Auxly Cannabis Group Inc. (TSX - XLY) (OTCQX:
CBWTF) ("
Auxly" or the
"
Company") a leading consumer packaged goods
company in the cannabis products market, is pleased to announce the
implementation of amendments to certain provisions of its
previously issued $123 million debenture (the
“
Debenture”) and investor rights agreement (the
“
Investor Rights Agreement”) dated September 25,
2019 (collectively, the “
Amendments”) with its
strategic partner, Imperial Brands PLC (“
Imperial
Brands”), 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 September 25, 2022 to September 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 (the “Interest Conversion
Election”), 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 annum and is payable annually, will
remain unchanged but will be payable on maturity of the Debenture;
and (iv) re-instated 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 Limited
(d/b/a 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 November 27, 2019, which assets
included a cannabis cultivation facility located in Chatham-Kent,
Ontario. 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.
ON BEHALF OF THE BOARD
"Hugo Alves" CEO
About Auxly Cannabis Group Inc. (TSX: XLY)
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 have 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.
Learn more at www.auxly.com and stay up to date at Twitter:
@AuxlyGroup; Instagram: @auxlygroup; Facebook:
@auxlygroup; LinkedIn: company/auxlygroup/.
Investor Relations:
For investor enquiries please contact our
Investor Relations Team: Email: IR@auxly.comPhone:
1.833.695.2414
Media Enquiries (only):
For media enquiries or to set up an interview please
contact:
Email: press@auxly.com
Auxly’s head office is located at 777 Richmond
St. W, Unit 002, Toronto, ON M6J 0C2. Imperial Brand’s head office
is located at 121 Winterstoke Road, Bristol, UK BS3 2LL.
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% 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.
Notice Regarding Forward Looking
Information:
This news release contains certain
"forward-looking information" within the meaning of applicable
Canadian securities law. Forward-looking information is frequently
characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed" and other similar words, or
information that certain events or conditions "may" or "will"
occur. This information is only a prediction. Various assumptions
were used in drawing the conclusions or making the projections
contained in the forward-looking information throughout this news
release. Forward-looking information includes, but is not limited
to: the Company's execution of its product development,
commercialization strategy and expansion plans; consumer
preferences; political change; and competition and other risks
affecting the Company in particular and the cannabis industry
generally.
A number of factors could cause actual results
to differ materially from a conclusion, forecast or projection
contained in the forward-looking information included in this
release including, but not limited to, whether: general economic,
financial market, legislative, regulatory, competitive and
political conditions in which Auxly operates will remain the same.
Additional risk factors are disclosed in the annual information
form of Auxly for the financial year ended December 31, 2020 dated
April 23, 2021.
New factors emerge from time to time, and it is
not possible for management to predict all of those factors or to
assess in advance the impact of each such factor on Auxly’s
business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking information. The forward-looking
information in this news release is based on information currently
available and what management believes are reasonable assumptions.
The purpose of forward-looking information is to provide the reader
with a description of management's expectations, and such
forward-looking information may not be appropriate for any other
purpose. Readers should not place undue reliance on forward-looking
information contained in this news release.
The forward-looking information contained in
this release is expressly qualified by the foregoing cautionary
statements and is made as of the date of this release. Except as
may be required by applicable securities laws, the Company does not
undertake any obligation to publicly update or revise any
forward-looking information to reflect events or circumstances
after the date of this release or to reflect the occurrence of
unanticipated events, whether as a result of new information,
future events or results, or otherwise.
Neither Toronto Stock Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the Toronto Stock Exchange) accepts responsibility for
the adequacy or accuracy of this release.
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