Vivo Cannabis (TSX: VIVO) has significant reduced its outstanding debt obligations through amendments to certain convertible debentures that remain on its books. The company has seen its previously outstanding $27.1 million convertible debentures reduced down to $6.6 million following negotiations with the debtholders.
The repaid debentures are that of the debentures issued in February 2018, bearing interest at a rate of 6.0% per annum. An original amount of $34.5 million debentures were issued, however in April and May of 2020 the company repurchased $10.0 million, and $0.88 million worth of units at a 7.0% discount to market value. This left $23.6 million in principal value of debt remaining as of June 30, 2020.
The amended agreement has seen Vivo repay 44.32% of the outstanding debentures, amount to a total value of $10.5 million, which will occur on a pro-rata basis, at no discount to the value. A further 27.84% of the debt, amounting to $6.6 million, will then be converted on a pro-rata basis, through the issuance of units of the company.
Units issued under this arrangement will see an issuance price of $0.2004, and contain one common share and one half of a purchase warrant exercisable at $0.2672 until February 15, 2022. The conversion price is a far cry from the original $4.00 per share set forth at the time of the debt issuance – just 5% of the original figure. 32,813,413 units of the company are expected to be issued as a result.
The remaining $6.6 million in debentures will see their maturity extended from February 28, 2021, to September 15, 2022, while the conversion price falls to $0.2672.
Currently outstanding 7% debentures, issued in December 2017, meanwhile will see the outstanding $3.5 million in principal repaid in December 2020.
Vivo Cannabis last traded at $0.20 on the TSX.
Information for this briefing was found via Sedar and Vivo Cannabis. 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.
