Aurora Cannabis Inc 6-K, filed May 28, 2020
Aurora Cannabis Inc (ACB)
About this 6-K
Aurora Cannabis Inc filed this 6-K on May 28, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2020
Commission File No. 001-38691
AURORA CANNABIS INC.
(Translation of registrant’s name into English)
500 – 10355 Jasper Avenue
Edmonton, Alberta, T5J 1Y6, Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) ☐
SUBMITTED HEREWITH
| Exhibits |
Description | |
| 99.1 | Material Change Report dated May 28, 2020 | |
| 99.2 | Material Change Report dated November 22, 2019 | |
INCORPORATION BY REFERENCE
The registrant’s Material Change Report, dated May 28, 2020, included as Exhibit 99.1 to this Report on Form 6-K, and Material Change Report, dated November 22, 2019, included as Exhibit 99.2 to this Report on Form 6-K, are hereby incorporated by reference into the Registration Statement on Form F-10 (Commission File No. 333-230692) of the registrant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AURORA CANNABIS INC. |
| /s/ Glen Ibbott |
| Glen Ibbott |
| Chief Financial Officer |
Date: May 28, 2020
FORM 51–102F3
MATERIAL CHANGE REPORT
| Item 1 | Name and Address of Company |
Aurora Cannabis Inc. (“Aurora” or the “Company”)
500 - 10355 Jasper Avenue
Edmonton, Alberta T5J 1Y6
| Item 2 | Date of Material Change |
May 28, 2020
| Item 3 | News Release |
A news release with respect to the material change referred to in this report was disseminated through Canada Newswire on May 28, 2020 and subsequently filed under the profile of the Company on SEDAR at www.sedar.com.
| Item 4 | Summary of Material Change |
The Company has strategically entered the United States CBD market through the completion of the acquisition of all of the outstanding membership units of Reliva, LLC (“Reliva”) in consideration for approximately US$40 million of common shares of Aurora (“Common Shares”) and potential earn out consideration of up to an additional US$45 million payable in Common Shares, cash or a combination thereof (the “Acquisition”). Reliva is a provider of hemp-derived CBD products in the United Sates. The Acquisition represents Aurora’s entry into the United States CBD market. In connection with the completion of the Acquisition the Company also entered into a Second Amendment to the First Amended and Restated Credit Agreement dated September 4, 2019, as amended by an amendment dated March 25, 2020 (the “Credit Facility”).
| Item 5 | Full Description of Material Change |
| 5.1 | Full Description of Material Change |
Acquisition of Reliva LLC
On May 20, 2020, Aurora and Aurora USA Holdings Inc. (“Aurora USA”) entered into a purchase and sale agreement with Reliva, Miguel Martin (as seller’s representative) and the unitholders of Reliva (the “Purchase Agreement”), pursuant to which Aurora agreed to acquire all of the outstanding units of Reliva.
On May 28, 2020, Aurora completed the Acquisition which represents the Company’s initial expansion of its business into the United States CBD market. On completion of the Acquisition, Aurora issued to the Reliva unitholders an aggregate of 2,480,810 Common Shares, at a deemed price of $15.71 per Common Share. Pursuant to the Purchase Agreement, Aurora agreed to pay additional potential earn-out consideration of US$45 million in cash, Common Shares, or a combination thereof, on achievement of certain EBITDA targets by Reliva over the twelve month periods ending December 31, 2020 and December 31, 2021. Upon completion of the Acquisition, the Reliva management team will remain in place with Miguel Martin continuing as president of Aurora USA and joining the executive leadership team of Aurora.
Reliva, LLC
Reliva, based in Natick, Massachusetts, is a U.S. provider of hemp derived CBD products for consumers. Through partnerships with wholesalers and retailers, including 8 of the 20 top convenience store chains, Reliva’s products, which include CBD consumables such as drink mixes and gummies, as well as body lotions, lip balms, and other CBD products, are available in over 20,000 retail stores in the United States.
The Acquisition of Reliva is not considered a “significant acquisition” under National Instrument 51-102.
