Tilray inventory drops practically 20% after convertible notes supplied to assist pay down debt

Since Tilray went public in July 2018, the inventory has logged six periods the place it has closed down greater than 20%, the final being the inventory’s worst one-day efficiency ever, on Feb. 11, 2021, when shares plummeted 50% after U.S. reforms on the authorized standing of hashish slowed.

Late Thursday, the corporate mentioned it was issuing $150 million in senior convertible notes due in 2027, with underwriters Jefferies and B. of A. Securities getting a 30 -day choice to supply a further $22.5 million.

In an announcement, the corporate mentioned the providing will end in decrease curiosity funds and have “fewer covenant restrictions than our non-convertible debt choices because of the conversion choice worth,” and can be much less dilutive than a secondary providing of inventory.

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Based mostly on Thursday’s closing worth, $172.5 million represents about 73 million shares. Tilray has about 618 million shares excellent. On the finish of February, the corporate reported having $165 million in money and money equivalents, $89.4 million in long-term debt, and $223.1 million in “convertible debentures payable.”

The corporate mentioned it was utilizing a portion of the proceeds to purchase again 5% convertible senior notes that come due in 2023, and 5.25% ones due in 2024, and the remaining for basic company functions. On the identical time, Tilray mentioned that with “sure holders” of the 2023 and/or 2024 notes, it is going to purchase again “a portion of such notes on phrases to be negotiated with such holder.”

The providing comes a bit greater than a month after the corporate agreed to purchase peer Hexo
HEXO,
-12.39%.
On April 10, Tilray reported after the shut of markets it swung to a loss for the February-ending quarter and supplied to amass Hexo in an all-stock, $56 million deal anticipated to shut in June.

Tilray shares, which had closed April 10 up 5.4% earlier than any of the bulletins had been made, closed down 8% the following session. In the meantime, shares of Hexo had surged 30.2% on April 10 earlier than the bulletins, and dropped 26.8% in the course of the April 11 session, in response to FactSet information.

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At Thursday’s shut, Tilray shares had been down 12.3% yr so far, in contrast with an 8.1% acquire on the S&P 500
SPX,
+1.23%.
Hexo shares are up 15.8% for the yr.