Aleafia Health (TSX: AH) this morning issued a brief update, indicating that the company is looking to repay outstanding convertible debentures. The debentures, which amount to $25.0 million in outstanding debt, are intended to be repaid by the company in the form of cash.
Originally issued in 2018 by that of Emblem Corp, whom Aleafia acquired close to two years ago, the outstanding debt represents roughly $2.0 million in annual interest expense. The debt is slated to come date on February 2 2021, and contains an interest rate of 8% per annum, along with a $2.3875 per share conversion price.
Given that a revised conversion price would cause hefty dilution for shareholders, the company appears to be taking the responsible path by paying it off in cash instead. The company posted a cash and cash equivalent position of $34.6 million as of September 30, however it still has a negative operational cash flow, leaving the potential need for future funding on the table.
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Aleafia Health last traded at $0.475 on the TSX.
Information for this briefing was found via Sedar and Aleafia Health. The author has no affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
