In a development that is perhaps surprising to absolutely no one, Aleafia Health (TSX: AH) announced this morning it is currently in negotiations with holders of its convertible debt. The debt comes due later this year, on June 27.
Originally issued in June 2019, the debt at issuance raised proceeds of $40.3 million from the company. Of that figure, just $2.9 million has been repaid, with a total outstanding principal amount now pegged at approximately $37.4 million as of September 30.
The firm however did secure a total of $19 million via a term loan and receivables facility just last week. With current cash on hand of just $4.7 million and a further $6.7 million in marketable securities and $8.2 million in trade receivables as of September 30, the firm has little chances of repaying the debt. And with a conversion price of $1.55 per share, there is little hope for the firm to see any further debt settled via equity conversion under the current terms.
In connection with these negotiations being underway, the company has not made an interest payment that was required to be made on December 31. This, however, is not classified as a default until thirty days after the payment is due.
The firm is currently looking to “achieve an outcome that is beneficial to all the Company’s stakeholders.” Notably, the debt is unsecured against the firms assets.
Aleafia Health last traded at $0.135 on the TSX.
Information for this briefing was found via Sedar and Aleafia Health. The author has no affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