Material Terms of the Purchase Agreement
Purchase Consideration
The Purchase Agreement provides for the payment of the following consideration by Aurora to the Reliva unitholders:
| • | On closing, US$39.7 million, plus estimated closing cash, and minus certain holdbacks for post closing adjustments, which Aurora satisfied through the issuance of 2,480,810 Common Shares to the Reliva unitholders. |
| • | Earn out consideration of up to US$45 million subject to Reliva achieving certain financial performance metrics in 2020 and 2021, which may be paid in cash, Common Shares or a combination thereof, at the option of Aurora. |
| • | The number of Common Shares to be issued in any payment is calculated based on the volume weighted average price of the Common Shares for the five trading days expiring three trading days prior to the issuance of such shares. |
Registration Rights
The Company agreed to file, within one business day of the closing of the Acquisition, with applicable Canadian securities regulators and with the Securities and Exchange Commission, a prospectus supplement (the “Prospectus Supplement”) to its base shelf prospectus dated May 10, 2019 (the “Base Prospectus”), to permit the resale of the Common Shares by the former Reliva unitholders in the United States. The Company agreed to indemnify the former Reliva unitholders against certain liabilities and expenses and to contribute to payments that the Selling Shareholders may be required to make in respect thereof that are directly or indirectly based on or resulting from the resale of the Common Shares by the former Reliva unitholders.
Risks Relating to the Acquisition
The Acquisition represents Aurora’s first entrance to the United States CBD market, and as such poses a number of risks to Aurora. If any of these risks occur, Aurora’s business, results of operations or financial condition could be materially adversely affected. These risks include the following:
Aurora may be unable to realize the anticipated benefits of the Acquisition.
Aurora is acquiring Reliva to realize anticipated benefits of entering the U.S. CBD market. The anticipated benefits are necessarily based on projections and assumptions. Aurora may not realize the anticipated benefits to the extent, or in the time frame, anticipated, or at all. If Aurora does not realize the anticipated benefits, its growth strategy and future profitability could be negatively affected. Aurora’s ability to realize the benefits of the Acquisition will depend in part on the timely integration of organizations, operations, procedures, policies and technologies, as well as the harmonization of differences in the business cultures of the two companies and the retention of key personnel. The challenges involved in this integration also include preserving Reliva’s customer, channel partner, supplier and other important relationships; minimizing the diversion of management attention from ongoing business concerns; assuring that the internal controls over financial reporting of the combined company are effective; and coordinating operations, relationships and facilities in a jurisdiction that Aurora has not previously operated in. Aurora’s failure to meet the challenges involved in the integration of Reliva’s business and operations or to otherwise realize the anticipated benefits of the Acquisition may adversely affect the future results of Aurora’s U.S. business, which could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
Aurora may fail to comply with the rapidly developing regulatory environment in the United States.
Aurora will be operating in a new jurisdiction in which the regulatory environment related to the manufacture, marketing and sale of CBD products is rapidly developing and Aurora may not always succeed in complying fully with applicable regulatory requirements. Aurora’s operations in the United States will be subject to various laws, regulations and guidelines by governmental authorities relating to the manufacture, marketing and sale of CBD products derived from “industrial hemp,” including, the U.S. Food and Drug Administration (the “FDA”), the U.S. Drug Enforcement Administration (the “DEA”) and the U.S. Federal Trade Commission (the “FTC”), and similar state regulators in each of the states in which we operate or our products and marketed and sold. As used in this document, “industrial hemp” means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a tetrahydrocannabinol (“THC”) concentration of not more than 0.3% on a dry weight basis. Achievement of the Company’s business objectives in the United States is contingent, in part, upon compliance with regulatory requirements enacted by federal and state regulatory authorities related to our business and manufacturing, marketing and selling CBD products in the United States. The failure to comply with, or enforcement by, these regulatory regimes could have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
There is significant legal and regulatory uncertainty in the United States regarding the manufacturing, marketing and sale of CBD products and the interpretation or application of, or changes to, laws and regulations related to the manufacturing, marketing and sale of CBD products may have a material adverse effect on the Company’s U.S. business.
