Tilray Brands

Canaccord Genuity Acts as Exclusive Financial Advisor to Tilray Brands on its Proposed Strategic Alliance With HEXO Corp. & Tilray’s Proposed Acquisition of HEXO’s Senior Secured Convertible Notes

Canaccord Genuity is pleased to announce that on March 3, 2022, its client, Tilray Brands, Inc. (“Tilray Brands” or the “Company”) (Nasdaq | TSX: TLRY) announced proposed agreements for a commercial and financial partnership with HEXO Corp. (“HEXO”) (Nasdaq | TSX: HEXO). Under the terms of the proposed agreements, Tilray Brands would acquire up to US$211.3 million of senior secured convertible notes (“Notes”) that were issued by HEXO and are currently held by funds affiliated with HT Investments MA LLC (“HTI”) (“Transaction”). In addition, Tilray Brands and HEXO would work together, in good faith, to evaluate cost saving synergies as well as other production efficiencies and enter into definitive agreements related to certain mutually agreed commercial transactions. Total savings, which will be shared equally between Tilray Brands and HEXO, are expected to be up to C$50 million within two years. Canaccord Genuity acted as exclusive financial advisor to Tilray Brands.

Under the terms of the proposed Transaction, and subject to negotiation of definitive documents and the satisfaction of specific conditions, Tilray Brands would pay 95% of the then outstanding principal balance for the Notes (“Purchase Price”), which includes accrued and unpaid interest on the Notes, as well as other agreed direct and indirect costs incurred by Tilray Brands in connection with the Transaction. Until closing, HTI may continue to redeem the Notes pursuant to their terms; however, in no event shall the outstanding principal balance of the Notes, when ultimately purchased by Tilray Brands, be less than US$182 million. The Purchase Price would be satisfied in cash, common shares of Tilray Brands, or a combination thereof, at Tilray Brands’ sole discretion. Among the various amendments to be made to the Notes, the initial conversion price would be C$0.90 (subject to adjustments as set forth in the certificates for the Notes and the indenture governing the Notes), which implies that, as at March 2, 2022, Tilray Brands has the right to convert into approximately 37% of HEXO Shares (on a basic basis).

Tilray Brands, Inc. is a leading, global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the U.S., Europe, Australia, and Latin America that is changing people's lives for the better – one person at a time. Tilray Brands delivers on this mission by inspiring and empowering the worldwide community to live their very best life and providing access to products that meet the needs of their mind, body, and soul, while invoking wellbeing. A pioneer in cannabis research, cultivation, and distribution, Tilray Brands’ unprecedented production platform supports over 20 brands in over 20 countries, including comprehensive cannabis offerings, hemp-based foods, and craft beverages.

HEXO is an award-winning licensed producer of innovative products for the global cannabis market. HEXO serves the Canadian recreational market with a brand portfolio including HEXO, Redecan, UP Cannabis, Namaste Original Stash, 48North, Trail Mix, Bake Sale, REUP and Latitude brands, as well as the medical market in Canada, Israel and Malta. HEXO also serves the Colorado market through its Powered by HEXO® strategy and Truss CBD USA, a joint venture with Molson-Coors.

The Canaccord Genuity team included Dan Daviau, Jamie Nagy, Mark Silvestre, Kevin Romano, Daniel Li, and Matthias Eyford from Investment Banking.