Halo Collective Inc. (“Halo” or the “Company”) (NEO: HALO) (OTCQB: HCANF) (Germany: A9KN) today announced that it has entered into a subscription agreement (the “Subscription Agreement”) with Global Tech Opportunities 6 (the “Subscriber”), that provides for the issuance of convertible debentures (each, a “Convertible Debenture”). The Company intends to use the proceeds for general working capital purposes as well as to fund various organic and acquisition growth initiatives.  The Subscriber is an investment fund managed by Alpha Blue Ocean (“ABO”).  Halo is expecting that approximately $15-20 million principal amount of Convertible Debentures will be issued pursuant to the Subscription Agreement through the balance of 2022 to fulfill the Company’s business plan, including the opening of Halo’s three planned dispensaries in the Los Angeles area.

“The U.S. west coast cannabis landscape is under-going massive disruption just as the opportunity for stronger players is as great as ever,” commented Kiran Sidhu, Halo’s CEO. “This new capital will allow us to focus on shareholder value creation through strategic investments in retail and indoor grow opportunities in California, new products and increased distribution in Oregon and California, and packaging up and building out our functional mushroom and CBD businesses.”

“Halo intends to open three marquee dispensaries in Los Angeles which will further augment the Company’s valuation. The Alpha Blue Ocean team has confidence in Halo’s senior management team and is providing Halo with access to capital to implement the Company’s business plan in 2022 and beyond. We are excited to be Halo’s financial partner to help increase value for all stakeholders”, said Amine Nedjai, ABO’s CEO.

The Subscription Agreement provides for the issuance of up to 24 Convertible Debentures with an aggregate principal amount of up to $65.0 million (including the Debenture Commitment Fee (as defined below)). In addition to the Debenture Commitment Fee, each Convertible Debenture will be issued for proceeds equal to 92% of the face value of the principal amount. The Convertible Debentures will mature on the date that is 24 months from the date of issuance and are convertible: (i) at any time at the option of the holder; and (ii) automatically at maturity. The conversion price of the Convertible Debentures (the “Conversion Price”) is equal to the lower of: (i) $1.00; and (ii) the closing price of the common shares in the capital of the Company (the “Common Shares”) on the NEO Exchange on the date immediately preceding the date on which a conversion notice is delivered to the Company (or, in the event of the automatic conversion of the outstanding principal upon the maturity of the Convertible Debenture, the maturity date).

In the event that the Conversion Price is greater than the average of the three lowest daily volume-weighted average prices observed over a period of fifteen (15) trading days immediately preceding the date of the relevant conversion notice (or, where no conversion notice is given, the relevant maturity date of the Convertible Debentures) (the “Theoretical Conversion Price”), the Company will be required to pay the Subscriber a make whole amount to compensate the Subscriber for the difference between the actual conversion price and the Theoretical Conversion Price (each, a “Make-Whole Amount”).

In connection with the Subscription Agreement, the Company has agreed to pay the Subscriber a commitment fee of $5.0 million (the “Debenture Commitment Fee”), which amount will be added in instalments of $2.5 million to the principal amount of the first two Convertible Debentures issued pursuant to the Subscription Agreement.

Upon the occurrence of certain events of default or a change of control, as set forth in the Subscription Agreement, the Convertible Debentures may, at the discretion of the Subscriber, be redeemed in cash prior to the maturity at price equal to 105% of the principal amount then outstanding. The Subscription Agreement also contains provisions preventing the Company from issuing Convertible Debentures if (i) the issuance of such Convertible Debentures would result in the Subscriber holding beneficial ownership or control of greater than 19.9% of the Common Shares (on a partially diluted basis), and (ii) the issuance of such Convertible Debentures would result in the Subscriber (and certain affiliates thereof) holding greater than an aggregate of $10.0 million principal amount of indebtedness under the Convertible Debentures and pursuant to the amended and restated loan agreement dated February 8, 2022 between Halo and the Subscriber and any convertible debentures issued in connection therewith.

ABO was created in 2017 by Pierre Vannineuse, Hugo Pingray and Amaury Mamou-Mani. ABO is a young and dynamic investment fund manager with the mission of revolutionizing the financial industry by offering innovative financing solutions. ABO implements a direct, rational and efficient approach by offering alternative financing solutions. In other words, flexible solutions for listed companies also referred to as PIPEs (Private Investment in Public Equity). ABO has executed more than 75 transactions since its inception with financial engagements of more than €1.5 billion.