Shares of Tilray Brands (NASDAQ:TLRY) fell 19% in yesterday’s extended trading after the company disclosed a $150 million offering of convertible senior notes due 2027. Despite the company’s efforts to reassure investors that the offering would be less dilutive than a common stock issue, the share price declined.
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The cannabis producer also granted the underwriters a 30-day period to purchase up to an additional $22.5 million worth of notes. The offering is expected to close on May 31, 2023.
Tilray said that it intends to use about $144.8 million of the net proceeds to repurchase a portion of its existing debt, including outstanding 5% convertible senior notes due 2023 and 5.25% convertible senior notes due 2024.
It is worth mentioning that TLRY held cash and cash equivalents of $408.3 million as of February 28, up from $279.2 million in the last year. During the fiscal Q3 earnings call on April 10, the company disclosed that it expects free cash flow to be positive across all business segments in Fiscal 2023.
Is TLRY a Good Stock to Buy?
Despite regulatory pressure in Canada and a delay in U.S. federal legalization, Tilray has been able to report positive adjusted EBITDA for 16 consecutive quarters. The growing presence of TLRY in the U.S. and Europe might boost its performance going forward.
Wall Street’s Moderate Buy consensus rating for Tilray is based on two Buys and three Holds. The average TLRY stock price target of $3.50 implies nearly 48% upside potential. Shares are down 14.3% year-to-date.
