10:38:43 EST Sun 28 Nov 2021
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Auxly Cannabis Group Inc
Symbol XLY
Shares Issued 832,374,788
Close 2021-07-06 C$ 0.27
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Auxly completes Curative interest sale for $6-million

2021-07-06 17:32 ET - News Release

Mr. Hugo Alves reports


Auxly Cannabis Group Inc. has implemented amendments to certain provisions of its previously issued $123-million debenture and investor rights agreement dated Sept. 25, 2019, with its strategic partner, Imperial Brands PLC, pursuant to the terms of the previously announced amending agreement dated April 19, 2021.

Pursuant to the amendments, Imperial and Auxly have: (i) extended the maturity date of the debenture by 24 months from Sept. 25, 2022, to Sept. 25, 2024; (ii) provided Imperial 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; (iii) provided that the payment of interest 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; and (iv) reinstated certain approval rights of Imperial under the investor rights agreement.

The amendments were subject to, among other things, the company obtaining minority shareholder approval in accordance with Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions, which was obtained at the company's annual and special meeting of shareholders held on June 28, 2021.

The company is also pleased to announce that it has completed the sale of its interest in 2368523 Ontario Ltd. (doing business as Curative Cannabis) to a private purchaser for total proceeds to the company of $6-million. The company acquired substantially all the shares and assets of Curative Cannabis pursuant to a foreclosure order issued on Nov. 27, 2019, which assets included a cannabis cultivation facility located in Chatham-Kent, Ont. The facility has remained non-operational since the foreclosure, and while exploring all possible options with respect to the use, commercialization and/or sale of the asset the company determined such asset was not essential to the company's operations and strategy. The disposition of this non-core asset allows the company to strengthen its financial position with non-dilutive capital that it can deploy into its core business.

About Auxly Cannabis Group Inc.

Auxly is a leading Canadian cannabis company dedicated to bringing innovative, effective and high-quality cannabis products to the wellness and adult-use markets. Auxly's experienced team of industry first movers and enterprising visionaries has 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.

Early warning disclosure

An affiliate of Imperial Brands holds the debenture, and, assuming the debenture is exercised in full as of the date hereof (but excluding any exercise of the interest conversion election by the holder of the debenture), Imperial Brands and its affiliates would have beneficial ownership of 157,983,592 common shares or approximately 16 per cent of the issued and outstanding common shares (calculated on a non-diluted basis).

Imperial Brands intends to review its investment in the company on a continuing basis, and may, subject to the terms of the investor rights agreement, purchase or sell common shares, either on the open market or in private transactions, or exercise the debenture in the future, in each case, depending on a number of factors, including general market and economic conditions, and other factors and conditions Imperial Brands deems appropriate.

An amended early warning report will be filed by Imperial Brands with applicable Canadian securities regulatory authorities. To obtain a copy of the early warning report, please contact Daniel Glavin at 416-869-5500.

We seek Safe Harbor.

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