On December 20, 2018, the U.S. Agriculture Improvement Act of 2018 (the “2018 Farm Bill”) came into effect in the United States. The 2018 Farm Bill, among other things, removed what is often referred to as “industrial hemp” from the U.S. Controlled Substances Act and amended the U.S. Agricultural Marketing Act of 1946 to permit the production and sale of industrial hemp in the United States. The 2018 Farm Bill tasked the U.S. Department of Agriculture (the “USDA”) with promulgating regulations in relation to the cultivation and production of industrial hemp. The 2018 Farm Bill also directed the USDA to promulgate federal regulations that would apply to the production of industrial hemp in every state which does not put forth a state industrial hemp plan for approval by the USDA. The USDA issued an interim final rule in October 2019. Various states are in the process of applying to the USDA for approval of their industrial hemp production regulations and certain state plans have been approved by the USDA. On February 27, 2020, the USDA announced the delay of certain requirements under its interim final rule, including the requirement for labs to be registered by the DEA and the requirement that producers use a DEA-registered reverse distributor or law enforcement to dispose of non-compliant plants under certain circumstances. The 2018 Farm Bill provides that its provisions do not preempt or limit state laws that regulate the production of industrial hemp. Accordingly, some states may choose to restrict or prohibit some or all industrial hemp production or sales within the state and variances in states’ laws and regulations on industrial hemp are likely to persist. Further, each state has discretion to develop and implement its own laws and regulations governing the manufacturing, marketing, labeling, and sale of industrial hemp products, which has created a patchwork of different regulatory schemes applicable to such products in the various states.
Under the 2018 Farm Bill, the FDA has retained authority over the U.S. Federal Food, Drug, and Cosmetic Act (the “FFDCA”)-regulated products (e.g., drugs (human and animal), food (human and animal), dietary supplements and cosmetics) containing industrial hemp and ingredients derived from industrial hemp, including CBD. The FDA has taken the position that CBD is prohibited from use as an ingredient in food and dietary supplements. This position is based on the FDA’s interpretation of the drug exclusion rule in the FFDCA. The drug exclusion rules provides that a substance that has been approved and/or has been subject to substantial clinical investigations as a drug may not be used in a food or dietary supplement, unless the substance was first marketed in a food or dietary supplement prior to the initiation of substantial clinical investigations of the substance as a drug. The FDA’s position is that CBD was not marketed in a food or dietary supplement prior to the time CBD was investigated and approved as a drug (despite the historic use of hemp as consumable product) and, therefore, CBD may not be used as an ingredient in food and dietary supplements.
To date, despite public statements, the FDA has not issued regulations regarding CBD as an ingredient in food and dietary supplements or taken any enforcement action in the courts asserting a violation of the U.S. Federal Food Drug & Cosmetic Act with respect to the manufacturing, marketing and sale of CBD products. However, the FDA has issued several “Warning Letters” to companies that have made unsubstantiated claims about their CBD products being able to treat medical conditions. Some of these letters were co-signed with the FTC and cited the companies for making health and other claims about the efficacy of CBD that were not substantiated by competent and reliable scientific evidence.
Until the FDA formally adopts regulations with respect to CBD products, there is a risk that the FDA could take action against Aurora’s CBD ingestible products sold in the United States, which could include “Warning Letters,” enforcement actions arising from civil, administrative or other proceedings, fines, penalties, administrative sanctions, settlements, injunctions, product recalls and/or seizures. Moreover, states also have regulatory authority through their own food, drug and cosmetic safety laws and we are subject to similar risks in each state in which Aurora’s CBD ingestible products are manufactured, marketed, sold, including enforcement actions arising from civil, administrative or other proceedings, fines, penalties, administrative sanctions, settlements, injunctions, product recalls and/or seizures. Any of these actions by federal or state regulators against Aurora and Aurora’s CBD ingestible products in the United States would have a material adverse effect on the Company’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
The FDA and state regulatory authorities could seek to regulate topical products that contain CBD in the United States on the basis that they are being used to treat, mitigate or prevent disease or for use in affecting the structure or any function of the body. For example, the FDA has sometimes asserted that a product qualifies as a drug based solely on the presence of an ingredient widely understood to have drug effects, even in the absence of express claims about them. Consequently, even though we do not make any health or other claims about any of CBD products sold in the United States, topical or ingestible, the FDA or a state regulator could still assert that the products are intended for use as drugs. Ultimately, if the FDA or a state regulator asserts its authority over our topical products, and we cannot or elect not to comply with the onerous regulatory requirements, we could be prevented from producing, marketing and selling topical products containing CBD in the United States. Likewise, if states enforce or adopt regulatory interpretations or restrictions that limit our ability to market our topical products containing CBD in such states it could have a material adverse effect on our U.S. business and could have a material adverse effect on our business, financial condition and results of operations more generally.
