Aurora Cannabis (TSXV:ACB) has announced that it has entered into an agreement with agents led by Canaccord Genuity, pursuant to which it will issue on a private placement basis up to $25 million aggregate principal amount of unsecured convertible debentures at $1,00 per principal amount.
As quoted in the press release:
The Debentures will bear interest from the date of closing at 8% per annum, payable semi-annually on June 30 and December 31 of each year. The Debentures will have a maturity date of 24 months from the Closing Date of the Offering (the “Maturity Date”). Net proceeds from the Offering will be used primarily towards the Company’s planned capacity expansion, and for general working capital purposes.
“This Offering, following our financings in August and September, will place Aurora in an extremely powerful financial position, with a current cash balance in excess of $45 million available to pursue all our strategic initiatives,” said Terry Booth, CEO. “We are now one of the best capitalized companies, with one of the strongest balance sheets in the cannabis sector. We have a large number of initiatives underway that ensure the Aurora Standard will remain the industry benchmark in terms of product quality, production capacity, technological innovation, and overall customer experience. We will continue to execute with discipline on our business strategy, with the objective of building the most valuable cannabis company in Canada.”
The Debentures will be convertible at the option of the holder into common shares of the Issuer (the “Common Shares”) at any time prior to the close of business on the Maturity Date. In addition, the Debentures will be redeemable at the option of the Issuer any time after 18 months upon the Company providing 30 days’ advance written notice, in accordance with the redemption terms. Subject to the approval of the TSX Venture Exchange (“TSXV”), the Debentures will be convertible into Common Shares at a conversion price of $2.00per common share (the “Conversion Price”). Holders converting their Debentures will receive accrued and unpaid interest thereon, up to, but not excluding, the date of conversion.
If, following the closing of the Offering and prior to the Maturity Date, the VWAP of the Common Shares on the TSXV for 10 consecutive trading days equals or exceeds $3.00, the Issuer may force conversion of all of the principal amount of the Debenture at the Conversion Price, upon giving Debenture holders 30 days advance written notice, in accordance with the conversion terms.