It appears that Auxly Cannabis (TSXV: XLY) has had a great response to its previously proposed convertible debenture conversion price reduction. The firm announced this morning just under $16 million worth of convertible debt had been converted by debtholders.
In total, 21,602,460 common shares were issued at a conversion price of $0.74 over the last two weeks, resulting in Auxly reducing its current debt by $15,985,826. Additionally, the firm also announced that a significant portion of the remaining debt has now been repaid as well, to the tune of $79,439,174. In total, $95,425,001 of the convertible debentures issued have now either been repaid or converted to common shares of the equity.
The convertible debentures themselves were issued in January 2018, with a term of two years and an interest rate of 6%, with the debt being unsecured. Originally issued with a conversion price of $1.55 and a total amount of $100 million, the debt has long acted as an overhang for the equity, hampering its ability to gain any upward momentum relative to that of its peers. With the due date drawing near and the conversion price nowhere near the current pricing of the equity, Auxly proposed a reduction in the conversion price of the debt to $0.74 per share on October 18.
With the convertible debentures now off the balance sheet, save for approximately $4.57 million, the firm now having virtually no debt in comparison to its prior position. The early conversion of debt has also saved the firm an additional $1.25 million in associated interest expenses.
Auxly Cannabis is currently trading at $0.69 on the TSX Venture.
Information for this briefing was found via Sedar and Auxly Cannabis Group Inc. The author is no position in this security and 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.