Auxly Cannabis (TSX: XLY) has substantially bolstered its balance sheet, indicating this morning that Imperial Brands has elected to convert debt to common shares of the issuer.
A total of $123.4 million in principal and accrued interest from an unsecured convertible debenture has been converted to shares. The debt, due September 25, 2026, was originally issued back in 2019 and was to be repaid by September 2022 before extensions were subsequently granted.
The transaction saw the issuance of 150.4 million shares at a price of $0.81 per share, settling a total of $121.9 million in principal amount of outstanding debt. A further 90.9 million shares were then issued at a price of $0.017 per share, to settle $1.56 million in accrued interest.
Post transaction, Imperial holdings a 19.8% interest in the company. As part of the transaction, a new investor rights agreement has been entered into, with language related to Auxly being the exclusive cannabis partner of Imperial being dropped.
The conversion is expected to reduce annual interest and accretion expenses by $14 million.
Auxly Cannabis last traded at $0.05 on the TSX.
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