After climbing 41% on the day following the announced early conversion of debentures, Hexo Corp (TSX: HEXO) (NYSE: HEXO) has announced that it will be conducting an overnight marketed public offering to get further funds in the till. The offering has not yet seen a price set for units of the company.
Hexo Corp announced earlier in the day, following a halt of its trading, that it has convinced certain holders of its unsecured convertible debentures bearing interest at 8% to convert $29.86 million in aggregate principal at a reduced rate. Originally scheduled to mature in December 2022, the debt was converted at $0.80 per unit, with each unit having one common share and one half warrant, which has an expiry of three years and a conversion price of $1.00 per share. This compares to the original conversion price of $3.16 per share under the terms of the debenture.
Shares issued under the early conversion will be subject to a one year lockup from date of issuance, while any warrants will be subject to a fourth month hold. The early conversion was limited at $30 million, however the full amount was not exercised. Of those whom elected to convert early, $7.92 million in principal was owned by members of Hexo management, which compares to $8.02 million that originally participated in the offering.
The debt offering, which was originally issued in December 2019, saw an early conversion option as a means to clean up Hexo’s balance sheet and reduce annual debt servicing costs.
The now released financing, which has yet to see a price point set, will see funds put towards working capital and general corporate purposes.
Hexo Corp last traded at $0.75 on the NYSE, up 41.08% on the day.
Information for this briefing was found via Sedar and Hexo Corp. 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.
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.