Imperial Brands PLC Extends $123 Million Convertible Debenture and Defers Interest
This news release constitutes a "designated news release" for the purposes of the Company's prospectus supplement dated March 23, 2021 to its short form base shelf prospectus
dated March 18, 2021.
TORONTO, April 19, 2021 (GLOBE NEWSWIRE) -- Auxly Cannabis Group Inc. (TSX.V - XLY) (OTCQX: CBWTF) ("Auxly" or the "Company"), a leading consumer packaged goods company in the cannabis products market, is pleased to announce an agreement with its strategic partner, Imperial Brands PLC (“Imperial Brands”) to amend certain provisions of its previously issued $123 million debenture (the “Debenture”) and investor rights agreement (the “Investor Rights Agreement”) dated September 25, 2019 (collectively, the “Amendments”).
Pursuant to the Amendments, Imperial Brands and Auxly have agreed to extend the maturity date of the Debenture by 24 months from September 25, 2022 to September 25, 2024.
The Amendments will also provide Imperial Brands with the right, on an annual basis, to convert any or all of the accrued and unpaid interest on the Debenture then outstanding into Common Shares (the “Interest Conversion Election”), at a conversion price equal to the five-day volume weighted average trading price of the Common Shares on the date that Interest Conversion Election is made. Auxly and Imperial Brands have also agreed that the interest rate under the Debenture, which currently accrues at a rate of 4% per annum and is payable annually, will remain unchanged but will be payable on maturity of the Debenture.
Lastly, the Amendments provide for the re-instatement of certain approval rights of Imperial Brands under the Investor Rights Agreement.
As a result of the Amendments, the Company will see a significant improvement to the near-term cash requirements of the business, enabling it to focus on executing on its business strategies that will position it for long-term growth to the benefit of its stakeholders.
“After the great progress we’ve made over our first year of commercial operations, including achieving the #1 position in the 2.0 market and breaking into the top 10 licensed producers by overall market share, this agreement to extend the debt maturity date for 24 months demonstrates the confidence Imperial Brands has in our strong growth and differentiated strategy,” said Hugo Alves, CEO of Auxly. “The extension and deferral of interest will improve our cash position, strengthen our balance sheet and remove potential overhang on the Company’s share price. I would like to thank our partners at Imperial Brands for their ongoing commitment to our Company and look forward to our continued relationship.”