Author: Matt Lamers

Imperial Brands converts CA$123 million in debt to Auxly Cannabis shares

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Imperial Brands has converted more than 123.4 million Canadian dollars ($90.6 million) in total debt to shares of Auxly Cannabis Group, formally giving the British tobacco giant a 19.8% ownership position in the Toronto-based marijuana company.

Auxly on Monday announced the completion of the conversion of CA$123.4 million of principal and accrued interest under the 4% unsecured convertible debenture that was due in September 2026.


Imperial converted CA$121.9 million of the principal amount outstanding under the debenture for 150,433,450 common shares at an exercise price of 81 Canadian cents per, according to a news release.

Roughly CA$1.56 million of accrued interest was converted into another 90,882,667 shares at a price of CA$0.17 per.

The two companies also agreed to remove the existing requirement that Imperial use Auxly as its exclusive cannabis partner.

Imperial first struck a deal with Auxly in 2019.

“We appreciate the continued support of our strategic partner Imperial who we now also welcome as our largest shareholder,” Auxly CEO Hugo Alves said in a statement.

“The conversion improves the financial position of the company by eliminating CA$123 million in debt and is expected to reduce our (pro forma) 2024 annual interest and accretion expense by approximately CA$14 million.

“This is fantastic news for Auxly; we will continue to look for ways to strengthen our balance sheet and remain focused on delivering profitable growth with quality products and incredible teamwork.”

Auxly shares trade as XLY on the Toronto Stock Exchange.

Canadian cannabis producer Organigram enters US, plans CA$25 million raise

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Organigram Holdings has dipped into its strategic investment pool to pick up a minority stake in Roxboro, North Carolina-based Open Book Extracts as part of its plan to target emerging cannabis markets in the United States and elsewhere.

Late last year, British American Tobacco injected 124.6 million Canadian dollars ($92.5 million) into Organigram, the majority of which it pledged for its strategic investment pool, named Jupiter.


“We are extremely excited to make our first Jupiter pool investment in Open Book Extracts, a company that we’ve had on our radar for quite some time,” Paolo De Luca, Organigram’s chief strategy officer, said in a statement.

Organigram’s investment for a minority position in Open Book Extracts amounts to $2 million (CA$2.7 million) in the form of a convertible note, according to a news release.

The companies said the investment will help the North Carolina business commercialize hemp-derived products in the U.S. over time.

They said the strategic rationale included:

  • Expanding Organigram’s footprint in the U.S., which is a strategic priority per the Jupiter strategy.
  • Open Book Extracts is growing quickly and is ready to tap the expanding legal hemp derivatives market.
  • Organigram expects to gain insights into the U.S. market and its consumers.
  • The two companies said they’re discussing how Open Book Extracts could serve as a research partner for efficacy testing, technology development and formulation sciences.
  • Open Book Extracts is nearing completion of its EU-GMP certification.

Separately, Organigram said it has entered into an underwriting agreement with ATB Securities, as lead underwriter, to sell 7,740,000 units at a price of CA$3.23 per unit, for gross proceeds of approximately CA$25 million.

The New Brunswick-based company expects to use the proceeds to fund growth initiatives and for general corporate purposes.

Each unit will consist of one common share and half of one share purchase warrant.

Each warrant will be exercisable to acquire one common share for a period of four years after the closing date at an exercise price of CA$3.65 per warrant share.

The offering is expected to close April 2.

Shares of Organigram trade as OGI on the Nasdaq and Toronto Stock Exchange.

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