Auxly Cannabis Group Inc. (OTCQX:CBWTF) (TSX:XLY) has amended and restated the unsecured convertible debentures in the capital of the company issued under its standby facility with an institutional investor.
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 on the following terms:
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$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;
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extended maturity date for the balance of the $7.5 million principal amount until August 15, 2024;
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guaranteed interest rate of 7.5% per annum, payable semi-annually;
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reduced conversion price of $0.1380 being convertible at the option of the holder into common shares in the capital of the company at any time prior to the maturity date;
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removal of the company's previous conversion rights; and
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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 4.35 million common shares and issued the Investor warrants to purchase 20 million 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.
Under the standby facility, the company issued the investor an aggregate of 20 million common share purchase warrants throughout 2020, of which 8.51 million warrants have expired unexercised; 5.4 million warrants with an exercise price of $0.366 will expire on June 26, 2022; and 6.11 million 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 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 has been approved by the independent directors of the company.
Photo by Thiago Patriota on Unsplash
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