Plus Products seeks consents for changes to 8% convertibles

By Rebecca Melvin

New York, Feb. 3 – Plus Products Inc. announced an extraordinary meeting of holders of its 8% unsecured convertible debentures due Feb. 28 to consider extending the maturity date by three years, increasing the coupon to 12% and granting Odyssey Trust Co. a first charge security interest in all the company’s present and after acquired properties, according to a company release on Wednesday.

The meeting is set for Feb. 25 at 1 p.m. ET. Holders will also consider granting a conversion right under which holders may require the company to convert their outstanding debentures pro rata up to a maximum amount of C$6.25 million, or 25% of the principal amount to be converted at C$0.95, exercisable up to March 31, 2021, and delete holders’ right to convert any part of the principal amount into common shares at C$6.50.

The company is also asking to amend the redemption price to 103% of the principal amount, including accrued interest until Feb. 28, 2023, and thereafter at 101.5% of the principal amount plus interest.

The company proposes paying a consent fee of C$499 per C$1000 principal amount of debentures to holders consenting before Feb. 22.

In consideration of the consent fee paid, the company will issue one common share purchase warrant for every C$1.10 consent fee consideration to be received by debentures held on the record date.

The total consideration will be 454 warrants for every C$1,000 principal amount of debentures. Each whole warrant will allow the holder to purchase one subordinate voting share at C$1.10 per share at any time on or before Feb. 28, 2024.

The meeting, which will be held by phone due to Covid-19 restrictions, will also ask holders to approve delisting the debentures from the Canadian Securities Exchange and approve listing the amended debentures instead.

The company said that approving the amendments will strengthen its balance sheet and allow it to further maintain cash to fund growth.

As previously reported, the convertibles, of which C$20 million originally priced on Jan. 28, 2019, consisted of one C$1,000 convertible note and 77 common share purchase warrants.

They were convertible one year after issuance and are convertible into the greater of either 95% of the volume-weighted average price of common shares for the 30 days before the conversion date or the C$6.50 conversion price.

The notes were convertible in three tranches with 33.3% convertible one year from issuance, 33.3% convertible 18 months from issuance and the remaining 33.4% convertible at maturity.

Plus Products is a San Mateo, Calif.-based cannabis-infused edibles manufacturer.

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