Marijuana stock HEXO (NYSE:HEXO) will ring in the New Year with a bit more money in its coffers. The company announced Friday that it has closed a previously announced round of funding totaling $70 million Canadian, or US$53 million. These monies derive from an issue of unsecured convertible debentures. The flotation was initially announced in October, with the expected completion date "on or about" Nov. 15.

HEXO did not provide a reason the issue closed later than originally expected. It was effected through a private placement. Participating investors include the company's CEO, Sebastien St-Louis, and several directors. 

Marijuana leaf atop a hundred dollar bill.

Image source: Getty Images.

The debentures have an annual coupon of 8% and mature on Dec. 5, 2022. Holders can convert them to HEXO stock between Dec. 7, 2020, and maturity; the conversion price is $3.16 ($2.38) per share, "subject to adjustment in certain events," as HEXO puts it. The company's New York Stock Exchange-listed shares closed at $2.09 apiece on Friday.

HEXO holds the right to force conversion at any time after the aforementioned date if its stock maintains a certain average level for 15 straight trading days.

In its press release announcing the latest news, HEXO repeated a quote from its October press release on the issue: "As we continue to focus on market share, growth, and becoming a leader in our industry, increasing our cash on hand to over $70 million allows us to continue working toward these goals."

HEXO stock closed up marginally the day the news was released. 

Debentures are bonds that are not backed by collateral, only the faith the investors have in the issuer's solvency. Convertible debentures have become a bit of a mini-trend in the cannabis industry; HEXO's fellow Canadian marijuana stock Aurora Cannabis (NYSE:ACB) is also an active floater of such securities.

In a notable move, recently Aurora offered the holders of a CA$230 million ($173 million) debenture issue an unusual deal. Aurora will convert the stock at a discount, and in addition it'll pay not only accrued and unpaid interest, but also that earned between late November and the March 2020 maturity date of the securities. In other words, Aurora will continue to pay interest as if its debentures were bonds instead of newly minted stock.