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Note 17 - Convertible Debentures Payable | 12 Months Ended
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May 31, 2024
Notes to Financial Statements |
Convertible Debentures [Text Block] |
17. | Convertible debentures payable
The following table sets forth the net carrying amount of the convertible debentures:
|  | May 31, |  |  | May 31, |
|  | 2024 |  |  | 2023 |
5.20% Convertible Notes ("TLRY 27") |  | $ | 129,583 |  |  | $ | 100,476 |
HTI Convertible Note |  |  | — |  |  |  | 47,834 |
5.25% Convertible Notes ("APHA 24") |  |  | 330 |  |  |  | 120,568 |
5.00% Convertible Notes ("TLRY 23") |  |  | — |  |  |  | 126,544 |
Total |  |  | 129,913 |  |  |  | 395,422 |
Deduct - current portion |  |  | 330 |  |  |  | 174,378 |
Total convertible debentures payable, non current portion |  | $ | 129,583 |  |  | $ | 221,044 |
HTI Convertible Note
|  | May 31, |  |  | May 31, |
|  | 2024 |  |  | 2023 |
4.00% Contractual debenture |  | $ | — |  |  | $ | 50,000 |
Unamortized discount |  |  | — |  |  |  | (2,166 | )
Net carrying amount |  | $ | — |  |  | $ | 47,834 |
On July 12, 2022, the Company issued a $50,000 convertible promissory note to HTI ("HTI Convertible Note"), bearing a 4% interest rate payable on a quarterly basis and having a maturity date of September 1, 2023. On August 31, 2023, the Company settled in full the HTI Convertible Note through the issuance of shares as described in Note 19 (Stockholders' equity). During the year ended May 31, 2024, the Company recognized interest expense of $500 and accretion of amortized discount interest of $2,166. In the years ended May 31, 2023 and 2022 the Company recognized interest expense of $1,778 and $nil accretion of amortized discount interest of $6,889 and $nil, respectively. TLRY 27
|  | May 31, |  |  | May 31, |
|  | 2024 |  |  | 2023 |
5.20% Contractual debenture |  | $ | 172,500 |  |  | $ | 150,000 |
Unamortized discount |  |  | (42,917 | ) |  |  | (49,524 | )
Net carrying amount |  | $ | 129,583 |  |  | $ | 100,476 |
The TLRY 27 convertible debentures were issued on May 30, 2023 and on June 9, 2023 by way of overallotment, in the principal amount of $172,500 (the “TLRY 27 Notes”). The TLRY 27 Notes bear interest at a rate of 5.20% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, and mature on June 15, 2027, unless earlier converted. The TLRY 27 Notes are Tilray’s general unsecured obligations and rank senior in right of payment to all of Tilray’s indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment with any of Tilray’s unsecured indebtedness that is not so subordinated, including TLRY 23 and APHA 24, effectively junior in right of payment to any of Tilray’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables but excluding intercompany obligations) of Tilray’s current or future subsidiaries. Noteholders will have the right to convert their TLRY 27 Notes into shares of Tilray’s common stock at their option, at any time, until the close of business on the second scheduled trading day immediately before June 15, 2027. The initial conversion rate is 376.6478 shares per $1,000 principal amount of TLRY 27 Notes, which represents a conversion price of approximately $2.66 per share. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events. The TLRY 27 Notes will be redeemable, in whole and not in part, at Tilray’s option at any time on or after June 20, 2025 at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price of Tilray’s common stock exceeds 130% of the conversion price for a specified period of time. If certain corporate events that constitute a fundamental change occur, then, subject to a limited exception, noteholders may require Tilray to repurchase their TLRY 27 Notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. In connection with the Company’s offering of the TLRY 27 Notes, the Company entered into a share lending agreement with an affiliate of Jefferies LLC (the “Share Borrower”), pursuant to which it lent to the Share Borrower 38,500,000 shares of the Company’s common stock (the "Borrowed Shares"). The Borrowed Shares were newly-issued shares, will be held as treasury shares until the expiration or early termination of the share lending agreement and may be used by purchasers of the TLRY 27 Notes to sell up to 38,500,000 shares of the Company’s common stock. The fair value of the share lending agreement has been recorded as part of the unamortized discount on the debenture. The Company expects that the selling stockholders will use their position created by such sales to establish their initial hedge with respect to their investments in the TLRY 27 Notes. The Company did not receive any proceeds from the sale of the Borrowed Shares. During the year ended May 31, 2024, the Company recognized interest expense of $8,970 and accretion of amortized discount interest of $11,516. For the same periods in the prior year there was no interest or accretion of amortized discount. As at May 31, 2024, there was $ 172,500 principal outstanding ( May 31, 2023 - $ 150,000). APHA 24
