#Auxly Cannabis #Imperial Brands #BMO Credit

Auxly Cannabis Group's Strategic Financial Agreements

On June 19, 2025, Auxly Cannabis Group Inc., a leading firm in the cannabis consumer goods sector, announced significant agreements intended to bolster its financial standing and support long-term growth initiatives. These agreements, which include amending a credit facility with the Bank of Montreal and settling existing debts with Imperial Brands, are strategic moves to enhance the company's balance sheet.

Key Agreements Overview

1. Amended Credit Facility

Auxly has entered a non-binding agreement to amend and restate its existing credit facility led by BMO. This restructuring aims to replace Auxly Leamington as the borrower and provide a credit facility totaling $50.7 million. The facility comprises a term loan of $36.2 million, a revolving line of credit of $10 million for working capital, and pre-existing equipment leases worth $4.5 million.

The changes to the facility include an extension period of two years, with an optional one-year extension. Revised financial covenants will offer the company more flexibility in aligning its capital with growth strategies. Security for the amended facility will extend to all, or significantly all, of Auxly's assets, enhancing creditor confidence and operational stability.

2. Settlement with Imperial Brands

Alongside the amendments to the credit facility, Auxly has also established an arrangement with Imperial Brands to settle outstanding obligations under a convertible debenture. Under the terms of this settlement, the Company will convert about $1 million in principal amounts and approximately $1.39 million in accrued interest into common shares.

This conversion will eliminate over $21 million in debt from Auxly's balance sheet, significantly simplifying its capital structure and improving its interest obligations. As part of this agreement, Auxly will also issue pre-funded warrants to Imperial Brands, allowing them to acquire additional shares at a nominal price by the end of 2028. Following this transaction, Imperial Brands is expected to hold around 19.9% of the issued shares of Auxly, highlighting a transformative shift in ownership stakes that promotes long-term collaboration.

Leadership Insights

Hugo Alves, CEO of Auxly, described the refinancing initiative as a pivotal achievement that strengthens the company and provides a clearer path towards sustainable and profitable growth. This philosophy focuses on not only the present needs but also long-term innovation and stakeholder value. CFO Travis Wong noted that these agreements simplify the overall capital structure, likely removing any