Aurora may be required to obtain additional licenses, authorizations, approvals and permits in connection with our U.S. business.
Aurora may be required to obtain and maintain certain U.S. federal or state permits, licenses and approvals in the United States relating to the manufacture, marketing and sale of CBD products. Aurora may be unable to obtain or maintain any necessary licenses, permits or approvals. To the extent such permits and approvals are required and not obtained, Aurora may be prevented from operating and/or expanding our U.S. business, which would have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
Aurora is subject to a variety of regulatory limitations related to marketing and advertising of our CBD products.
In the U.S., advertising is subject to regulation by the FTC under the Federal Trade Commission Act as well as the FDA under the FFDCA, including as amended by the U.S. Dietary Supplement Health and Education Act of 1994, and by similar state and local regulation. In recent years, the FTC, the FDA and state regulators have initiated numerous investigations of food and dietary supplement products both because of their CBD content and based on allegedly deceptive or misleading marketing claims and have, on occasion, issued “Warning Letters” due to such claims. Some U.S. states also permit content, advertising and labeling laws to be enforced by state attorneys general, who may seek civil and criminal penalties, relief for consumers, class action certifications, class wide damages and recalls of products sold by Aurora. There has also been a recent increase in private litigation that seeks, among other things, relief for consumers, class action certifications, class wide damages and recalls of products. Any actions against Aurora by governmental authorities or private litigants would have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
Aurora’s participation in the industrial hemp industry could subject Aurora to unexpected enforcement action.
There is uncertainty concerning the legal status of industrial hemp and industrial hemp products containing industrial hemp-derived ingredients, including CBD. The status of products derived from the hemp plant, under both federal and state law can depend on the THC content of the plant or derivative (including whether the plant meets the statutory definition of “industrial hemp”), whether the cultivator, processor, manufacturer or product marketer engages in cannabis-related activities for research versus purely commercial purposes, as well as the form and intended use of the product. Under U.S. federal law, products containing CBD may be unlawful if derived from cannabis, including hemp, with a concentration greater than 0.3% on a dry weight basis or if derived from industrial hemp grown outside the parameters of an approved industrial hemp pilot program or industrial hemp cultivated in violation of the 2018 Farm Bill. Even after enactment of the 2018 Farm Bill, the DEA may not treat all products containing industrial hemp-derived ingredients, including CBD, as exempt from the U.S. Controlled Substances Act. If the DEA takes action against Aurora or other participants in the industrial hemp industry, this would have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
Aurora, or the industrial hemp industry and CBD products more generally, may receive unfavorable publicity or become subject to negative consumer perception.
Aurora believes the industrial hemp industry and the manufacturing, marketing and sale of CBD products are highly dependent upon broad social acceptance and consumer perception regarding the safety, efficacy and quality of the products, as well as consumer views concerning regulatory compliance. Consumer perception of Aurora’s products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention, market rumors or speculation and other publicity regarding the consumption of CBD products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to industrial hemp or CBD markets or any particular product, or consistent with earlier publicity. Aurora’s dependence upon consumer perceptions means that adverse scientific research reports, findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally. Further, adverse publicity reports or other media attention regarding the safety, efficacy and quality of industrial hemp or CBD in general, or our products specifically, could have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally. Additionally, the industrial hemp industry and CBD products may be impacted by perceived similarities or differences between industrial hemp and CBD, on the one hand, and cannabis that is subject to the U.S. Controlled Substances Act, on the other hand. Consumers, vendors, distributors, channel partners, retailers, landlords/lessors, industry partners or third-party service providers may incorrectly perceive industrial hemp and CBD products as cannabis that is subject to the U.S. Controlled Substances Act, thereby confusing them for goods that are illegal under U.S. federal law, which could adversely impact Aurora’s ability to sell CBD products in the United States or to obtain the necessary services or supplies to manufacture, market and sell CBD products in the United States. Additionally, the parties with which Aurora does business, may perceive that they are exposed to reputational risk as a result of our non-U.S. legal cannabis business activities. For example, Aurora may face challenges making U.S. dollar wire transfers or engaging any third-party supplier. While the Company has other banking relationships and believe that the services can be procured from other institutions, the Company may in the future have difficulty maintaining existing, or securing new, bank accounts or clearing services. Failure to establish or maintain business relationships in the United States would have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
Aurora may be subject to litigation in the United States related to marketing, distribution and sale of CBD products.
