Tilray Brands, Inc.(Nasdaq: TLRY) was able to lower the price it is paying for Hexo. The changes to the original deal include an additional discount on Tilray Brands’ purchase price as well as the reduction of the conversion price under the HEXO Note from C$0.85 to C$0.40 per share. The deal is expected to close on or about July 15, 2022.
Irwin D. Simon, Tilray Brands’ Chairman and CEO, said, “We believe HEXO continues to be the right strategic partner for Tilray Brands in Canada and, therefore, look forward to closing this transaction in July and working with HEXO to deliver on the promise and the potential of this partnership for our shareholders, consumers, and employees.”
Tilray Brands will buy the HEXO Note from HTI, which includes 100% of the current remaining $185 million outstanding principal balance of the HEXO Note, plus any accrued and unpaid interest thereon. Tilray will pay 89.2% of the then outstanding principal balance for the HEXO Note or roughly a 10.8% discount on the outstanding principal amount.
Charlie Bowman, HEXO’s President and CEO, added, “The strategic alliance with Tilray Brands accelerates HEXO’s operational turnaround and unlocks capital to expand our market leadership globally. The partnership is an essential next step in improving our capital structure, and we’re confident that the synergies realized will reset the industry.”
Hexo went on to also state in a separate release that it was also changing an equity purchase agreement with 2692106 Ontario Inc. and KAOS Capital Ltd. The new terms will allow the company to reduce the minimum liquidity interim covenant and closing condition from $100 million to C$70 million. In addition, the Outside Date was extended from July 1, 2022 to August 1, 2022 but not past November 30, 2022. The shareholder approval was extended from June 15, 2022 to July 15, 2022. The Amendment Share Price was cut from from $0.54 to C$0.40.
Tilray’s will have the right to appoint nominees and an observer to the company’s board of directors so that Tilray will be able to appoint two directors and one observer to the company’s board of directors.