Canadian cannabis producer Canopy Growth Corp. entered into an agreement with an institutional investor for a convertible debt issuance worth up to $150 million (203 million Canadian dollars) in two tranches.
Per the terms of the deal, the investor is purchasing $100 million of the convertible debentures in an initial tranche, the Smiths Falls, Ontario-based company said in a Tuesday news release.
An additional $50 million could be purchased in a second tranche if certain conditions are satisfied.
The convertible debentures, which mature Feb. 28, 2028, will bear interest at a rate of 5% per year from the date of issuance, payable in common shares
Up to 98,929,320 common shares underlie the convertible debentures.
Canopy said it intends to use net proceeds from the initial tranche for working capital and general corporate purposes.
Estimated net proceeds will be roughly $95 million and $48 million for the first and second tranches, respectively.
“Canopy Growth is executing a strategy focused on accelerating growth and profitability by transforming our Canadian operations and fast-tracking entry into the U.S. market,” Chief Financial Officer Judy Hong said in a statement.
“Building on other recent actions taken to enhance cash flow, this attractive capital immediately adds to Canopy Growth’s cash on hand and provides additional flexibility to continue advancing strategic priorities.”
Earlier this month, Canopy announced that it was planning to close its flagship cultivation facility in Smiths Falls and cutting more than a third of its workforce as part of a shift to an “asset-light model” in Canada.
Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.