HEXO Corp’s (NASDAQ:HEXO) (TSX:HEXO) holder of the senior secured convertible note due May 2023, HT Investments MA LLC, has irrevocably waived any rights in relation to the breach of the covenant of the company in the secured note to have positive adjusted EBITDA as defined and calculated in the secured note for the three-month period ending on January 31, 2022.
HEXO provided notice on March 11, 2022 to the noteholder of the occurrence of an event of default under the secured note since it was not in compliance with the covenant of the company in the secured note to have positive adjusted EBITDA as defined and calculated in the secured note for the three-month period ending on January 31, 2022.
The noteholder has irrevocably waived their rights due to the event of default until the earlier of May 17, 2022 or the date the proposed transaction announced on March 3, 2022 among the company, the noteholder and Tilray Brands, Inc. (NASDAQ:TLRY) under which Tilray is expected to purchase the secured note from the noteholder is terminated, provided further that the company, the noteholder and Tilray have agreed to extend the end of forbearance date in the event that they remain engaged in good faith negotiations to consummate the proposed transaction.
As a result of the event of default, the noteholder would have had the right to declare the secured note or any portion of it to become due and payable immediately for cash in an amount equal to 115% of the outstanding principal amount of the secured note.
The current outstanding principal amount of the secured note, which was issued with an initial principal amount of $360 million but which has been reduced through redemptions by the noteholder, is $208.67 million.