Aurora may be subject to litigation, claims and other legal and regulatory proceedings from time to time in the ordinary course of marketing, distribution and sale of CBD products in the United States. Several companies in the CBD industry in the United States have recently become subject to an increasing number of purported class actions lawsuits relating to their food and dietary supplement products containing CBD. Should Aurora face similar class actions filed against Aurora, plaintiffs in such class action lawsuits, as well as in other lawsuits against us, may seek very large or indeterminate amounts, including punitive damages, which may remain unknown for substantial periods of time. Any such litigation could create a negative perception of Aurora’s brands, could require Aurora to expend significant resources to defend and could result in a significant award or injunction against Aurora. Any of these results could have a material adverse effect on Aurora’s U.S. business and could have a material adverse effect on the business, financial condition and results of operations of the Company more generally.
Second Amendment to the Credit Facility
Concurrently with the completion of the Acquisition, the Company entered into a second amendment, dated May 28, 2020, to the Credit Facility. The amendment, among other things, (i) provides the Company with consent to complete the Acquisition and for Reliva to continue conducting its business in the United States, and (ii) restricts the Company from using any funds advanced under the Credit Facility for investment in Reliva. The amendment also reduces the maximum amount of the Credit Facility to the following:
Facility A Maximum Amount - $38,000,000;
Facility B Maximum Amount - $118,517,785; and
Facility C Maximum Amount - $15,294,160.
The Company has committed to repay $20 million of the outstanding amount under the Credit Facility (which includes lenders that are financial institutions that are affiliates of BMO Capital Markets Corp., CIBC World Markets Corp. and AltaCorp Capital Inc.) on or before August 31, 2020. The Company will use funds on hand, funds received from the sale of non-core assets, or proceeds from sales under the Company’s existing at the market offering under its Base Prospectus, for the payment.
| 5.2 | Disclosure for Restructuring Transactions |
Not applicable.
| Item 6 | Reliance on subsection 7.1(2) of National Instrument 51–102 |
Not applicable.
| Item 7 | Omitted Information |
Not applicable.
| Item 8 | Executive Officer |
The following senior officer of the Company is knowledgeable about the material change and this Material Change Report and may be contacted:
Michael Singer, Executive Chairman and Interim CEO Telephone: 1-855-279-4652
| Item 9 | Date of Report |
May 28, 2020
Caution Concerning Forward-Looking Statements
This material change report includes statements containing certain “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws (“forward-looking statements”). Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. Examples of such statements include statements with respect to the earn out payments payable to Reliva unitholders and the obligation to pay an additional portion of the Credit Facility. The statements are based on the opinion and estimates of management 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, including prevailing market conditions. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Form 51–102F3
MATERIAL CHANGE REPORT
| Item 1. | Name and Address of Company |
Aurora Cannabis Inc. (“Aurora” or the “Company”)
500 - 10355 Jasper Avenue
Edmonton, Alberta T5J 1Y6
| Item 2. | Date of Material Change |
November 14, 2019
| Item 3. | News Release |
A news release announcing the material change referred to in this report was disseminated by Aurora on November 14, 2019 and filed on SEDAR under Aurora’s profile on the same date.
| Item 4. | Summary of Material Change |
The Company announced that it has provided notice to all holders of the Company’s CAD$230 million 5% unsecured, convertible debentures due March 9, 2020 (the “Debentures”) of an opportunity to voluntarily convert their Debentures at a temporarily amended early conversion ratio (the “Amended Early Conversion Ratio”) during the period commencing on November 18, 2019 and ending at 5:00 p.m. (Toronto time) on November 20, 2019.
The Amended Early Conversion Ratio will be determined using an amended early conversion price, which will represent a 6% discount to the 5 day average daily volume weighted average trading price of the common shares of the Company on the Canadian and U.S. stock exchanges on a forward-looking basis, as outlined in the indenture dated March 9, 2018, as supplemented by a first supplemental indenture dated November 14, 2019, between the Company and Computershare Trust Company of Canada (the “Trustee”) governing the Debentures (the “Indenture”), which has been filed under the Company’s profile on SEDAR at www.sedar.com.
