Hexo Sees $23.6 Million In Debentures Exercise Early Conversion

Following the release of earnings this morning, Hexo Corp (TSX: HEXO) (NYSE: HEXO) announced that it has conducted an initial closing of the previously announced early conversion of unsecured convertible debentures. In total, $23.595 million in debt has subscribed to the early conversion option.

The early conversion option is related to $70 million in convertible debentures with an 8% coupon that were issued December 5, 2019. Following their issuance, the equity essentially saw its price per share implode. Given that the conversion of debt is to occur at $3.16 per share, the company offered to convert up to $29.86 million worth of debt into common shares at a price of $0.80 per unit.

The conversion of the debt this morning has resulted in an additional 29,493,750 common shares of the company being issued to certain debtholders, along with half as many warrants. The warrants have a converison price of $1.00 per share for a period of 3 years from issuance. Any shares issued under the early conversion are subject to lockup for a period of 12 months from the date of issue.

The company currently expects the remaining $6.265 million in the early conversion option to be exercised by the end of June.

Certain undisclosed insiders participated in the early conversion option, with a total of $7.87 million in aggregate principal being converted by insiders. As a result, these insiders received 9,837,500 conversion units.

Hexo Corp last traded at $1.09 on the NYSE.

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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.