18:02:03 EDT Fri 02 Jun 2023
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Tilray Brands Inc
Symbol TLRY
Shares Issued 496,834,936
Close 2023-05-25 C$ 3.18
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Tilray prices notes of $150-million offering

2023-05-26 00:38 ET - News Release

Mr. Irwin Simon reports


Tilray Brands Inc. has priced its registered offering of $150-million aggregate principal amount of 5.20 per cent convertible senior notes due 2027. Tilray also granted a 30-day option to the underwriters of the note offering to purchase up to an additional $22.5-million aggregate principal amount of notes, solely to cover overallotments. The offering is expected to close on May 31, 2023, subject to customary closing conditions.

Irwin D. Simon, chairman and chief executive officer, Tilray, said, "We successfully executed a favourable refinancing, which demonstrates the strength of our company and investor confidence in our management team and strategic plan."

The aggregate net proceeds from the offering, after deducting underwriting discounts and commissions and expenses payable by Tilray, are expected to be approximately $144.8-million, or approximately $166.6-million if the underwriters exercise their option to purchase the additional notes in full. Tilray intends to use a portion of the net proceeds from this offering to finance the concurrent repurchase of a portion of its outstanding 5.00 per cent convertible senior notes due 2023 and 5.25 per cent convertible senior notes due 2024, as described below, and the rest of the net proceeds for general corporate purposes.

The notes will be senior unsecured obligations of Tilray. The notes will mature on June 15, 2027, unless earlier repurchased, redeemed or converted. Interest will accrue on the notes at a rate of 5.20 per cent per year and will be payable semi-annually in arrears on June 15 and Dec. 15 of each year, beginning on Dec. 15, 2023.

Noteholders will have the right to convert their notes into shares of Tilray's common stock at their option, at any time, until the close of business on the second scheduled trading day immediately before June 15, 2027. The initial conversion rate is 376.6478 shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $2.66 per share. The initial conversion price represents a premium of approximately 12.5 per cent over the last reported sale price of $2.36 per share of Tilray's common stock on May 25, 2023. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events.

The notes will be redeemable, in whole and not in part, at Tilray's option at any time on or after June 20, 2025, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price of Tilray's common stock exceeds 130 per cent of the conversion price for a specified period of time.

If certain corporate events that constitute a fundamental change occur, then, subject to a limited exception, noteholders may require Tilray to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

In connection with the company's offering of the notes, the company entered into a share lending agreement with an affiliate of Jefferies LLC, under which it will lend to the share borrower 38.5 million shares of the company's common stock. The borrowed shares will be newly issued shares issued in connection with the offering of the notes, and will be held as treasury shares upon the expiration or early termination of the share lending agreement.

Purchasers of the notes may separately sell up to 38.5 million shares of the company's common stock that they may borrow through the share borrower. The company expects that the selling stockholders will use the short position created by such sales to establish their initial hedge with respect to their investments in the notes. The company will not receive any proceeds from the expected sale of the borrowed shares from the note purchasers.

Contemporaneously with the pricing of the notes in the offering, Tilray entered into separate privately negotiated transactions with certain holders of the 2023 notes and certain holders of the 2024 notes to repurchase approximately $12.5-million aggregate principal amount of 2023 notes for approximately $12.6-million of cash and approximately $122.5-million aggregate principal amount of 2024 notes for approximately $125.7-million of cash, which include, in each case, accrued and unpaid interest on such 2023 notes and 2024 notes.

Tilray expects that certain holders of 2023 notes and certain holders of 2024 notes that agreed to sell their 2023 notes or 2024 notes, as applicable, in negotiated transactions with Tilray may, concurrently with or shortly after the pricing of the notes, enter into or unwind various derivatives with respect to Tilray's common stock and/or purchase shares of its common stock in the market. The amount of Tilray's common stock that such holders purchase may be substantial in relation to the historic average daily trading volume of the common stock. In addition, Tilray expects that certain purchasers of the notes may establish a short position with respect to its common stock by short selling the common stock or by entering into short derivative positions with respect to the common stock, in each case, in connection with the offering. The net effect of the market activities described above by holders of 2023 notes and holders of 2024 notes and purchasers of the notes could increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of Tilray's common stock and/or the market price of the notes and may have affected the initial conversion price of the notes, and Tilray cannot predict the magnitude of such market activities or the overall effect they will have on the market price of the notes or the market price of its common stock.

Jefferies, BofA Securities and TD Securities (USA) LLC are acting as the joint bookrunners and underwriters for the note offering.

The offering of the notes and the offering of the company's common stock by the selling stockholders will be made by means of separate prospectus supplements to the prospectus forming a part of the company's effective shelf registration statement filed with the Securities and Exchange Commission on Oct. 7, 2022, under the Securities Act of 1933, as amended, and related free writing prospectuses. You may obtain these documents at no charge by visiting the SEC's website. The final prospectus supplements relating to the offering of the notes and the offering of the company's common stock and the related free writing prospectuses will be filed with the SEC. When available, copies of the final prospectus supplements may also be obtained by contacting: Jefferies, attention: equity syndicate prospectus department, 520 Madison Ave., New York, N.Y., 10022, telephone: 877-821-7388, e-mail: Prospectus_Department@Jefferies.com; BofA Securities, NC1-022-02-25, 201 North Tryon St., Charlotte, N.C., 28255-0001, attention: prospectus department or e-mail at dg.prospectus_requests@bofa.com; or TD Securities, attention: equity capital markets, 1 Vanderbilt Ave., New York, N.Y., 10017, by telephone at 855-495-9846 or by e-mail at TD.ECM_Prospectus@tdsecurities.com. Before you invest, you should read the prospectus supplements and accompanying base prospectus, the registration statement and the other documents that the company has filed with the SEC as incorporated by reference therein, and the related free writing prospectuses for more complete information about the company and the offerings.

About Tilray Brands Inc.

Tilray (Nasdaq: TLRY and Toronto Stock Exchange: TLRY) is a leading global cannabis lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia and Latin America that is changing people's lives for the better -- one person at a time. Tilray delivers on this mission by inspiring and empowering the worldwide community to live its very best life, enhanced by moments of connection and well-being. Patients and consumers trust Tilray to be the most responsible, trusted and market-leading cannabis consumer products company in the world with a portfolio of innovative, high-quality and beloved brands that address the needs of the consumers, customers and patients it serves. A pioneer in cannabis research, cultivation and distribution, Tilray has an unprecedented production platform supporting over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods and craft beverages.

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