TORONTO, July 26, 2023 /CNW/ - Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB: CBWTF) ("Auxly" or the "Company"), a leading consumer packaged goods company in the cannabis products market, is pleased to announce an agreement with its strategic partner, Imperial Brands PLC ("Imperial Brands") to amend certain provisions of its previously issued $123 million debenture (the "Debenture) dated September 25, 2019 as amended on July 6, 2021 (the "Amendment"). Pursuant to the Amendment, Imperial Brands and Auxly have agreed to extend the maturity date of the Debenture by 24 months from September 25, 2024 to September 25, 2026. The parties anticipate the Amendment to come into effect on August 16, 2023.
The Debentures are convertible into Common Shares at a price of $0.81 per share at any time prior to the close of business on the business day immediately preceding maturity. Auxly remains Imperial Brands' exclusive global partner for any future development, manufacture, commercialization, sale and distribution of cannabis products.
In connection with the initial investment by Imperial Brands, the parties entered into an investor rights agreement (the "Investor Rights Agreement") which provides, among other things, that for so long as Imperial Brands holds a partially diluted percentage of outstanding common shares in the capital of Auxly of not less than 15%, it is eligible to nominate one individual designated by Imperial Brands for election as a director to Auxly's Board. As Imperial Brands no longer holds the required percentage under the Investor Rights Agreement, its nominee, Murray McGowan, has resigned from Auxly's Board effective immediately.
"On behalf of myself, and the rest of the Board of Directors, I would like to thank Mr. McGowan for his valuable guidance and support over the past two years." said Hugo Alves, CEO of Auxly. "The extension of the Debenture will further our goal of prudently managing and strengthening our balance sheet and I would like to thank our partners at Imperial Brands for their ongoing commitment to our Company and I look forward to our continued relationship."
Related Party Transaction
Imperial Brands is considered a "related party" of the Company, and the Amendment constitutes a "related party transaction", as such terms are defined by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on an exemption from the shareholder approval and formal valuation requirements of MI 61-101 available on the basis of financial hardship which provides an exemption where the financial hardship criteria set out in Subsection 5.5(g) of MI 61-101 are met and where there is no other requirement, corporate or otherwise, to hold a meeting to obtain any approval of the holders of any class of affected securities.
Further details have been provided in the corresponding material change report related to the Amendment.
Resignation of CFO and Appointment of Interim CFO
Auxly announces the resignation of Mr. Brian Schmitt from his position as Chief Financial Officer ("CFO") of Auxly, effective July 26, 2023. Mr. Schmitt is leaving for an opportunity outside of the cannabis industry at a non-reporting issuer. Travis Wong, Auxly's Senior Vice President of Finance, has been appointed interim CFO of Auxly effective immediately.
Mr. Wong joined Auxly in 2017 and currently holds the position of Senior Vice President of Finance where he has been responsible for managing Auxly's day-to-day finance activities. Mr. Wong has more than 15 years of corporate finance, accounting and capital markets experience. Prior to joining Auxly, he worked as a natural resources investment banker at Nomura Securities based in London, England. He has advised on over $5bn of public and private M&A transactions and has been involved in capital raising transactions for a broad range of European corporations. Earlier in his career, he held positions at KPMG LLP in their audit and deal advisory teams. He is a Chartered Professional Accountant (CPA Canada), and holds a Bachelor of Business Administration from Simon Fraser University and an MBA from the University of Oxford.
"On behalf of myself, the Board of Directors and the entire Auxly team, I would like to thank Mr. Schmitt for his contributions and dedication to Auxly since joining in early 2019, and we wish him the best of luck with all of his future endeavors," said Hugo Alves, CEO of Auxly. "Travis has been with Auxly since it was founded in 2017 he is a talented finance professional and has a deep understanding of Auxly's business and the cannabis industry in general. We are delighted to welcome Travis to our senior executive team and have every confidence that is going to do an exceptional job for Auxly."
The Company has received all necessary approvals required to implement the warrant amendments that were previously announced on February 10, 2023, and such warrant amendments are now effective. The Company amended the terms of 27,381,500 common share purchase warrants (the "Warrants") which were issued pursuant to a bought deal financing completed on June 14,2021 to (i) reduce the exercise price to $0.045 per common share, and (ii) extend the expiry date to June 14, 2026. None of the Warrants are held, directly or indirectly, by insiders.
ON BEHALF OF THE BOARD
"Hugo Alves" CEO
About Auxly Cannabis Group Inc. (TSX: XLY)
Auxly is a leading Canadian consumer packaged goods company in the cannabis products market, headquartered in Toronto, Canada. Our focus is on developing, manufacturing and distributing branded cannabis products that delight our consumers.
Our vision is to be a leader in branded cannabis products that deliver on our consumer promise of quality, safety and efficacy.
Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/.
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: obtaining the necessary regulatory approval for the Amendment and the timing of such approvals; the anticipated benefits of the Amendment; the Company's execution of its product development and commercialization strategy; consumer preferences, political change, future legislative and regulatory developments involving cannabis and cannabis products; 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 in this release including, but not limited to, whether: the Company is able to obtain regulatory approval for the Amendment on the proposed terms and timeline; the expected benefits of the Amendment materialize in the manner expected, or at all; there is acceptance and demand for current and future Company products by consumers and provincial purchasers; and general economic, financial market, legislative, regulatory and political conditions in which the Company operates will remain the same. Additional risk factors are disclosed in the annual information form of the Company for the financial year ended December 31, 2022 dated March 31, 2023.
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 the Company'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 release is based on information currently available and what management believes are reasonable assumptions. Forward-looking information speaks only to such assumptions as of the date of this release. Readers should not place undue reliance on forward-looking information contained in this 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.
View original content to download multimedia:https://www.prnewswire.com/news-releases/imperial-brands-plc-extends-123-million-convertible-debenture-and-auxly-implements-board-and-management-changes-301886740.html
SOURCE Auxly Cannabis Group Inc.
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/July2023/26/c4767.html