Stem Holdings Announces Convertible Debenture Amendment Terms

Rhea-AI Summary

Stem Holdings, Inc. (OTCQX: STMH) is seeking approval from debentureholders to amend the terms of C$3,687,050 convertible debentures. The proposed changes include repricing the conversion price from C$1.15 to C$0.10 and extending the maturity by three years. Additionally, if shares exceed C$0.80 for ten consecutive days, the company may force conversion of the debentures. A total of 167 common share purchase warrants are to be issued for each $1,000 held, priced at C$0.20 for 24 months. Approval from 66 2/3% of debentureholders is required, and CSE acceptance is pending.

Positive

• Repricing of convertible debentures could make them more attractive to lenders.
• Extension of maturity provides additional financial flexibility.

Negative

• Conversion price significantly reduced from C$1.15 to C$0.10, indicating valuation concerns.
• Approval from debentureholders and CSE is uncertain, introducing execution risk.

BOCA RATON, Fla., June 07, 2022 (GLOBE NEWSWIRE) -- Stem Holdings, Inc. (OTCQX: STMH CSE: STEM) (the “Company” or “Stem”), a leading vertically-integrated cannabis and hemp company with state-of-the-art cultivation, processing, extraction, retail, and distribution operations, announces that the Company is seeking the approval of the holders (the “Debentureholders”) of the C$3,687,050 principal amount of convertible debentures (“Convertible Debentures”) to reprice the Convertible Debentures. The Convertible Debentures presently mature on June 27, 2022, and September 14, 2022.

The conversion price for the Convertible Debentures are proposed to be repriced to C$0.10 per Common Share which was previously at C$1.15 ‎per Common Share. Additionally, the following amendments to the terms of the Convertible ‎Debentures are being proposed to the Debentureholders: (i) an extension to the maturity date of the Convertible Debentures for an additional three years; and (ii) an amendment to permit the Company to force the conversion of the principal amount of the ‎then outstanding Convertible Debentures and any accrued and unpaid interest thereof at the New Conversion Price ‎on not less than 30 days’ prior written notice if the closing trading price of the shares of common stock of Stem exceeds C$0.80 for a period of 10 consecutive trading days on the CSE (collectively, the ‎‎“Debenture Amendments”). ‎

The repricing of Convertible Debentures, the Debenture Amendments will be implemented pursuant to the terms of supplemental indentures entered into ‎between the Company and Olympia Trust Company dated as of the date hereof (the “Supplemental Indentures”). ‎Copies of the Supplemental Indentures will be available on the Company’s profile on SEDAR. The Debenture Amendments require the written approval of 66 2/3% of the Debentureholders.

As part of the amendment, the Company expects to issue 167 common share purchase warrants for each Debenture Unit amount of $1,000 held which will be priced at C$0.20 for a period of 24 months. In addition, the Debenture Amendment, if approved, will provide for the payment of 5% of the principal amount upon the completion of the Debenture Amendments.

The Debenture Amendments remain subject to CSE acceptance.

There is no assurance the Debenture Amendments will be approved by Debentureholders or the CSE.

About Stem Holdings, Inc.

Stem Holdings, Inc. (OTCQX:STMH CSE:STEM) is a leading cannabis and hemp branded products company in the U.S. with proprietary capabilities in sustainable cultivation, processing, extraction, and R&D, as well as retail and distribution operations aligned with state-by-state regulations. Stem's award-winning owned and partner-brands including TJ’s Gardens™ and Yerba Buena™ are the foundation of the Company’s expansion within current as well as new segments and markets, with exceptional and disruptive brands, and products that benefit well-being. Stem's expertise and scale will drive growth domestically and internationally with a continuing commitment to social responsibility and shareholder equity as a leader in the cannabis industry.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions.

Investors are cautioned that forward-looking information is not based on historical facts but instead reflects the expectations of Stem’s management concerning future results or events based on the opinions, assumptions and estimates considered reasonable by management at the date the statements are made. Although Stem believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Stem does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

No securities regulatory authority has in any way passed upon the merits of the proposed transactions described in this news release or has approved or disapproved of the contents of this news release.

regina.costa@stemholdings.com
561-948-5410

FAQ

What is Stem Holdings' proposed conversion price for debentures?

The proposed conversion price for the Convertible Debentures is C$0.10 per Common Share.

How much is Stem Holdings seeking approval for its convertible debentures?

Stem Holdings is seeking approval for C$3,687,050 principal amount of convertible debentures.

What are the new maturity dates for Stem Holdings' convertible debentures?

The maturity date is proposed to be extended by an additional three years.

What percentage of debentureholders' approval is needed for the amendments?

Approval from 66 2/3% of the debentureholders is required.

What is the potential risk for Stem Holdings regarding the debenture amendments?

There is no assurance that the Debenture Amendments will be approved by Debentureholders or the CSE.