High Times has a tough time as investors gripe
THE chief financial officer of High Times Holding, owner of counterculture pot magazine High Times, has jumped ship after just three months — in the midst of a rocky IPO process.
Neil Watanabe, who was also the company’s chief operating officer, resigned on July 19 “to pursue other business opportunities,” the company said in an SEC filing. “There were no disputes between Mr. Watanabe and the company with respect to any financial matters or financial disclosures,” the filing said.
Watanabe did not return a request for comment.
The departure comes as High Times, which runs pot-themed events and concerts in addition to publishing the magazine, struggles to pull off a money-raise through a mini IPO process.
Even before Watanabe’s departure, there were signs investors were growing restless with the IPO process, which has dragged on for a year.
“Where is our stock we bought eight months ago?” asked David Day, CEO at New World CBD Distributors in a LinkedIn comment when Watanabe’s appointment was announced in April.
Watanabe wrote back: “This has been a lengthy process, but we are completing the last steps towards listing on a public exchange. We are starting the stock issuance process in the following weeks. Stay tuned!”
Fast forward to today and Watanabe is gone while the stock still hasn’t landed on a public exchange.
“I’m beginning to wonder,” said Day, who told Media Ink that he and family members own about 3,000 to 4,000 shares. “I was planning on Nasdaq and the rocket taking off.”
In late June, the company said it would be extending its offering period yet again from June 30 to Aug. 31, indicating it has not yet sold all 4.5 million shares in the offering. The IPO is being done under SEC rules that allow small-cap companies to raise money.
Meanwhile, High Times — owned by private equity company Oreva Capital — has been forced to borrow another $600,000 from principal banker ExWorks, pushing its debt load to $18 million. In 2018, it posted flat revenue of $14.7 million and an operating loss that doubled to $27.5 million.
Oreva, headed by Adam Levin, purchased the 44-year-old cannabis title in June 2017 with backingg from investors including Damian Marley’s publicly traded Stony Hill and Ean Seeb, who ran marijuana dispensary Denver Relief Consulting.
The goal has been to use the high-profile name of the magazine to make money through conferences and other live events in a $50 billion market.
Rising Peak
The final sale from the bankrupt F+W Media wrapped up Monday with Terry O’Toole’s Macanta Partners buying the last two magazine groups on the block for $3.5 million and renaming the new entity Peak Media Properties.
Former Newsweek and Philadelphia Inquirer Chief Executive Greg Osberg, who was the CEO of the old F+W from January 2018 through its bankruptcy, is joining Peak Media as its first CEO.
Macanta paid $2,850,000 for about 30 knitting and quilting magazines— the largest group in the old F+WMedia. It also paid $675,00 for the Artists Network, which includes Artists Magazine and Southwest Artist.
Twelve other smaller niche collections were already sold off to new owners, and Penguin Random House picked up the domestic books for $5.6 million.
The company had $105 million in debt at the time of its March bankruptcy filing and raised only $13 million via its bust-up.
O’Toole’s previous venture firm, Tinicum Capital Partners, which became the majority owner of F+W in 2014, lost about $40 million in the bankruptcy along with other private equity firms for a combined $150 mmillion loss. O’Toole and Osberg — reached on the road to Boulder, Colo., Tuesday — said they expect to have a far different experience this time around. “It’s completely debt free and we believe in the core audiences who are dedicated to their hobbies,” said O’Toole.
“We’ll use our media to stimulate customers and push them to our ecommerce partners,” Osberg said.