Tilray Brands, Inc. (“Tilray” or the “Company”) (Nasdaq: TLRY; TSX:
TLRY), a leading global cannabis-lifestyle and consumer packaged
goods company, today announced the pricing of its registered
offering of $150 million aggregate principal amount of 5.20%
Convertible Senior Notes due 2027 (the “Notes”). Tilray also
granted a 30-day option to the underwriters of the Notes offering
to purchase up to an additional $22.5 million aggregate principal
amount of Notes, solely to cover over-allotments. The offering is
expected to close on May 31, 2023, subject to customary closing
conditions.
Irwin D. Simon, Chairman and CEO, Tilray Brands,
Inc., said, “We successfully executed a favorable refinancing which
demonstrates the strength of our Company and investor confidence in
our management team and strategic plan.”
The aggregate net proceeds from the offering,
after deducting underwriting discounts and commissions and expenses
payable by Tilray, are expected to be approximately $144.8 million,
or approximately $166.6 million if the underwriters exercise their
option to purchase the additional Notes in full. Tilray intends to
use a portion of the net proceeds from this offering to finance the
concurrent repurchase of a portion of its outstanding 5.00%
Convertible Senior Notes due 2023 and 5.25% Convertible Senior
Notes due 2024, as described below, and the remainder of the net
proceeds for general corporate purposes.
The Notes will be senior unsecured obligations of
Tilray. The Notes will mature on June 15, 2027, unless earlier
repurchased, redeemed or converted. Interest will accrue on the
Notes at a rate of 5.20% per year and will be payable semiannually
in arrears on June 15 and December 15 of each year, beginning on
December 15, 2023.
Noteholders will have the right to convert their
Notes into shares of Tilray’s common stock at their option, at any
time, until the close of business on the second scheduled trading
day immediately before June 15, 2027. The initial conversion rate
is 376.6478 shares per $1,000 principal amount of Notes, which
represents an initial conversion price of approximately $2.66 per
share. The initial conversion price represents a premium of
approximately 12.5% over the last reported sale price of $2.36 per
share of Tilray’s common stock on May 25, 2023. The conversion rate
and conversion price will be subject to adjustment upon the
occurrence of certain events.
The Notes will be redeemable, in whole and not in
part, at Tilray’s option at any time on or after June 20, 2025 at a
cash redemption price equal to the principal amount of the notes to
be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date, but only if the last reported sale
price of Tilray’s common stock exceeds 130% of the conversion price
for a specified period of time.
If certain corporate events that constitute a
fundamental change occur, then, subject to a limited exception,
noteholders may require Tilray to repurchase their Notes for cash.
The repurchase price will be equal to the principal amount of the
notes to be repurchased, plus accrued and unpaid interest, if any,
to, but excluding, the applicable repurchase date.
In connection with the Company’s offering of the
Notes, the Company entered into a share lending agreement with an
affiliate of Jefferies LLC (the “Share Borrower”), under which it
will lend to the Share Borrower 38,500,000 shares of the Company’s
common stock. The borrowed shares will be newly-issued shares
issued in connection with the offering of the Notes and will be
held as treasury shares upon the expiration or early termination of
the share lending agreement.
Purchasers of the Notes may separately sell up to
38,500,000 shares of the Company’s common stock that they may
borrow through the Share Borrower. The Company expects that the
selling stockholders will use the short position created by such
sales to establish their initial hedge with respect to their
investments in the Notes. The Company will not receive any proceeds
from the expected sale of the borrowed shares from the Note
purchasers.
Contemporaneously with the pricing of the Notes in
the offering, Tilray entered into separate privately negotiated
transactions with certain holders of the 2023 notes and certain
holders of the 2024 notes to repurchase approximately $12.5 million
aggregate principal amount of 2023 notes for approximately $12.6
million of cash and approximately $122.5 million aggregate
principal amount of 2024 notes for approximately $125.7 million of
cash, which includes, in each case, accrued and unpaid interest on
such 2023 notes and 2024 notes (each a “note repurchase” and
collectively the “notes repurchases”).
Tilray expects that certain holders of 2023 notes
and certain holders of 2024 notes that agreed to sell their 2023
notes or 2024 notes, as applicable, in negotiated transactions with
Tilray may, concurrently with or shortly after the pricing of the
Notes, enter into or unwind various derivatives with respect to
Tilray’s common stock and/or purchase shares of its common stock in
the market. The amount of Tilray’s common stock that such holders
purchase may be substantial in relation to the historic average
daily trading volume of the common stock. In addition, Tilray
expects that certain purchasers of the Notes may establish a short
position with respect to its common stock by short selling the
common stock or by entering into short derivative positions with
respect to the common stock, in each case, in connection with the
offering. The net effect of the market activities described above
by holders of 2023 notes and holders of 2024 notes and purchasers
of the Notes could increase (or reduce the size of any decrease in)
or decrease (or reduce the size of any increase in) the market
price of Tilray’s common stock and/or the market price of the Notes
and may have affected the initial conversion price of the Notes,
and Tilray cannot predict the magnitude of such market activities
or the overall effect they will have on the market price of the
Notes or the market price of its common stock.
Jefferies LLC, BofA Securities and TD Securities
are acting as the joint bookrunners and underwriters for the Notes
offering.
