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Tilray closes $155 million investment in HEXO

HEXO Corp. has closed its previously announced transaction with Tilray Brands, Inc.

The transactions with Tilray Brands solidify the strategic partnership between HEXO and Tilray Brands and provide HEXO with a recapitalized balance sheet and the financial flexibility necessary to accelerate its transformation into a cash flow positive business within the next four quarters.

“This partnership with Tilray Brands is a game-changer for HEXO,” said Charlie Bowman, CEO of HEXO Corp. “It provides us with the opportunity to reset the organization onto a path of profitable, sustainable growth and allows us to leverage our leading market share into becoming the preferred cannabis experience for consumers. We’re now able to proactively plan for the second half of 2022 and beyond, focusing on meeting evolving consumer demand and innovative product development.”

“Refinancing our balance sheet and funding future growth has been a top priority,” said Julius Ivancsits, CFO of HEXO Corp. “Finalizing this agreement accomplishes both objectives, placing HEXO on solid financial footing and increasing shareholder value.”

“This is a unique opportunity to realize our vision of building Canada’s leading cannabis alliance,” noted Irwin D. Simon, Chairman and CEO of Tilray Brands. “The partnership will create substantial synergies and commercial benefits, as well as allowing us to capitalize on our respective strengths in product innovation, accelerating growth across global markets.”

Pursuant to a transaction agreement dated April 11, 2022 and amended pursuant to an amending agreement dated June 14, 2022 among HEXO, Tilray Brands and HT Investments MA LLC, the terms of the outstanding senior secured convertible note originally issued by HEXO to HTI were amended and restated and the Note was immediately thereafter assigned to Tilray Brands pursuant to the terms of an amended and restated assignment and assumption agreement dated June 14, 2022.

HEXO and Tilray Brands have also entered into certain commercial agreements, providing the two companies with cost saving synergies and production efficiencies. The Commercial Agreements are expected to create significant efficiencies, with a target combined cost savings of up to US$80 million within two years to be shared equally between the two companies.

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