HEXO, a Quebec cannabis producer, has announced that it has finalized a strategic partnership with Tilray, a Canadian producer, which includes the purchase of its debt up to $211 million, in exchange for Tilray of a significant share of the capital of its struggling rival. .
Under HEXO’s terms, the terms of the deal are favorable to it and will allow the company to strengthen its balance sheet and accelerate its transformation into a profitable business over the next year.
The new partnership also brings together the two major cannabis market leaders in Canada and is expected to create economies of scale of up to C$50 million within two years, which will be shared equally between HEXO and Tilray.
“My main priority since joining in November has been to repair a very difficult balance sheet due to the convertible notes that were put in place previously, and today, after an exhaustive search for alternatives, we are announcing the most optimal to strengthen our balance sheet, preserve shareholder value and provide HEXO with the capital needed to execute our plan The Path Forward“said Scott Cooper, President and CEO of HEXO.
“This strategic alliance will help reduce our costs, preserve our independence and we look forward to concluding a definitive agreement shortly. »
“We believe this transaction would be a win-win for Tilray and HEXO, as it would launch a strategic partnership between two leading Canadian cannabis producers with complementary brand portfolios. For us, it paves the way for meaningful future ownership in HEXO and allows us to participate in HEXO’s share price appreciation as it continues to implement its growth initiatives.” said Irwin D. Simon, president and CEO of Tilray.
Last year, HEXO raised concerns about its convertible note issuance and said it might not have enough cash to service its debt.
