Harvest Completes US$100 Million First Tranche of US$500 Million Convertible Debenture Financing

Health & Recreation, Inc.
) (“Harvest” or the “Company”), a vertically
integrated cannabis company with one of the largest and deepest
footprints in the U.S., is pleased to announce that it has closed the
first tranche of its previously announced brokered private placement of
7% unsecured convertible debentures (the “Convertible Debentures”)
of the Company, at a price of US$1,000 per Convertible Debenture (the “Issue
”) for gross proceeds of US$100,000,000. Eight Capital is
acting as agent for the offering. The Company intends to use the net
proceeds of the offering to fund working capital and general corporate

The Convertible Debentures have a maturity date (the “Maturity Date”)
of May 9, 2022 and bear interest from the date of issue at 7.0% per
annum, payable semi-annually on June 30 and December 30 of each year.
The Convertible Debentures are convertible, at the option of the holder,
into subordinate voting shares of the Company (“Subordinate Voting
”) at any time prior to the close of business on the last
business day immediately preceding the Maturity Date. The Convertible
Debentures have a conversion price of US$11.4198723 (the USD equivalent
of CDN$15.378, based on the Bank of Canada CAD/USD exchange rate as of
May 8, 2019) per Subordinate Voting Share (the “Conversion Price”).
The purchaser of the Convertible Debentures also received, for no
additional consideration, 3,502,666 warrants (the “Warrants”).
Each Warrant is exercisable to purchase one Subordinate Voting Share at
an exercise price of CDN$18.17 per share, for a period of 36 months from
the date of issue.

“Our vision is to become the most valuable cannabis company in the world
and this transaction will help fuel Harvest’s growth,” said Harvest CEO
Steve White. “This is a particularly acquisitive time in the industry
and access to significant capital with favorable terms is crucial to
long-term success.”

The Company may, subject to certain conditions, force the conversion of
all of the principal amount of the then outstanding Convertible
Debentures at the applicable Conversion Price if, at any time after the
date that is four months and one day following the date of issue of the
Convertible Debentures, the daily volume weighted average trading price
(the “VWAP”) of the Subordinate Voting Shares is greater than
CDN$21.53 for any 10 consecutive trading days, by providing 30 days’
notice of such conversion.

The Convertible Debentures, the Warrants and the Subordinate Voting
Shares underlying both, are subject to a statutory hold period which
expires on September 11, 2019, being four months and one day following
the date of issue of the Convertible Debentures.

The Company has also entered into an investment agreement with an
institutional investor and an Agency Agreement with Eight Capital,
pursuant to which Eight Capital has agreed to offer for sale, and the
institutional investor has agreed, subject to certain terms and
conditions customary for a transaction of this nature, to purchase up to
4 additional tranches of 100,000 convertible debentures (the “Additional
”) at the Issue Price, for additional gross proceeds of up
to US$400,000,000 (the “Additional Offering”), on the terms
described in Harvest’s press release dated April 4, 2019. There can be
no assurances that any Additional Debentures will be issued as proposed
or at all.

About Harvest Health & Recreation, Inc.

Headquartered in Tempe, Arizona, Harvest Health & Recreation Inc. is
a multi-state cannabis operator (MSO) and vertically-integrated
cannabis company. Subject to completion of announced
acquisitions, Harvest will have the largest footprint in the U.S., with
rights to 219 facilities, of which 142 are retail locations and more
than 1,580 employees across 17 states. Since 2011, the company has been
committed to aggressively expanding its Harvest House of Cannabis retail
and wholesale presence throughout the U.S., acquiring, creating and
growing leading brands for patients and consumers nationally and
continuing on a path of profitable growth. Harvest’s mission is to
improve lives through the goodness of cannabis and is focused on its
vision to become the most valuable cannabis company in the world. We
hope you’ll join us on our journey: 

Forward-looking Statements

This press release contains statements which constitute
“forward-looking information” within the meaning of applicable
securities laws, including statements regarding the plans, intentions,
beliefs and current expectations of Harvest with respect to future
business activities. Forward-looking information is often identified by
the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,”
“anticipate,” “believe,” “estimate,” “expect” or similar expressions and
include information regarding the completion of the offering or any
tranche of the offering.

Investors are cautioned that forward-looking information is not based
on historical facts but instead reflects Harvest management’s
expectations, estimates or projections concerning future results or
events based on the opinions, assumptions and estimates of management
considered reasonable at the date the statements are made. Although
Harvest believes that the expectations reflected in such forward-looking
information are reasonable, such information involves risks and
uncertainties, and undue reliance should not be placed on such
information, as unknown or unpredictable factors could have material
adverse effects on future results, performance or achievements of the
combined Company. This forward-looking information may be affected by
risks and uncertainties in the business of Harvest and market conditions.

Should one or more of these risks or uncertainties materialize, or
should assumptions underlying the forward-looking information prove
incorrect, actual results may vary materially from those described
herein as intended, planned, anticipated, believed, estimated or
expected. Although Harvest has attempted to identify important risks,
uncertainties and factors which could cause actual results to differ
materially, there may be others that cause results not to be as
anticipated, estimated or intended. Harvest does not intend, and does
not assume any obligation, to update this forward-looking information
except as otherwise required by applicable law.


Alex Howe, Head of Corporate Communications

Author: dmnnewswire