Auxly Cannabis Group Boosts Financial Position With Amendments To Previous $123M Convertible Debenture

Cannabis-focused consumer packaged goods company Auxly Cannabis Group Inc. XLY CBWTF on Tuesday announced the implementation of amendments to particular provisions of its previously issued debenture with tobacco giant Imperial Brands PLC.

Back in 2019, Imperial had invested CA$123 million ($92.8 million) in Auxly, by way of a debenture that is convertible into 19.9% ownership of the cannabis company, at a conversion price of 81 cents per share.

Under the deal, Imperial agreed to provide Auxly with global Imperial Brands vaping technology and access to Nerudia, its vapor innovation business. In addition, Auxly will become an exclusive partner for Imperial’s cannabis business operations.

“We are looking forward to working with the incredibly strong team at Imperial Brands," Auxly CEO Hugo Alves, said at the time. “We believe there is considerable opportunity for growth and value creation for both companies.”

In April, the companies entered into an amendment agreement to extend the maturity date of the debenture by two years to September 25, 2024, and allow Imperial to convert any or all of the accrued and unpaid interest on debenture then outstanding into common shares on an annual basis.

Under the amendments, payment of interest under the debenture remained unchanged at 4% per annum, payable annually.

Auxly also disclosed it had sold its stake in 2368523 Ontario Limited – which is doing business as Curative Cannabis – for $6 million to a private purchaser.

The company acquired all the shares and assets of Curative Cannabis to a foreclosure order issued in 2019, including a Chatham-Kent, Ontario-based cultivation facility, which has remained non-operational since then.

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