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Auxly Cannabis Group Inc
Symbol XLY
Shares Issued 749,712,690
Close 2021-04-16 C$ 0.37
Recent Sedar Documents

Auxly extends maturity date of $123M debenture to 2024

2021-04-19 09:52 ET - News Release

Mr. Hugo Alves reports

IMPERIAL BRANDS PLC EXTENDS $123 MILLION CONVERTIBLE DEBENTURE AND DEFERS INTEREST

Auxly Cannabis Group Inc. has formed an agreement with its strategic partner, Imperial Brands PLC, to amend certain provisions of its previously issued $123-million debenture and investor rights agreement dated Sept. 25, 2019.

Pursuant to the amendments, Imperial Brands and Auxly have agreed to extend the maturity date of the debenture by 24 months from Sept. 25, 2022, to Sept. 25, 2024.

The amendments will also provide Imperial Brands with the right, on an annual basis, to convert any or all of the accrued and unpaid interest on the debenture then outstanding into common shares at a conversion price equal to the five-day volume weighted average trading price of the common shares on the date that interest conversion election is made. Auxly and Imperial Brands have also agreed that the interest rate under the debenture, which currently accrues at a rate of 4 per cent per annum and is payable annually, will remain unchanged but will be payable on maturity of the debenture.

Lastly, the amendments provide for the reinstatement of certain approval rights of Imperial Brands under the investor rights agreement.

As a result of the amendments, the company will see a significant improvement to the near-term cash requirements of the business, enabling it to focus on executing on its business strategies that will position it for long-term growth to the benefit of its stakeholders.

"After the great progress we've made over our first year of commercial operations, including achieving the No. 1 position in the 2.0 market and breaking into the top 10 licensed producers by overall market share, this agreement to extend the debt maturity date for 24 months demonstrates the confidence Imperial Brands has in our strong growth and differentiated strategy," said Hugo Alves, chief executive officer of Auxly. "The extension and deferral of interest will improve our cash position, strengthen our balance sheet and remove potential overhang on the company's share price. I would like to thank our partners at Imperial Brands for their ongoing commitment to our company and look forward to our continued relationship."

Auxly remains Imperial Brands' exclusive global partner for any future development, manufacture, commercialization, sale and distribution of cannabis products.

The debentures are convertible into common shares at a price of 81 cents per share at any time prior to the close of business on the business day immediately preceding maturity.

The implementation of the amendments is subject to the satisfaction of a number of conditions, including, among other things, the approval of the TSX Venture Exchange, and minority shareholder approval of the amendments in accordance with Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions, as more particularly described herein.

Related party transaction

Imperial Brands is considered a related party of the company, and the amendments constitute a related party transaction, as such terms are defined by MI 61-101. The company is relying on an exemption from the formal valuation requirements of MI 61-101 available on the basis of the securities of the company not being listed on specified markets prescribed by MI 61-101.

Pursuant to MI 61-101, the amendments are subject to the approval by shareholders of the company holding more than 50 per cent common shares represented in person or by proxy at a duly constituted meeting of the shareholders of the company, excluding the votes attaching to the common shares held by Imperial Brands and its associates and affiliates. The company intends to obtain the minority shareholder approval at its upcoming annual and special meeting of shareholders. Further particulars of the amendments will be specified in the management information circular that will be sent to shareholders in advance of the company meeting.

About Auxly Cannabis Group Inc.

Auxly is a leading Canadian cannabis company dedicated to bringing innovative, effective and high-quality cannabis products to the medical, wellness and adult-use markets. Auxly's experienced team of industry first-movers and enterprising visionaries have secured a diversified supply of raw cannabis, strong clinical, scientific and operating capabilities, and leading research and development infrastructure in order to create trusted products and brands in an expanding global market.

We seek Safe Harbor.

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