Tilray Extends Lockup Period With Major Shareholder

Cannabis company Tilray Inc TLRY said Monday it reached an agreement with its largest stockholder Privateer Holdings to extend a lockup period by two years.

What Happened

Privateer Holdings is Tilray's largest investor with a 75 million share count, which represents 77 percent of all shares outstanding. The investor and Tilray agreed to extend a lockup on its shares and provide for an orderly release of 75 million Tilray shares held by Privateer to Privateer's equity holders.

As part of the agreement, a downstream merger of Privateer will take place in which Privateer's investors will be granted newly issued Tilray stock equal to the position held by Privateer. Once complete, Privateer's old stake in Tilray will become null and void.

A lockup period is a predetermined amount of time following an IPO where large shareholders are restricted from selling their shares.

Need more cannabis news? Check out all of our coverage here.

Why It's Important

Tilray CFO Mark Castaneda said the agreement signals Privateer's confidence in Tilray's long-term business. The transaction also gives Tilray "greater control" of its own operating flexibility which will better position the company to manage its public float.

Privateer Managing Partner Michael Blue said the structure will give Tilray the flexibility it needs to maintain a leadership position in the "rapidly emerging" cannabis market.

During the first year of the two-year lockup period, Tilray shares will be released only pursuant to marketed offerings and/or block trades to institutional investors or through stock sales to strategic investors. Remaining shares will be allocated in the second year through a staggered release.

Tilray's stock traded higher by 15.7 percent to $44.90 in Monday's pre-market session.

Related Links:

Analyst Says Tilray Growth Expectations Are Way Too High

Analyst Likes Tilray In The Long Run, But Says Stock Is Overvalued Right Now