Auxly Cannabis Group Inc. CBWTF XLY entered into an agreement with its strategic partner, Imperial Brands PLC to amend certain provisions of its previously issued $123 million debenture dated September 25, 2019 as amended on July 6, 2021. Pursuant to the amendment, Imperial Brands and Auxly have agreed to extend the maturity date of the Debenture by 24 months from September 25, 2024 to September 25, 2026. The parties anticipate the amendment to come into effect on August 16, 2023.
The debentures are convertible into common shares at a price of $0.81 per share at any time prior to the close of business on the business day immediately preceding maturity. Auxly remains Imperial Brands' exclusive global partner for any future development, manufacture, commercialization, sale and distribution of cannabis products.
In connection with the initial investment by Imperial Brands, the parties entered into an investor rights agreement which provides, among other things, that for so long as Imperial Brands holds a partially diluted percentage of outstanding common shares in the capital of Auxly of not less than 15%, it is eligible to nominate one individual designated by Imperial Brands for election as a director to Auxly's board. As Imperial Brands no longer holds the required percentage under the investor rights agreement, its nominee, Murray McGowan, has resigned from Auxly's board effective immediately.
Related Party Transaction
Imperial Brands is considered a "related party" of the company, and the amendment constitutes a "related party transaction", as such terms are defined by Multilateral Instrument 61-101 - Protection of minority security holders in special transactions
Resignation of CFO and Appointment of Interim CFO
Brian Schmitt resigned from his position as CFO of Auxly, effective July 26, 2023. Schmitt is leaving for an opportunity outside of the cannabis industry at a non-reporting issuer. Travis Wong, Auxly's SVP of finance, has been appointed interim CFO of Auxly effective immediately.
Warrant Amendments
The company has received all necessary approvals required to implement the warrant amendments that were previously announced on February 10, 2023, and such warrant amendments are now effective. The company amended the terms of 27.4 million common share purchase warrants which were issued pursuant to a bought deal financing completed on June 14,2021 to reduce the exercise price to $0.045 per common share, and extend the expiry date to June 14, 2026. None of the warrants are held, directly or indirectly, by insiders.
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Photo: Benzinga edit with photos by Matthias Zomer on Pexels and squarefrog on Pixabay
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