Our Toronto office advised Alpha Blue Ocean Inc. (Alpha), a money manager based in London, UK with a strong track record of partnering with public companies and delivering meaningful value to their shareholders, with legal guidance on its investment of up to C$20m aggregate principal amount of senior unsecured convertible debentures of Wayland Group Corp. (Wayland), a public Ontario, Canada-based cannabis company.
European High Growth Opportunities Securitization Fund (EHGO), a Luxembourg registered securitization fund managed by Alpha, committed to subscribe for up to C$20m aggregate principal amount of the Wayland debentures on or before February 20, 2020, pursuant to a structured finance transaction that was customized to meet both EHGO’s investment objectives and Wayland’s financing needs. The debentures are non-interest bearing and mature on the 12-month anniversary of their issuance date. EHGO may convert the debentures at any time prior to their maturity date, and the debentures are automatically converted upon their maturity date, into common shares in the capital of Wayland. The debentures may also be redeemed in cash, upon the demand of EHGO or the request of Wayland, in limited circumstances. The debentures are issuable in up to five tranches of C$4m each, and the agreement provides for built-in flexibility to accelerate or suspend the scheduled tranche issuances.
In addition to the debentures, on the first tranche issuance which closed on February 20, 2019, Wayland issued to EHGO 1,851,851 warrants exercisable until February 20, 2022 and 740,740 warrants exercisable until February 20, 2024, for one common share in the capital of Wayland per warrant at an exercise price of C$1.35 per share. On each subsequent tranche closing, EHGO will also receive additional warrants exercisable until the fifth anniversary of their issuance date to purchase up to C$1m of Wayland common shares.
Norton Rose Fulbright also advised EHGO on a securities lending arrangement with one of Wayland’s existing shareholders, pursuant to which EHGO is able to borrow such number of existing Wayland common shares as is at least equal to the number of Wayland common shares into which the debentures held by it are convertible and to return the borrowed shares using new Wayland common shares issued to it upon conversion of such debentures. Such arrangement was entered into in furtherance of EHGO’s investment objectives.
The team was led by Walied Soliman, and included members of the firm’s securities and corporate finance practice Evelyn Li, Trevor Zeyl, and Cynthia Sargeant.