Tilray Brands, Inc. Announces Successful Pricing of $150 Million Unsecured Convertible Senior Notes Offering

Los Angeles– Tilray Brands, Inc. a global cannabis-lifestyle and consumer packaged goods company, revealed today that it has successfully priced its registered offering of $150 million aggregate principal amount of 5.20% Convertible Senior Notes due 2027 (the “Notes”). The offering is expected to close on May 31, 2023, subject to customary closing conditions.

The offering, which refinances a significant portion of Tilray’s debt due in June 2024, allows the company to extend the maturity to 2027 and secure a lower fixed interest rate of 5.20%. By strengthening its balance sheet, Tilray aims to leverage the additional cash proceeds of $15 million (or $37 million if the over-allotment is fully exercised) for strategic acquisitions and debt repayment. This move brings Tilray’s current cash, cash equivalents, and marketable securities to approximately $440 million.

Tilray has also granted a 30-day option to the underwriters of the Notes offering, enabling them to purchase up to an additional $22.5 million aggregate principal amount of Notes, solely to cover over-allotments.

The aggregate net proceeds from the offering, after deducting underwriting discounts, commissions, and expenses payable by Tilray, are projected to reach approximately $144.8 million. If the underwriters exercise their option to purchase the additional Notes in full, the net proceeds are estimated to be approximately $166.6 million. A portion of the net proceeds will be utilized by Tilray to finance the concurrent repurchase of a portion of its outstanding 5.00% Convertible Senior Notes due 2023 and 5.25% Convertible Senior Notes due 2024. The remaining funds will be allocated for general corporate purposes.

The Notes, which will be senior unsecured obligations of Tilray, will mature on June 15, 2027, unless repurchased, redeemed, or converted earlier. Interest on the Notes will accrue at a rate of 5.20% per year and will be payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023.

Noteholders will have the option to convert their Notes into shares of Tilray’s common stock at any time until the second scheduled trading day immediately before June 15, 2027. The initial conversion rate is set at 376.6478 shares per $1,000 principal amount of Notes, representing an initial conversion price of approximately $2.66 per share. This conversion price carries a premium of approximately 12.5% over Tilray’s common stock’s last reported sale price of $2.36 per share on May 25, 2023. The conversion rate and conversion price are subject to adjustment based on certain events.

Tilray has included a redemption provision for the Notes, allowing the company to redeem them in whole, but not in part, at its discretion, starting from June 20, 2025. The cash redemption price will be equal to the principal amount of the Notes plus any accrued and unpaid interest, but only if the last reported sale price of Tilray’s common stock exceeds 130% of the conversion price for a specified period.