Auxly Cannabis has finalized two major financial moves to strengthen its balance sheet. The company announced it has extended its credit facility with BMO and settled all remaining debt with Imperial Brands, according to a press release.
The transactions eliminate approximately $21 million in debt and reduce Auxly's yearly debt payments by about $700,000. The company also secured access to a new $10 million revolving credit line, which it says will support continued operations and expansion. With these changes, Auxly has also removed the "going concern" warning from its financial statements.
"This marks a turning point," said Auxly CEO Hugo Alves. "We're profitable, we're growing, and now we've got the financial strength to keep building our success in Canada and beyond."
New loan terms and borrower structure
The updated credit agreement, led by BMO, totals $50.7 million and includes a $36.2 million term loan, $10 million in working capital, and $4.5 million in equipment leases. The term is set for two years with the option to extend for an additional year. The borrower is now Auxly itself, rather than its Leamington subsidiary. The facility is secured by most of the company's assets and comes with revised financial conditions designed to support long-term growth.
Imperial Brands exits debt position
Auxly also finalized its debt settlement with Imperial Brands. The agreement converts roughly $2.4 million in principal and accrued interest into about 18.3 million shares. An additional $7.4 million in interest was exchanged for warrants to purchase up to 90.9 million shares at a nominal price. The remaining $11.8 million in interest was forgiven.
These warrants are restricted: they can be exercised until the end of 2028 but only to the extent that Imperial does not exceed 19.9% ownership. With the conversion, Imperial now owns just under that threshold, and Auxly no longer owes the company any money.
"We've reduced debt, secured new working capital, and extended our terms," said CFO Travis Wong. "These improvements provide us with the financial flexibility to execute our strategy with confidence."
For more information:
Auxly
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www.auxly.com
