Clock Ticking Loudly As Hexo Looks To Meet Looming Debt Deadline
Investing.com | Jan 26, 2022 00:39
For shareholders of Hexo (NASDAQ:HEXO) (TSX:HEXO), the past 12 months have been an up-and-down experience. And it could get even rockier as a deadline to reach a thus-far elusive milestone looms large at the end of this month.
That is when the cannabis grower must meet the terms of a debt financing deal it struck last May with a New Jersey-based hedge fund to raise US$360 million in secured convertible notes. That deal was struck so that Hexo could acquire Redecan, an Ontario-based cannabis cultivating and processing operation.
The acquisition thrust Hexo into the top tier of the Canadian cannabis sector. But the financing deal included the caveat that Hexo had to report positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Otherwise, it will default on the debt.
Last week, Hexo officials outlined report released earlier this year by the Marijuana Policy Project, just over $10 billion has been generated in cannabis tax revenue in the US since the weed first began being sold legally in some states in 2014.
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