In accordance with the terms of the Indenture and concurrently with the news release dated November 14, 2019, the Company has provided the Trustee with a notice of the Amended Early Conversion Ratio.
| Item 5. | Full Description of Material Change |
| 5.1 | Full Description of Material Change |
See the attached news release.
| 5.2 | Disclosure for Restructuring Transactions |
Not applicable.
| Item 6. | Reliance on subsection 7.1(2) of National Instrument 51-102 |
Not applicable.
| Item 7. | Omitted Information |
None.
| Item 8. | Executive Officers |
The following senior officer of the Company is knowledgeable about the material change and this Material Change Report and may be contacted:
Glen Ibbott, CFO
Telephone: 1-855-279-4652
| Item 9. | Date of Report |
November 22, 2019
| November 14, 2019 | NYSE | TSX : ACB | |
Aurora Cannabis Announces Temporary Amended Early Conversion Privilege for its 2020 Convertible Debentures
Secures Commitment of Investors Holding Approximately $155 million of Debentures to Covert
TORONTO, ON – Thursday, November 14, 2019 - Aurora Cannabis Inc. (“Aurora” or the “Company”) (NYSE | TSX: ACB), the Canadian company defining the future of cannabis worldwide, announced today that it has provided notice to all holders (the “Debentureholders”) of the Company’s CAD$230 million 5% unsecured, convertible debentures due March 9, 2020 (the “Debentures”) of an opportunity to voluntarily convert their Debentures at the Amended Early Conversion Ratio (as defined herein).
All Debentureholders will be able to convert their Debentures at the Amended Early Conversion Ratio during the period commencing on November 18, 2019 and ending at 5:00 p.m. (Toronto time) on November 20, 2019 (the “Early Conversion Period”). The Amended Early Conversion Ratio will be determined using an amended early conversion price (the “Amended Early Conversion Price”), which will represent a 6% discount to 5 day volume weighted average trading price (the “VWAP”) of the common shares of the Company (the “Common Shares”) on the Canadian and U.S. stock exchanges, as outlined in the indenture dated March 9, 2018, as supplemented by a first supplemental indenture, between the Company and Computershare Trust Company of Canada (the “Trustee”) governing the Debentures (the “Indenture”), which has been filed under the Company’s profile on SEDAR at www.sedar.com. The VWAP will be measured utilizing volumes and prices on both the Canadian and U.S. stock exchanges.
Lock-Up Support
Aurora has secured the commitment of investors holding approximately $155 million face value of Debentures to convert their Debentures at the Amended Early Conversion Ratio.
Exchange Details & Benefits
A Debentureholder who elects to convert their Debentures during the Early Conversion Period will receive the following per each $1,000 principal amount of Debentures submitted:
| (i) | all Common Shares contractually due under the temporarily amended early conversion ratio equal to $1,000 principal amount of Debentures divided by the Amended Early Conversion Price per $1,000 principal amount of such Debentureholder’s Debentures (the “Amended Early Conversion Ratio”), |
| (ii) | accrued and unpaid interest from the last interest payment date, being June 30, 2019, to, but excluding, November 25, 2019, payable in cash, and (iii) future unpaid interest from November 25, 2019, to, but excluding, the date of maturity of the Debentures, being March 9, 2020, payable in cash. |
| Page | 1 |
Any Debentureholder who converts their Debentures during the Early Conversion Period by 5:00 p.m. (Toronto time) on November 18, 2019 will receive the Common Shares due under the Amended Early Conversion Ratio under an alternate settlement process as described in the Supplemented Indenture.
In accordance with the terms of the Indenture and, concurrently with this news release, the Company has provided the Trustee with a notice of the Amended Early Conversion Ratio (the “Notice”). As set out in the Notice, the Company’s Board of Directors has approved the Amended Early Conversion Ratio applicable to the Debentures during the Early Conversion Period. The Amended Early Conversion Ratio during the Early Conversion Period will not affect the rights of those Debentureholders who do not convert their Debentures prior to the expiry of the Early Conversion Period.
The Company will issue a press release on November 22, 2019 after the close of trading of the stock exchanges, confirming the Amended Early Conversion Price and the Amended Early Conversion Ratio.
Terry Booth, CEO of Aurora, stated: “The early conversion program provides Debentureholders with a meaningful incentive to convert early and we are very pleased to have the institutional support to ensure meaningful participation.”
