HEXO Corp. Announces $25 Million Registered Direct Offering
NYSE Listed HEXO Stock Tanks as Canadian Investors Stuck Watching From Sidelines
According to the terms disclosed by HEXO, institutional investors will purchase and sell 14,970,062 common shares of HEXO stock at a discounted offering price of USD $1.67 per share. The offering price represents a roughly 15% discount to HEXO’s closing price on December 24, 2019.
HEXO stock purchase warrants will be included in the direct offering allowing investors over a five year-term to purchase an additional 7,485,032 HEXO shares at an exercise price of USD $2.45 per share. Acting as the sole placement agent for the offering will be A.G.P./Alliance Global Partners.
HEXO says it expects to use the net proceeds from the offering to fund research and development efforts to advance the company’s innovation strategies. HEXO will also use a portion of the funds for working capital and general corporate purposes.
The $25 million registered direct offering is expected to close before the end of the year. More specifically, on or around December 30, 2019, and will be subject to customary closing conditions such as required exchange approvals and the listing of the common shares on the TSX and NYSE.
HEXO’s offering is being conducted in the U.S. under the company’s amended and restated short form base shelf prospectus dated December 14, 2018. The offering will be filed with the appropriate securities regulatory authorities in Canada with a corresponding Form F-10 Registration Statement filed in the United States with the SEC under the U.S./Canada Multijurisdictional Disclosure System (MJDS).
HEXO will also file a prospectus supplement to the Base Shelf Prospectus on a non-offering basis with Canadian and American regulators. Copies of the Supplement and/or the Base Shelf Prospectus will be available to investors on SEDAR.com (Canada) and SEC.gov/EDGAR (United States).
Investors can also obtain a copy of the Supplement, Registration Statement and Base Shelf Prospectus by contacting A.G.P./Alliance Global Partners located at 590 Madison Avenue, 36th Floor, New York, NY 10022 by telephone at 212-624-2060 or emailing firstname.lastname@example.org.
HEXO Stock Price Action
With Canada’s exchanges closed for Boxing Day today, Canadian investors were forced to watch in horror as HEXO’s NYSE listed shares sold off in dramatic fashion. HEXO’s U.S. shares closed trading today down a staggering 21.94% at $1.53 per share. Today’s close was 7.78% below the price of the company’s new direct offering.
Year to date (YTD), HEXO stock has lost 54.28% on the NYSE and 44.25% on the TSX. Once Canada’s markets open tomorrow morning, Canadian investors can expect to see their TSX: HEXO holdings adjust to reflect today’s negative price action.
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Disclosure: The Cannabis Investor holds a position in HEXO.