Tilray swaps debt for equity in private transaction

Published 10/03/2025, 22:24
Tilray swaps debt for equity in private transaction

Tilray Brands, Inc. (NASDAQ:TLRY), a company known for its medicinal chemicals and botanical products currently trading at $0.65 near its 52-week low, has recently announced a private debt-for-equity exchange. On Monday, the company reported it has entered into agreements to issue up to 23 million shares of common stock in exchange for $14.6 million of its 5.20% Convertible Senior Notes due June 1, 2027.

The shares of common stock issued through these transactions are exempt from registration under the Securities Act of 1933. This exemption, under Section 3(a)(9) of the Act, allows for the exchange of securities with existing security holders without the need to register, provided that no commission or other remuneration is paid for soliciting the exchange.

The move will see the company’s outstanding debt reduced by the principal amount of the notes involved in the exchange. With total debt of $373.79 million, Tilray’s strategic decision to convert debt into equity comes as part of its broader financial management efforts. According to InvestingPro data, while the company maintains a healthy current ratio of 2.54, it has been quickly burning through cash.

Investors and market watchers may view this transaction as a step by Tilray to manage its financial leverage and streamline its capital structure. The transaction is designed to reduce the company’s debt burden without incurring additional costs associated with issuing new shares in a public offering.

This report is based on information provided in a press release statement and a recent filing with the Securities and Exchange Commission. InvestingPro analysis suggests the stock is currently undervalued, with 12 additional key insights available to subscribers through their comprehensive Pro Research Report, part of their coverage of over 1,400 US equities.

In other recent news, Tilray Brands, Inc. has reached a settlement agreement in a securities class action lawsuit involving its subsidiary, Aphria (NASDAQ:APHA), Inc. The settlement totals CAD $30 million (approximately US $21 million) and resolves claims without any admission of liability or wrongdoing. Tilray’s recent earnings report showed quarterly sales of $211 million, which matched TD Cowen’s projections but fell short of the broader market consensus of $218 million. Despite the sales shortfall, Jefferies reaffirmed a Buy rating on Tilray, maintaining a $2.50 price target, citing strategic decisions aimed at long-term profitability.

Meanwhile, TD Cowen also maintained a Buy rating but reduced its price target from $2.00 to $1.50, noting a decline in Canadian adult-use cannabis sales. Tilray’s adjusted EBITDA of $9 million did not meet the consensus estimate of $11.2 million, prompting management to anticipate a rebound in the third quarter by refocusing on previously de-prioritized categories. The company is expected to drive sequential growth and has maintained its fiscal year 2025 sales forecast at $900 million, although the EBITDA estimate was revised downward to $62 million.

Additionally, the Canadian cannabis sector faces challenges as new tariffs imposed by President Donald Trump on Canada could increase costs and disrupt supply chains, impacting companies like Tilray. These developments come amid fluctuating fortunes in the cannabis industry, which remains sensitive to regulatory and political changes. The tariffs may affect the cost of goods sold and could lead to retaliatory measures, further complicating international trade for Canadian cannabis operators.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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