Cannabis company Tilray Brands signs definitive agreement in Hexo deal

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Cannabis company Tilray Brands Inc. has signed a definitive agreement in its proposed plan with rival Hexo Corp. first announced last month.

Under the deal, Tilray will acquire the US$193 million in outstanding senior secured convertible notes that were issued by Hexo and held by funds affiliated with HT Investments MA LLC.

The notes will be amended to include conversion rights at a price of 85 cents Canadian per Hexo share, a price that implies Tilray Brands would have the right to convert the notes into a 35 per cent stake in Hexo.

Hexo will not receive any proceeds as a result of Tilray Brands' purchase of the notes from HTI.

When the proposed plan was announced on March 3, Tilray said it would acquire up to US$211 million in senior secured convertible notes that would be amended to include conversion rights at a price of 90 cents Canadian per Hexo share.

The deal will also see Tilray and Hexo form a joint venture to provide shared services to both companies. They estimate total savings, which will be shared equally, are expected to be up to C$50 million within two years.