$360 million financing of last MayThe below details the $360 million offering/borrowing of May 2021 (you'll recall a scrambled additonal $140 million raise in August 2021)
A couple of points of interest:
1. Hexo only got $327 million - the difference of $33 million was the fee or cost of borrowing the $360 million
2. any repayments of the bonds would be paid at 110% - so for example, if Hexo wanted to repay $100 million, they'd actually repay $110 million (of course, this wont happen - Hexo has no money anyway)
3. virtually ALL OF HEXO's assets were used as security for the loan. So as Ive posted befroe, Hexo has nothing to offer as collateral for 'normal bank financing' as suggested by quintard.
4. Hexo would have probably paid at least a 5% fee to underwrite the $140 million - another $7 million in fees
OTTAWA, May 27, 2021 (GLOBE NEWSWIRE) – HEXO Corp (HEXO or the Company) (TSX:HEXO; NYSE:HEXO) announced today that it has completed an offering (the Offering) of $360,000,000 aggregate principal amount of senior secured convertible notes (the Notes) directly to an institutional buyer and certain of its affiliates or related funds (collectively, the Purchaser).
The bonds were sold at a purchase price of $327,600,000, or approximately 91.0% of their face value. The bonds will be issued on 1. May 2023 (expiration date). Subject to certain restrictions, the Notes are convertible at the option of the Investor and, subject to certain conditions and restrictions, at the option of the Company, into marketable common shares of the Company.
Unless previously converted, all principal repayments of the bonds will be made at a price equal to 110% of the principal amount of the redeemable bonds. The Notes do not bear interest unless an event of default occurs. The Bonds will be registered bonds without coupons pursuant to a trust agreement dated the 27th. day of May 2021 between the Company and GLAS Trust Company LLC, as trustee (the Trustee), as supplemented and amended by resolutions of the Board of Directors of the Company. The Company expects to use the net proceeds from the offering primarily to fund the acquisition (the potential acquisition) of a large Canadian licensing company (the target company), if completed. The company has not yet reached a final agreement on this potential acquisition. Although negotiations between the parties are at an advanced stage, the Target is not prepared to enter into a definitive agreement for a potential acquisition until the Company has demonstrated that it has sufficient cash to satisfy the expected cash portion of the purchase price.
The Company’s obligations under the Notes are secured by a first priority lien on substantially all of the Company’s assets. Payment of the principal of, premium (if any) and interest (if any) on the Notes will be made in full and unconditionally on a security basis by the Corporation’s wholly owned subsidiary, HEXO Operations Inc. The Notes were offered and sold in the United States in a transaction pursuant to the Indenture dated the 25th day before the date of the offering. Registration Statement on Form F-10 (File No. 333-256131) (Registration Statement) filed with the SEC on May 27, 2021, including the underlying prospectus, as supplemented by a prospectus supplement dated May 27, 2021. supplement (collectively, the U.S. prospectus), is registered. In addition, the Corporation has filed a base prospectus dated May 21, 2021 (the Base Prospectus) with the securities regulatory authorities in each of the Canadian provinces and territories, as supplemented by the Prospectus Supplement dated May 27, 2021 (collectively, the Canadian Prospectus). Copies of the registration statement and the U.S. prospectus are or will be available on EDGAR at www.sec.gov and copies of the Canadian prospectus are or will be available on SEDAR at www.sedar.com.