Alberta, Canada-based Aurora Cannabis (NYSE: ACB) has priced its offering of $300 million convertible senior notes due 2024.
The offering will be $345.0 million if the initial purchasers’ over-allotment option is exercised in full. The notes will be issued at par value. The unsecured notes will mature on February 28, 2024, and will bear cash interest semi-annually at a rate of 5.5% per annum.
The initial conversion rate for the notes will be 138.37 common shares per $1,000 of notes, equivalent to an initial conversion price of approximately $7.23 per common share. The initial conversion rate represents a premium of approximately 10.0% to Jan. 18’s common share closing sale price on the New York Stock Exchange and is subject to adjustment in certain events.
Aurora intends to use the net proceeds to support its Canadian and international expansion initiatives, for future acquisitions and for general corporate purposes, including working capital requirements to continue the company’s accelerated growth.
Upon conversion, the notes will be settled in cash, Aurora common shares or a combination of cash and common shares, at the company’s election. Aurora will have the right to redeem the notes in certain circumstances after February 28, 2022, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.
Holders will also have the right to require Aurora to repurchase their notes upon the occurrence of certain customary events at a purchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest.
The offering is expected to close on or about January 24, 2019, subject to customary closing conditions.