|  | May 31, |  |  | May 31, |
|  | 2024 |  |  | 2023 |
5.25% Contractual debenture |  | $ | 350,000 |  |  | $ | 350,000 |
Debt settlement |  |  | (349,670 | ) |  |  | (213,260 | )
Fair value adjustment |  |  | — |  |  |  | (16,172 | )
Net carrying amount |  | $ | 330 |  |  | $ | 120,568 |
The APHA 24 convertible debentures, were entered into in April 2019, in the principal amount of $350,000, bear interest at a rate of 5.25% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, and mature on June 1, 2024, unless earlier converted (the APHA 24 Notes"). The APHA 24 Notes are Tilray’s general unsecured obligations and rank senior in right of payment to all of Tilray’s indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment with any of Tilray’s unsecured indebtedness that is not so subordinated, including TLRY 27 effectively junior in right of payment to any of Tilray’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables but excluding intercompany obligations) of Tilray’s current or future subsidiaries. Holders of the APHA 24 Notes may convert all or any portion of such note, in multiples of $1 principal amount, at their option at any time between December 1, 2023 to the maturity date of June 1, 2024. The initial conversion which the Company may settle in cash, or common shares of Tilray, or a combination thereof, at Tilray's election, is equivalent to an initial conversion price of approximately $11.20 per common share, subject to adjustments in certain events. The Company may redeem for cash all or part of the APHA 24, at its option, if the last reported sale price of the Company’s common shares has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on and including trading day immediately preceding the date on which the Company provides notice of redemption. The redemption of the APHA 24 will be equal to 100% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date. The Company elected the fair value option under ASC 825 Financial Instruments for the APHA 24. The APHA 24 was initially recognized at fair value on the balance sheet. All subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income. The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive income (loss). During the year ended May 31, 2024, the Company exchanged the aggregate principal of $136,410 of APHA 24 Notes for cancellation by issuing 73,484,147 shares. The overall change in fair value of APHA 24 during year ended May 31, 2024 decreased by $16,172, this was comprised of $19,735 of fair value changes and a foreign exchange loss of $3,563. There was $330 principal outstanding as at May 31, 2024 compared to $136,740 as at May 31, 2023. The remaining principal outstanding balance has been paid off in cash upon maturity. During the year ended May 31, 2024, the Company recognized interest expense of $5,803 ($13,610 and $13,600 for the periods ended May 31, 2023 and May 31, 2022 respectively). TLRY 23
|  | May 31, |  |  | May 31, |
|  | 2024 |  |  | 2023 |
5.00% Contractual debenture |  | $ | — |  |  | $ | 277,856 |
Principal amount paid |  |  | — |  |  |  | (150,526 | )
Unamortized discount |  |  | — |  |  |  | (786 | )
Net carrying amount |  | $ | — |  |  | $ | 126,544 |
The TLRY 23 Notes bore interest at a rate of 5.00% per annum, payable semi-annually in arrears on April 1 and October 1 of each year. On September 12, 2023, the Company repurchased $20,000 of its TLRY 23 Notes for cancellation by issuing 7,000,000 shares and paying $610 of cash to settle both principal and accrued interest. Upon repurchase of the TLRY 23 Notes, a portion of the settlement consideration was allocated to the equity component of the instrument and was recognized as a $1,672 reduction of additional paid-in capital in the Consolidated Statements of Changes in Equity. Additionally, this repurchase resulted in a loss of $1,062 which was recorded in other non-operating (losses) gains, net as shown in Note 27 (Non-operating income (expense)). After cancellation, the outstanding principal balance of the TLRY 23 Notes was $107,331. On October 2, 2023, the Company repaid the remaining principal of the TLRY 23 Notes in cash upon maturity. During the year ended May 31, 2024, the Company recognized interest expense of $2,122 and accretion of amortized discount interest of $786. In the year ended May 31, 2023 and 2022 the Company recognized interest expense of $9,303 and $14,684 accretion of amortized discount interest of $2,817 and $4,176, respectively .

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