Ayr Wellness Accelerates Warrant Expiry, Offers Early Incentive Despite Already High Returns

Ayr Wellness (CSE: AYR.a) is evidently in need of cash. The company this morning announced the accelerated exercise of certain outstanding warrants, while at the same time offering an incentive for those that exercise the warrants early, the latter of which is apparently being done to encourage conversion.

Originally slated to expire in May 2024, the warrants in question were reportedly subject to acceleration as far back as November 2020 based on the firm seeing its trading price exceeding $18.00 for a period of twenty consecutive days. With the acceleration now announced, holders have until September 30, 2021 to convert their warrants.

For those that elect to convert on a cash basis, the company has also offered a $0.75 incentive per share, thereby encouraging holders to not exercise on a cashless basis. This effectively brings the warrant exercise price down from $11.50 per share to $10.75 per share, with total proceeds from the exercise to now hit an estimated US$55.00 million, excluding 2.9 million outstanding founders warrants.

Curiously, the justification for such an incentive is questionable at best – the equity is currently trading in excess of C$30 per share, thereby placing accelerated warrants well into the money. The need for an additional discount, even with the acceleration of warrants, should not be required given the return such warrants would see on the market. As a result, the program appears to be an unnecessary expense for the firm.

Ayr Wellness last traded at $30.99 on the CSE.

Information for this briefing was found via Sedar and Ayr Wellness. The author has no securities or 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.

Leave a Reply