Cannabis and the Capital Markets

Friends, another dive into the world of complex capital markets transactions.  This time, an analysis of Tilray’s announced $450 million convertible bond offering, noting that the annual interest payment is more than 2017 revenues (although the author sort of elides over the fact that the company will now be sitting on nearly half a billion more of cash to pay that coupon), and the 15% premium to the (then) current stock price. 

In my opinion (which, by the way, is not the opinion of Gaw Van Male, LLP or its employees), the author’s breathless concern about this offering seems to have less to do with the bond itself and more with how the market has been bidding up Tilray’s stock price. https://ftalphaville.ft.com/2018/10/08/1538971201000/Tilray-s--450m-game-of-chicken/

By: Marc Hauser