- HEXO Corp. (HEXO) signs definitive agreement with Tilray Brands Inc. (TLRY), and a purchase agreement with an affiliate of KAOS Capital Inc.
- The closing of all agreements is expected to occur by the end of May
- HEXO will now have the flexibility to accelerate into a cash flow positive business
- Proceeds from the purchase agreement will fund interest/prepayments under the amended note, and for general corporate and working capital purposes
- HEXO Corp. (HEXO) is down 2.78 per cent trading at $0.70 per share as of 2:42 p.m. ET
- Tilray Stock (TSX:TLRY) is down 2.97 per cent trading at $7.83 per share as of 2:45 p.m. ET
HEXO (HEXO) has signed an agreement with Tilray Brands (TLRY) and an equity purchase agreement with an affiliate of KAOS Capital Inc.
Tilray is a producer of medical and recreational cannabis, and HEXO is a producer of high-quality cannabis products.
The closing of all agreements is expected to occur by the end of May.
The terms of the transaction have been entered into among HEXO, Tilray Brands and HT Investments MA LLC.
Tilray Brands has agreed to acquire 100 per cent of the remaining outstanding principal balance (currently US$193 million) of the amended note originally issued by HEXO to HTI.
As consideration for Tilray Brands’ purchase of the note it will pay HTI 95 per cent of the principal for the amended note that will be outstanding at closing.
Until closing, HTI may continue to redeem the note pursuant to its terms, however, in no event shall the principal be less than US$160 million before closing.
HEXO will issue to HTI a number of common shares equal to 12 per cent of the outstanding principal at the closing, divided by US$0.54.
In the event this would result in HTI owning more than 9.99 per cent of HEXO’s common shares, HEXO will issue several rights exercisable for common shares equal to the difference between the shares that would have been issued and the number of shares actually issued.
The purchase agreement common shares will be issued at a 7.00 per cent discount to the 20-day volume-weighted average price at the time the demand is made.
HEXO will use the proceeds to fund interest payments under the amended note, to fund one or more pre-payments of such note, and for general corporate and working capital purposes.
The affiliate will be issued 7.5 million common shares for $0.72 per share as a commitment fee.
HEXO Corp. (HEXO) is down 2.78 per cent trading at $0.70 per share as of 2:42 p.m. ET.
