April 12 (Reuters) – Tilray Brands said on Tuesday it had agreed to buy $193 million of Hexo’s remaining debt, in a deal that gives the cannabis producer a right to pick up a significant equity stake in its troubled rival.
This is the second such deal by Tilray. The company in March agreed to buy up to $211 million of Hexo’s debt.
Tilray said on Tuesday it would purchase the notes from debt holder HT Investments MA LLC. An amended agreement will permit Tilray to exercise conversion rights at C$0.85 per Hexo share to acquire a significant equity ownership in the future. The March deal had a conversion price of C$0.90 per Hexo share.
Last year, Hexo disclosed an ongoing concern with a senior secured convertible note and said it may not have enough cash coming in to help pay off the debt.
Hexo will pay Tilray an annual fee of $18 million for advisory services related to cultivation, operations, and production, the company said on Tuesday.
Hexo’s shares closed at C$0.72 on Monday. (Reporting by Rithika Krishna in Bengaluru; Editing by Sriraj Kalluvila)
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