TORONTO, Canada – Aegis Brands Inc. announces that it will convert the Company’s 11.0% convertible unsecured subordinated debentures (the “Debentures”) into common shares of the Company (“Common Shares”). The conversion of the Debentures will expand Aegis’ shareholder base, will strengthen Aegis’ Balance Sheet, and will better position the Company for further growth.
Aegis has provided notice to Computershare Trust Company of Canada (the “Trustee”) on behalf of the holders of the Debentures due November 17, 2027 with a principal amount of CAD$25,045,000 that Aegis has exercised its option to convert the entire principal amount of Debentures outstanding into Common Shares.
The conversion price of CAD$0.485 (the “Forced Conversion”) is in accordance with the terms and conditions of the Debentures and the indenture between the Company and the Trustee entered into on November 15, 2022, as supplemented on December 22, 2022 (the “Indenture”). The Indenture is filed under the Company’s profile on SEDAR at www.SEDAR.com.
Pursuant to the terms of the Debentures, the Company may exercise the right of Forced Conversion if the weighted average trading price of the Common Shares on the Toronto Stock Exchange for 20 consecutive trading days, ending on and including the fifth trading day before the date of the notice to convert, exceeds 125% of the conversion price of CAD$0.485.
In connection with the Forced Conversion, the Company will issue an aggregate of 51,639,175 Common Shares. The Forced Conversion is expected to be completed on or about January 23, 2023 (the “Conversion Date”). The Common Shares issuable upon conversion of the Debentures will remain subject to a statutory hold for a period expiring January 30, 2023. As a result of the conversion, the Debentures will not become listed for trading on the Toronto Stock Exchange (the “TSX”).
The holders of the Debentures shall be entitled to receive accrued and unpaid interest, paid in cash, from and including December 31, 2022, being the most recent interest payment date to which interest will have been paid prior to the Conversion Date, to, but not including, the Conversion Date (less applicable withholding taxes, if any), being $6.63 per $1,000 principal amount of the Debentures.
The board of directors of the Company has also approved the repricing of a total of 1,045,000 stock options of the Company (the “Options”) previously issued to employees of the Company pursuant to its amended and restated stock option plan dated May 28, 2019 (the “Plan”). Stock options are a key component of senior management’s overall compensation and are intended to provide long-term rewards linked directly to the market value of the Company’s shares. The repricing decision was taken as existing strike prices did not achieve this alignment after the Company’s recent recapitalization. The Options have been repriced at $0.64 per Common Share, being the five-day volume weighted average closing price of the Common Shares.
The repricing of the Options is subject to the approval of the TSX and disinterested shareholders of the Company at the Company’s next annual general meeting of shareholders, in accordance with the terms of the Plan and the policies of the TSX. Details regarding the repricing of the Options will be further disclosed in the Company’s information circular for its next annual general meeting to be held in the second quarter of 2023.
