Aphria Strengthens Balance Sheet With Negotiated Debt Reduction
May 8, 2020
Completes accretive transaction to repurchase its convertible senior notes
Net cash position increases by $127.5 million ($91 million USD)
Leamington, Ontario – May 8, 2020 – Aphria Inc. (“Aphria” or the “Company”) (TSX: APHA and NYSE: APHA), a leading global cannabis company, today announced that it entered into privately negotiated agreements with a limited number of holders outside of Canada of its convertible senior notes (“Notes”) to repurchase an aggregate of approximately $127.5 million ($90.8 million USD) principal amount of Notes for approximately 18.7 million of common shares and approximately $2.9 million ($2.1 million USD) in cash for accrued and unpaid interest.
Effectively, the Company agreed to repurchase a portion of its Notes at a 25% discount to their face value, using shares issued at a 31% premium to Aphria’s most recent closing market price (which is equivalent to a conversion price of $4.84 USD per share).
The purpose of the transaction was to reduce the Company’s debt and eliminate $6.7 million ($4.8 million USD) in annual cash interest costs.
This transaction strengthens the Company’s balance sheet by increasing its net cash position from $36.3 million CAD at its February 29, 2020 quarter-end to $163.8 million, on a pro-forma basis as at that date.
This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful. The exchanges are exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and upon an exemption from the prospectus requirement afforded by OSC Rule 72-503 as promulgated under the Securities Act (Ontario).
We Have A Good Thing Growing
Aphria Inc. is a leading global cannabis company driven by an unrelenting commitment to our people, the planet, product quality and innovation. Headquartered in Leamington, Ontario – the greenhouse capital of Canada – Aphria Inc. has been setting the standard for the low-cost production of high-quality cannabis at scale, grown in the most natural conditions possible. Focusing on untapped opportunities and backed by the latest technologies, Aphria Inc. is committed to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly researched consumer insights designed to meet the needs of every consumer segment. Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria Inc. drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion.
For more information, visit: aphriainc.com
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Katie M. Turner
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain information in this news release constitutes forward-looking statements under applicable securities laws and are expressly qualified by this cautionary statement. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the negative of these terms and similar expressions. Examples of forward-looking statements in this news release include, but are not limited to, statements with respect to the transaction being accretive to the Company’s income statement, producing annual savings and resulting in a positive effect on the Company’s earnings per share. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions, estimates and perception of trends of management and its beliefs with respect to future events, as at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the cannabis industry in Canada generally, income tax and regulatory matters, including delays in the issuance of licenses, the sale and distribution of vapes; the ability of Aphria to meet its liquidity requirements to fund ongoing operations; the ability of Aphria to implement its business strategies; competition; crop failure; safety of derivative cannabis products; currency and interest rate fluctuations.
Readers are cautioned that the foregoing list is not exhaustive and should consider as other factors discussed under the heading “Risk Factors” in Aphria’s most recent Annual Information Form and under the heading “Industry Trends and Risks” in Aphria’s Management’s Discussion and Analysis for the three and nine months ended February 29, 2020, each available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.
The forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake an obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws. Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of Toronto Stock Exchange) accepts responsibility for the adequacy or accuracy of this release.
The schedule below is an excerpt of Aphria Inc.’s financial statements prepared on a basis consistent with IFRS for the three and nine months ended on February 29, 2020 and filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. This schedule does not contain all the information in Aphria Inc.’s financial statements that is important to you. You should read the financial statements and Management’s Discussion and Analysis carefully to obtain a comprehensive understanding of Aphria Inc.’s financial statements and notes thereto under IFRS and related information.