Auxly Cannabis (TSXV: XLY) this morning announced that it has secured up to $25.0 million in financing from a single institutional investor in the form of unsecured convertible debentures. The financing arrangement is referred to as a “standby facility” that can grant the company funds when it is needed.
Under the terms of the arrangement, the investor is to subscribe to tranches of the placement when Auxly requests, with each request being required to occur at least 30 days from the previous tranche closing. Funds used from the financing are said to be put towards additional capacity and automation for Auxly’s 2.0 products at its Dosecann facility, and for general working capital and corporate purposes.
Debentures issued under the arrangement are to have a maturity date of 24 months from the time of issuance and bear interest at a rate of 7.5% per annum, payable semi annually. Further, the company will provide the investor with 55% warrant coverage at a price that is 120% of the conversion price of the debt.
Given the nature of the financing, the conversion price for the debt has been marked as being the closing price for the equity on the day prior to the issuance of debt. Certain forced debt conversion clauses are also attached to this, which is dependent upon the value of Auxly’s equity rising for a sustained period of time.
The initial tranche is for $1.25 million, with a conversion price of $0.435 per share. An additional 1,580,460 common share purchase warrants were also issued with a conversion price of $0.522 per unit.
Auxly Cannabis last traded at $0.435 on the TSX Venture.
Information for this briefing was found via Sedar and Auxly Cannabis Group Inc. 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.
