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.
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.