Tilray Inc | $TLRY Stock | Shares Sink On $400 Million Convertible Notes Offering

Tilray Inc

Tilray, Inc (NASDAQ: TLRY)


Shares in Tilray Inc tumbled in early hours of regular trading on Thursday after the company announced that it intends to offer $400 million in convertible senior notes, a move aimed at funding its acquisitions and operations.

The Canadian medical cannabis producer also plans to use a portion of the proceeds to repay a $9.1 million existing mortgage on a production plant in Nanaimo, British Columbia.

The notes, which are due in 2023, will not be offered in the US. They will only be sold to accredited institutional buyers in a private placement in Canada.

First purchasers of the notes will be granted an option to buy an additional $60 million, according to a statement released by the company after markets closed on Wednesday.

The notes will be senior unsecured obligations of the company and will accrue interest payable semiannually in arrears. They will be convertible into cash, shares of the company’s Class 2 common stock or a combination of cash and shares of company’s Class 2 common stock, at its election.

The initial conversion rate, repurchase/redemption rights, interest rate, and other terms of the notes will be determined during the pricing of the offering.

TLRY dropped 3.6% in premarket trading and continued falling after the opening bell. The shares, which closed Wednesday’s session with a gain of more than 13%, were down $8.45, or 5.28% to $148.55.

The stock has been on a positive momentum since Tilray went public on the Nasdaq Global Select Market about three months ago.

Several other leading pot producers such as Aurora Cannabis, Inc., India Globalization Capital Inc., Canopy Growth Corp, and Innovative Industrial Properties Inc. have also attempted to cash in on investor euphoria to raise money through equity and equity-linked sales.

Canopy Growth currently has two C$600 million ($466 million) convertible debt issues. Aurora Cannabis Inc. also issued 5% unsecured convertible bonds due in 2020 to raise funds for acquiring CanniMed Therapeutics earlier this year.

Tilray Inc. Company Profile

Tilray is a global pioneer in the research, cultivation, production and distribution of medical cannabis and cannabinoids. Tilray was the first licensed producer of medical cannabis in the world to have its facility Good Manufacturing Practices (GMP) certified in accordance with European Medicine Agency (EMA) standards.

The company currently serves tens of thousands of patients, physicians, pharmacies, governments, hospitals, and researchers in eight countries spanning four continents through its affiliated entities in Australia and New Zealand (Tilray Australia New Zealand Pty Ltd), Canada (Tilray Canada Ltd), Germany (Tilray Deutschland GmbH), and Portugal (Tilray Portugal Unipessoal Lda). – Tilray