High Tide financing gets thumbs up at Beacon Securities

High Tide’s (High Tide Stock Quote, Chart, News, Analysts, Financials TSXV:HITI) new $30-million financing deal with Cronos Group is a positive move that strengthens its financial position, according to Beacon Securities analyst Doug Cooper. In a July 17 note, Cooper said the Calgary-based cannabis retailer, operating 103 stores in Alberta and Ontario, secured favourable terms that support future flexibility and growth.

The convertible debenture carries 4% interest, matures in five years, and can be repaid early without penalty. It may be converted into shares at $4.20, subject to mutual agreement. Cooper maintained his “Buy” rating and $5.75 target, based on a 10x multiple of his 2026 EBITDA estimate.

As part of the deal, Cronos received 3.86 million warrants priced at $3.91 and would own about 11% of High Tide on a fully diluted basis. With $35-million in cash at the end of Q2 and $23 million in debt, the $30-million from Cronos boosts High Tide’s cash position to $65-million.

“We view this transaction positively as it gives HITI a lot of flexibility in its negotiations, as any potential transaction would not require subsequent financing,” Cooper said.

Cooper said High Tide remains interested in expanding to Germany. Earlier this year, it announced plans to acquire a 51% stake in Purcan GmbH, but the deal was later put on hold.

“With its much larger cash position, we believe it is likely that HITI may be pursuing both another acquisition target in Germany, but also a larger and more established player,” Cooper said. “In fact, recall that as part of its Q2 results, the company announced that it has been engaging in ongoing and exclusive discussions regarding a transaction with “a leading German medical cannabis importer and wholesaler”.

He said CRON would likely be interested in the deal, as it could use its new partnership with HITI to export cannabis to Germany, where international sales tend to have higher margins than in Canada.

“We believe investors should also be pleased that there will likely not be any future dilution upon any German transaction.”

According to Cooper, High Tide is on track to post $29.1-million in Adjusted EBITDA and $587.5-million in revenue for fiscal 2025. He sees further growth ahead in 2026, forecasting $43-million in EBITDA and $654.2-million in revenue.

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