Supreme Cannabis Announces Agreement to Partially Convert and Amend Debentures
- Supreme Cannabis reduces principal amount to $36.5 million from $100.0 million
- Extends maturity date on $36.5 million of remaining Debentures to September 1, 2025 and reduces conversion price to $0.285
- Reduces annual interest payments by over 50%
TORONTO, Aug. 4, 2020 /CNW/ - The Supreme Cannabis Company, Inc. ("Supreme Cannabis" or the "Company") (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1) today announced that the requisite majority holders (the "Debenture Holders") of the Company's outstanding 6.0% senior unsecured convertible debentures (the "Debentures") issued in October 2018 have agreed to amend the terms of the Debentures.
"We are pleased to have reached an agreement that significantly reduces the Company's debt obligations and amends the Debentures in advance of their original maturity in October 2021," said Beena Goldenberg, President and CEO of Supreme Cannabis. "This transaction offers holders of the Debentures with an improved conversion rate that is aligned with current market conditions and affords our company additional flexibility and runway to accelerate revenue growth and achieve cost optimization as we continue on our path to near-term profitability."
The Company has reduced the principal amount of the Debentures by $63.5 million in exchange for the issuance of 116.6 million common shares, thereby converting debt to equity at a premium to the current share price. Holders of the Debentures resident in eligible jurisdictions will receive half of the common shares as free-trading shares, and the other half of the common shares will be subject to a four-month restricted period. Holders of the Debentures resident in other jurisdictions will be entitled to receive shares subject to restricted periods, subject to applicable securities laws.
The total principal amount of convertible Debentures outstanding will be reduced from $100.0 million to $36.5 million and the maturity date will be extended from October 19, 2021 to September 1, 2025 unless repurchased, redeemed or converted prior to maturity. The remaining Debentures will accrete at a rate of 11.06% per annum, compounding on a semi-annual basis commencing on September 1, 2020, and ending on September 1, 2023. The accreted portion of the principal is payable in cash but does not bear cash interest and is not convertible into the Company's common shares. The accreted portion of the principal will be evidenced by a separate series of debentures, which will not be listed on the Toronto Stock Exchange.
The conversion price of the remaining convertible Debentures outstanding will be reduced from $2.45 per share to $0.285 per share and annual interest payments will be reduced to $2.9 million from $6.0 million. The Company will have the right to force the conversion of the remaining principal amount of the convertible Debentures outstanding at the Conversion Price on not less than 30 days' notice if the daily volume weighted average trading price of the Company's common shares is greater than $0.45 for any 10 consecutive trading days. The principal amount of the remaining Debentures will amortize at 1.0% per month over the 24 months prior to maturity.
The amendments are expected to become effective no later than September 1, 2020. The Company will provide additional details concerning the applicable record dates and effective dates once all required approvals have been received and definitive documentation has been completed.
The amendments to the terms of the Debentures remain subject to the approval of the Toronto Stock Exchange and standard closing conditions.
About Supreme Cannabis.
The Supreme Cannabis Company, Inc., (TSX: FIRE) (OTCQX: SPRWF) (FRA: 53S1), is a global diversified portfolio of distinct cannabis companies, products and brands. Since 2014, the Company has emerged as one of the world's most premium producers of recreational, wholesale and medical cannabis products.
Supreme Cannabis' portfolio of brands caters to diverse consumer and patient experiences, with brands and products that address recreational, wellness, medical and new consumer preferences. The Company's recreational brand portfolio includes, 7ACRES, Blissco, 7ACRES Craft Collective, Sugarleaf and Khalifa Kush Enterprises Canada. Supreme Cannabis addresses national and international medical cannabis opportunities through its premium Truverra brand.
Supreme Cannabis' brands are backed by a focused suite of world-class operating assets that serve key functions in the value chain, including, scaled cultivation, value-add processing, automated packaging and product testing and R&D. Follow the Company on Instagram, Twitter, Facebook, LinkedIn and YouTube.
We simply grow better.
Forward-Looking Information.
Certain statements made in this press release, including statements concerning the proposed amendments to the Debentures and the completion and timing thereof, constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking information may relate to anticipated events or results and other statements that are not historical facts. The forward-looking information contained in this press release is made as of the date hereof, and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
SOURCE The Supreme Cannabis Company, Inc.
Madelin Daviau, Investor Relations, Email: [email protected], Phone: 416-466-6265, supreme.ca
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