $5 and $50 million. The offering is being run under the so-called Regulation A securities rules that allow companies to offer equity to both accredited and unaccredited investors alike. The company said in an earlier SEC filing it would list the offering’s share price at $11.
That money could be used to help the company grow and potentially help the Origo deal close, but it might have to go to debt payments. The company has a mounting set of liabilities, including an $1.5 million convertible debt note from ExWorks Capital that comes due in August.
Despite the looming debt payments and delay on consummation of the Origo deal, High Times Chief Executive Adam Levin remained upbeat about the Green Rush transaction, which gives High Times access to Green Rush’s readers and social media followers, according to the company.
“Green Rush Daily has built a large, loyal audience and is innovating coverage of cannabis-related news, culture, business and much more,” Levin said in a statement. “Adding Green Rush Daily to the High Times family strongly enhances our editorial coverage, online presence, audience type and advertiser reach. The deal will significantly benefit the advertisers and readers of both High Times and Green Rush Daily.”
High Times values itself at between $250 million and $288 million based on the number of shares it plans to sell in the offering.
The deal for Green Rush Daily was executed under High Times’ subsidiary Trans-High Corp., which purchased a select portion of Green Rush’s holdings, according to High Times’ March 30 SEC filing.
“Trans-High acquired certain of Green Rush’s assets that consisted solely of its websites, intellectual property, advertiser agreements and future revenues from such agreements,” the filing said. “No employees or liabilities of Green Rush were acquired or assumed by Trans-High.”
While the purchased assets do not include employees, High Times said in its statement that Green Rush would continue to operate as an independent unit. Green Rush operates various websites and social media channels that draw millions of unique hits a month, according to the companies.
The deal calls for High Times to give Green Rush owner Scott McGovern 577,651 Class A shares – worth $6.4 million at the $11 Reg A listing price – and $500,000 in cash. High Times also will bring on McGovern as an employee, paying him a $250,000 annual salary and allocating him 289,630 in Class B non-voting stock options at an $8.11 purchase price that vest over a three-year period.
Pritzker Pickup
West Los Angeles-based Pritzker Group stepped into the food industry with the acquisition of a mid-sized manufacturer of grain-based and seasoning products based in San Antonio, Texas, the investment firm announced last week.
Pritzker Group’s subsidiary PPC Partners, which has offices in West Los Angeles and Chicago, led the acquisition of C.H. Guenther & Son Inc. in partnership with other investors and the food manufacturer’s management, the firm said.
C.H. Guenther & Son, which has more than 2,500 employees at factories in the United States, Canada and Western Europe, will keep its headquarters in San Antonio and its management staff.
PPC Investment Partner Michael Nelson said in a statement that the acquisition would provide a platform for the firm to accelerate its investment in the food manufacturing industry.
Have a deal tip? Henry Meier can be reached at [email protected] or at (323) 556-8321.