Board Recommednation
The Company’s Executive Committee and its Board of Directors believe the Amended Early Conversion Ratio is in the best interest of the Company’s shareholders as it will provide maximum balance sheet flexibility. Aurora has significant financial flexibility under its various financial facilities to finance any remaining Debentures that mature in 2020.
Debentureholders who do not convert their Debentures during the Early Conversion Period will not be entitled to the benefit of the Amended Early Conversion Ratio and will not receive the Common Shares issuable upon conversion of the Debentures, or up front payment of interest to maturity. For clarity, Debentureholders who do not convert their Debentures during the Early Conversion Period will retain their full rights under the Indenture including conversion right and entitlement to interest, as outlined under the Indenture.
The TSX has conditionally approved the Amended Early Conversion Ratio, the Amended Early Conversion Price and the listing of the additional Common Shares issuable upon conversion of the Debentures at the Amended Early Conversion Price. Listing of these securities is subject to the Company fulfilling standard TSX listing requirements.
Debentureholders are urged to contact their brokers well in advance of the expiry of the Early Conversion Period.
Debentureholder Contact
The Company has retained Laurel Hill Advisory Group (“Laurel Hill”) as solicitation agent. Debentureholders may contact Laurel Hill toll-free in North America at 1.877.452.7148 or collect outside North America at 1.416.304.0211 or by email at assistance@laurelhill.com.
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Prior to the commencement of the Early Conversion Period, the Company reserves the right to withdraw the Notice and the Amended Early Conversion Ratio should market conditions materially deteriorate.
About Aurora
Headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 625,000 kg per annum and sales and operations in 25 countries across five continents, Aurora is one of the world’s largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in the massive scale production of high-quality consistent product. Designed to be replicable and scalable globally, our production facilities are designed to produce cannabis at significant scale, with high quality, industry-leading yields, and low-per gram production costs. Each of Aurora’s facilities is built to meet European Union Good Manufacturing Practices (“EU GMP”) standards. Certification has been granted to Aurora’s first production facility in Mountain View County, the MedReleaf Markham facility, and its wholly owned European medical cannabis distributor Aurora Deutschland. All Aurora facilities are designed and built to the EU GMP standard. In addition to the Company’s rapid organic growth and strong execution on strategic M&A, which to date includes 17 wholly owned subsidiary companies – MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia, HotHouse Consulting, MED Colombia, Agropro, Borela, ICC Labs, Whistler, Chemi Pharmaceutical, and Hempco–Aurora is distinguished by its reputation as a partner and employer of choice in the global cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: Radient Technologies Inc. (TSXV: RTI), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), CTT Pharmaceuticals (OTCC: CTTH), Alcanna Inc. (TSX: CLIQ), High Tide Inc. (CSE: HITI), EnWave Corporation (TSXV: ENW), Capcium Inc. (private), Evio Beauty Group (private), and Wagner Dimas (private).
Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and is a constituent of the S&P/TSX Composite Index.
For more information about Aurora, please visit our investor website, investor.auroramj.com
Terry Booth, CEO
Aurora Cannabis Inc.
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Further information
| For Media: | For Investors: | |
| Laura Gallant |
Rob Kelly | |
| +1.437.992.8429 |
+1.647.331.7228 | |
| laura.gallant@auroramj.com |
rob.kelly@auroramj.com |
Forward looking statements
This news release includes statements containing certain “forward-looking information” within the meaning of applicable securities law (“forward-looking statements”). Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. These forward-looking statements are only predictions. 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 assumptions of management in light of management’s experience and perception of historical trends, current conditions and expected developments at the date the statements are made, such as current and future market conditions, the current and future regulatory environment and future approvals and permits. Forward-looking statements are subject to a variety of risks, uncertainties and other factors that management believes to be relevant and reasonable in the circumstances could cause actual events, results, level of activity, performance, prospects, opportunities or achievements to differ materially from those projected in the forward-looking statements, including general business and economic conditions, changes in laws and regulations, product demand, changes in prices of required commodities, competition and other risks, uncertainties and factors set out under the heading “Risk Factors” in the Company’s annual information form dated September 10, 2019 (the “AIF”) and filed with Canadian securities regulators available on the Company’s issuer profile on SEDAR at www.sedar.com. The Company cautions that the list of risks, uncertainties and other factors described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such information. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities laws.
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