Stalwart Canadian producer Aleafia Health Inc. (TSX: AH) (TSX: AH.DB) (OTCQX: ALEAF) is continuing to push back its obligations on a significant debt that comes due in a few months.
On Tuesday, the firm said the forbearance agreement with holders of its convertible debt has been extended until April 11. Around 62 per cent of the $37.4 million outstanding is currently due.
The agreement will automatically renew for two-week periods going forwards unless notice is given.
“The parties continue to work expeditiously and in good faith to negotiate a potential transaction to amend the terms associated with the convertible debt,” Aleafia says in a statement. “While there can be no assurances regarding any outcome, the Company believes progress is being made towards a solution that is beneficial to its stakeholders.”
Previously, the firm failed to pay a scheduled interest payment of $1.6 million on the debentures due Dec. 31.
Read more: Annual sales fall 6% to $43.1M for Aleafia
In June 2019, Aleafia issued over 40,000 convertible debentures for gross proceeds of $40 million. Each unit consists of one $1,000 principal amount of unsecured convertible debenture of the firm and 680 common share purchase warrants.
That debt has an annual interest rate of 8.5 per cent, payable semi-annually, and matures June 27.
According to the company’s fourth quarter and fiscal 2021 financial statements, the remaining principal balance to be paid upon maturity is $37.4 million.
Restating the “growing concern” status of its finances, Aleafia says it’s experienced recurring losses, has a cumulative deficit of $480.8 million, and a working capital deficiency of $21.4 million.
As of Dec. 31, the firm had $11.3 million in cash.
Company stock traded at $0.12 Tuesday on the Toronto Stock Exchange.
nick@mugglehead.com
