TORONTO, June 23,
2022 /CNW/ - Auxly Cannabis Group Inc. (TSX:
XLY) ("Auxly" or the "Company"), a leading
consumer packaged goods company in the cannabis products market, is
pleased to announce that it has amended and restated the unsecured
convertible debentures in the capital of the Company
("Original Convertible Debentures") issued under its
standby facility (the "Standby Facility") with an
institutional investor (the "Investor"), which was
previously announced on April 28,
2020.
The Standby Facility allowed the Corporation to sell, on a
private placement basis, Original Convertible Debentures in
tranches for an aggregate principal amount of up to $25 million. Under the Standby Facility, the
Company sold $11.25 million in
Original Convertible Debentures over five tranches throughout 2020.
As of the date hereof, the Company has repaid $2.5 million of principal owing under such
Original Convertible Debentures.
The Investor and the Company have agreed to amend and restate
the remaining Original Convertible Debentures (the "2022
Convertible Debentures") on the following terms:
- $8.75 million aggregate principal
amount will remain outstanding until July
15, 2022, where on such date the Company will repay
$1.25 million thereby reducing the
aggregate principal amount to $7.5
million;
- extended maturity date for the balance of the $7.5 million principal amount until August 15, 2024 (the "Maturity
Date");
- guaranteed interest rate of 7.5% per annum, payable
semi-annually;
- reduced conversion price of $0.1380 being convertible at the option of the
holder into common shares in the capital of the Company ("Common
Shares") at any time prior to the Maturity Date;
- removal of the Company's previous conversion rights; and
- inclusion of certain repayment conditions should the Company
raise additional capital prior to the Maturity Date.
As consideration for amending 2022 Convertible Debentures, the
Company has paid the Investor an amendment fee of $500,000 through the issuance of 4,347,826 Common
Shares and issued the Investor warrants to purchase 20,000,000
Common Shares, with each warrant being exercisable for a period of
36 months following the date of issuance at a price per share of
$0.1495. All securities issued by the
Company as consideration for the amendment are subject to a
statutory four-month hold period in accordance with applicable
securities legislation. The TSX has provided its notice of
conditional acceptance to the proposed amendments and the issuance
of the securities to the Investor, subject to the Company filing
the necessary documents in the ordinary course pursuant to the
notice.
Under the Standby Facility, the Company issued the Investor an
aggregate of 20,031,747 Common Share purchase warrants
("Warrants") throughout 2020, of which 8,510,800 Warrants
have expired unexercised; 5,409,836 Warrants with an exercise price
of $0.366 will expire on June 26, 2022; and 6,111,111 Warrants with an
exercise price of $0.216 will expire
on September 8, 2022.
In connection with the amendment of the 2022 Convertible
Debentures, the Company has agreed to indemnify (the
"Indemnity") certain of its directors and officers for any
and all losses not otherwise recoverable from the collateral
provided by the Investor for the Common Shares provided by such
directors and officers to the Investor pursuant to the terms of the
transaction. The Indemnity may constitute a related party
transaction under Multilateral Instrument 61-101
– Protection of Minority Security Holders in Special
Transactions ("MI 61-101"), but is otherwise exempt
from the formal valuation and minority approval requirements of MI
61-101. The Indemnity has been approved by the independent
directors of the Company. No special committee was established in
connection with the amendment of the 2022 Convertible Debentures or
the granting of the Indemnity, and no materially contrary view or
abstention was expressed or made by any director of the Company in
relation thereto.
This news release does not constitute an offer to sell, or a
solicitation of an offer to buy, any of the securities referenced
herein in the United States. The
securities referenced herein have not been and will not be
registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act") or any state securities
laws and may not be offered or sold within the United States or to U.S. Persons unless
registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is
available
About Auxly Cannabis Group Inc.
(TSX: XLY) (OTCQX: CBWTF)
Auxly is a leading Canadian consumer packaged goods company in
the cannabis products market, headquartered in Toronto, Canada. The Company's focus is on
developing, manufacturing and distributing branded cannabis
products that delight wellness and recreational consumers and
deliver on its consumer promise of quality, safety and
efficacy.
Learn more at www.auxly.com and stay up to date at Twitter:
@AuxlyGroup; Instagram: @auxlygroup; Facebook:
@auxlygroup; LinkedIn: company/auxlygroup/.
Media Enquiries (only):
For media enquiries or to set up an interview please
contact:
Email: press@auxly.com
Notice Regarding Forward Looking
Information:
This news release contains certain "forward-looking information"
within the meaning of applicable Canadian securities law.
Forward-looking information is frequently characterized by words
such as "plan", "continue", "expect", "project", "intend",
"believe", "anticipate", "estimate", "may", "will", "potential",
"proposed" and other similar words, or information that certain
events or conditions "may" or "will" occur. This information is
only a prediction. Various assumptions were used in drawing the
conclusions or making the projections contained in the
forward-looking information throughout this news release.
Forward-looking information includes, but is not limited to: the
timing of any future payments under the 2022 Convertible
Debentures; political change; future legislative and regulatory
developments involving cannabis and cannabis products; and
competition and other risks affecting Auxly in particular and the
cannabis industry generally.
A number of factors could cause actual results to differ
materially from a conclusion, forecast or projection contained in
the forward-looking information in this release including, but not
limited to, whether: the Company can complete any further payments
under the 2022 Convertible Debentures on the anticipated terms and
timeline; ; and general economic, financial market, legislative,
regulatory, competitive and political conditions in which the
Company and its subsidiaries and partners operate will remain the
same. Additional risk factors are disclosed in the annual
information form of the Company for the financial year ended
December 31, 2021 dated March 30, 2022.
New factors emerge from time to time, and it is not possible for
management to predict all of those factors or to assess in advance
the impact of each such factor on the Company's business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking information. The forward-looking information in
this release is based on information currently available and what
management believes are reasonable assumptions. Forward-looking
information speaks only to such assumptions as of the date of this
release. The purpose of forward-looking information is to provide
the reader with a description of management's expectations, and the
reader is cautioned that such forward-looking information may not
be appropriate for any other purpose. Readers should not place
undue reliance on forward-looking information contained in this
release.
The forward-looking information contained in this release is
expressly qualified by the foregoing cautionary statements and is
made as of the date of this release. Except as may be required by
applicable securities laws, the Company does not undertake any
obligation to publicly update or revise any forward-looking
information to reflect events or circumstances after the date of
this release or to reflect the occurrence of unanticipated events,
whether as a result of new information, future events or results,
or otherwise.
Neither Toronto Stock Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Toronto
Stock Exchange) accepts responsibility for the adequacy or accuracy
of this release.
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SOURCE Auxly Cannabis Group Inc.