HEXO closes $70 million private placement of convertible debentures
December 06 2019 - 6:30AM
HEXO Corp. (“HEXO” or the “Company”) (TSX:HEXO; NYSE:HEXO) is
pleased to announce the closing of its previously announced private
placement of unsecured convertible debentures for aggregate gross
proceeds of $70 million (the “Offering”).
The Company intends to use the net proceeds of
the Offering for working capital and general corporate
purposes.
“This financing demonstrates that investors are
confident in HEXO,” said Sébastien St-Louis, co-founder and CEO of
HEXO. “As we continue to focus on market share, growth, and
becoming a leader in our industry, increasing our cash on hand to
over $70 million allows us to continue working towards these
goals.”
The group of investors under the Offering
includes, but is not limited to, Sebastien St-Louis, CEO of HEXO,
as well as directors Dr. Michael Munzar, Vincent Chiara, Nathalie
Bourque and Adam Miron.
Pursuant to the Offering, the Company issued a
total of $70 million principal amount of 8.0% unsecured convertible
debentures maturing on December 5, 2022 (the “Debentures”). The
Debentures are convertible at the option of the holder at any time
after December 7, 2020 and prior to maturity at a conversion price
of $3.16 per share (the “Conversion Price”), subject to adjustment
in certain events. The Company may force the conversion of all of
the then outstanding Debentures at the Conversion Price at any time
after December 7, 2020 and prior to maturity on 30 days’ notice if
the daily volume weighted average trading price of the common
shares of the Company is greater than $7.50 for any 15 consecutive
trading days.
At any time on or before December 4, 2020, the
Company may repay all, but not less than all, of the principal
amount of the Debentures, plus accrued and unpaid interest.
On maturity, the holders of the Debentures have
the right to require the Company to repay any principal amount of
their Debentures through the issuance of common shares of the
Company in satisfaction of such amounts at a price equal to the
volume weighted average trading price of the common shares on the
TSX for the 5 trading days immediately preceding the payment date.
In accordance with the rules of the TSX, shareholder approval will
be required for the issuance of any common shares where: (i) the
number of common shares issuable would exceed 25% of the number of
common shares outstanding prior to the closing date; or (ii) the
number of common shares issuable to insiders would exceed 10% of
the number of common shares outstanding prior to the Closing
Date.
All securities issued in connection with the
Offering are subject to a four month hold period
expiring April 6, 2020.
Under the Offering, certain insiders of the
Company purchased and were issued, directly or indirectly, $8.02
million principal amount of Debentures, which constituted “related
party transactions” within the meaning of Multilateral Instrument
61-101 - Protection of Minority Security Holders in Special
Transactions (“MI 61-101”). The issuance to the insiders is
exempt from the formal valuation and minority shareholder approval
requirements of MI 61-101, as the fair market value of the
Debentures issued to, and the consideration paid by, such persons
did not exceed 25% of the Company’s market capitalization.
About HEXO Corp.
HEXO Corp is an award-winning consumer packaged
goods cannabis company that creates and distributes innovative
products to serve the global cannabis market. Through its hub and
spoke business strategy, HEXO Corp is partnering with Fortune 500
companies, bringing its brand value, cannabinoid isolation
technology, licensed infrastructure and regulatory expertise to
established companies, leveraging their distribution networks and
capacity. As one of the largest licensed cannabis companies in
Canada, HEXO Corp operates facilities in Ontario and Quebec. The
Company is also expanding internationally and has a foothold in
Greece to establish a Eurozone processing, production and
distribution centre. The Company serves the Canadian adult-use
markets under its HEXO Cannabis, Up Cannabis and Original Stash
brands, and the medical market under HEXO medical cannabis. For
more information please visit hexocorp.com.
Forward-Looking Statements
This press release contains forward-looking
information and forward-looking statements within the meaning of
applicable securities laws (“forward-looking statements”).
Forward-looking statements are based on certain expectations and
assumptions and are subject to known and unknown risks and
uncertainties and other factors that could cause actual events,
results, performance and achievements to differ materially from
those anticipated in these forward-looking statements. Forward
-looking statements should not be read as guarantees of future
performance or results. A more complete discussion of the risks and
uncertainties facing the Company appears in the Company’s Annual
Information Form and other continuous disclosure filings, which are
available on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. The Company disclaims any intention or obligation,
except to the extent required by law, to update or revise any
forward-looking statements as a result of new information or future
events, or for any other reason
Investor RelationsJennifer
Smith1-866-438-8429invest@HEXO.comwww.hexocorp.com
Media Relations(819)
317-0526media@hexo.com
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