The offering of the Notes and the offering of the
Company’s common stock by the selling stockholders will be made by
means of separate prospectus supplements to the prospectus forming
a part of the Company’s effective shelf registration statement
filed with the Securities and Exchange Commission (the “SEC”) on
October 7, 2022, under the Securities Act of 1933, as amended, and
related free writing prospectuses. You may obtain these documents
for free by visiting the SEC’s website at www.sec.gov. The
final prospectus supplements relating to the offering of the Notes
and the offering of the Company’s common stock and the related free
writing prospectuses will be filed with the SEC. When
available, copies of the final prospectus supplements may also be
obtained by contacting: Jefferies LLC, Attn: Equity Syndicate
Prospectus Department, 520 Madison Avenue, New York, New York
10022, Telephone: (877) 821-7388, Email:
Prospectus_Department@Jefferies.com., BofA Securities,
NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001,
Attn: Prospectus Department or email at
dg.prospectus_requests@bofa.com, or TD Securities (USA) LLC,
Attention: Equity Capital Markets, 1 Vanderbilt Avenue, New York,
NY 10017, by telephone at (855) 495-9846 or by email at
TD.ECM_Prospectus@tdsecurities.com. Before you invest, you should
read the prospectus supplements and accompanying base prospectus,
the registration statement and the other documents that the Company
has filed with the SEC as incorporated by reference therein, and
the related free writing prospectuses for more complete information
about the Company and the offerings.
This press release is neither an offer to sell nor
a solicitation of an offer to buy the Notes, the Company’s common
stock or any other securities, nor shall it constitute an offer,
solicitation or sale of any securities in any state or jurisdiction
in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of
any such state or jurisdiction.
About Tilray Brands
Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), is
a leading global cannabis-lifestyle and consumer packaged goods
company with operations in Canada, the United States, Europe,
Australia, and Latin America that is changing people's lives for
the better - one person at a time. Tilray Brands delivers on this
mission by inspiring and empowering the worldwide community to live
their very best life, enhanced by moments of connection and
wellbeing. Patients and consumers trust Tilray Brands to be the
most responsible, trusted and market leading cannabis consumer
products company in the world with a portfolio of innovative,
high-quality and beloved brands that address the needs of the
consumers, customers and patients we serve. A pioneer in cannabis
research, cultivation, and distribution, Tilray Brands’
unprecedented production platform supports over 20 brands in over
20 countries, including comprehensive cannabis offerings,
hemp-based foods, and craft beverages.
Cautionary Note Regarding Forward-Looking
Statements
Certain statements in this press release
constitute forward-looking information
or forward-looking statements (together,
“forward-looking statements”) under Canadian securities laws
and within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, that are intended to be subject to the “safe
harbor” created by those sections and other applicable
laws. Forward-looking statements can be identified by
words such as “forecast,” “future,” “should,” “could,” “enable,”
“potential,” “contemplate,” “believe,” “anticipate,” “estimate,”
“plan,” “expect,” “intend,” “may,” “project,” “will,” “would” and
the negative of these terms or similar expressions, although not
all forward-looking statements contain these identifying
words. Certain material factors, estimates, goals, projections or
assumptions were used in drawing the conclusions contained in
the forward-looking statements throughout this
communication.
Forward-looking statements include statements
regarding our intentions, beliefs, projections, outlook, analyses
or current expectations concerning, among other things: estimates
of our financial information, including in respect of expected
revenues, margins, cash flow, profitability, and production of
cannabis; estimates of future costs applicable to sales, future
capital expenditures, future cost reductions, and projected
synergies including pre-tax synergies, cost savings and
efficiencies; our expectation to have scalable medical and
adult-use cannabis platforms to strengthen the leadership position
in Canada, internationally, and eventually in the United States; us
being well positioned in the European cannabis markets and our
ability to leverage our current European platforms; strategic and
financial benefits in connection with the acquisition of HEXO Corp.
by Tilray; the legalization of cannabis in the United States and us
being well positioned to compete in the United States market;
future sales and the impact to the trading price of our common
stock, including the expected shorting of the borrowed shares in
the concurrent offering; the projected growth in our market share
and growth in the European Union market; our expectation to offer a
diversified and branded product offering and distribution
footprint, world-class cultivation, processing and manufacturing
facilities, our intentions with respect to the use of proceeds from
the sale of the Notes, and the completion of the Notes offering and
the notes repurchases.
Many factors could cause actual results,
performance or achievement to be materially different from
any forward-looking statements, and other risks and
uncertainties not presently known to the Company or that the
Company deems immaterial could also cause actual results or events
to differ materially from those expressed in
the forward-looking statements contained herein. For a
more detailed discussion of these risks and other factors, see the
caption “Risk Factors” in the prospectus supplement and the most
recently filed annual information form of the Company and the
Annual Report on Form 10-K (and other periodic reports filed with
the SEC) of the Company made with the SEC and available on EDGAR.
The forward-looking statements included in this
communication are made as of the date of this communication and the
Company does not undertake any obligation to publicly update
such forward-looking statements to reflect new
information, subsequent events or otherwise unless required by
applicable securities laws.
Media: Berrin Noorata, news@tilray.com or
Investors: Raphael Gross, +1-203-682-8253
Raphael.Gross@icrinc.com
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