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Tilt’s stock closed at 38 cents Wednesday.STRINGER/Reuters

With its share price collapsing, cannabis company Tilt Holdings Inc. is giving several of its founders a fresh batch of share purchase warrants – and they can be exercised at a much lower price than previous stock options.

Massachusetts-based Tilt, which is listed on the Canadian Securities Exchange after acquiring a B.C. company last year, has been struggling to win back investors after a string of missteps. Notably, the company paid its executives US$110-million in the past two quarters, mostly in stock options, after incurring a US$496-million impairment charge in May.

Interim chief executive Mark Scatterday has publicly acknowledged the frustration many Tilt shareholders have voiced about the compensation. In late August, management said the board was finalizing a forfeiture of the options. That cancellation was formally announced Wednesday, wiping out 60 million legacy options.

But on Wednesday, Tilt also announced that several of its founders will be receiving a total of nine million new share purchase warrants. Warrants are effectively the same as stock options, allowing the holders to buy stock at a predetermined price.

The new warrants let the founders buy shares at $1.05 over the next five years. The cancelled options permitted their holders to buy shares for $5.25.

Tilt’s stock price closed at 38 cents Wednesday, after the company issued shares in a financing last November at $5.25 right before going public. At the current level, the old options had lost almost all of their value, while the new warrants are much more appealing.

In an e-mailed statement, Tilt said the warrants were issued as part of a separation agreement with several founders, but the company did not explain why other shareholders weren’t given warrants as well. Last November, the company raised US$119-million in a share sale underwritten by Canadian investment banks that was priced at $5.25 per share. Anyone still holding shares from this offering has lost 93 per cent of their investment.

In the statement, Tilt said the forfeiture of legacy options “will drive shareholder value and improve our balance sheet for future quarterly earnings.”

As for the new warrants, Tilt said these securities and their corresponding separation agreements allow the company “to continue in its new direction with new management in place. These warrants are still priced significantly out of the money, and align everyone for long-term success.”

Tilt is one of many companies marketed to Canadian investors as a means of capitalizing on the potential of cannabis use being legalized in the United States. The company went public in December through a reverse takeover of Canada’s Santé Veritas Holdings Inc., and simultaneously bulked up by acquiring three other U.S. businesses.

In May, Tilt wrote off US$496-million worth of assets tied to this four-way deal. A week later, then-CEO Alex Coleman blamed Tilt’s auditor for the impairment. Shortly after, Tilt named Mr. Scatterday as interim CEO and announced that Mr. Coleman would serve solely as board chair. He stepped down from that role a few weeks later.

Over the summer, Tilt announced that it amended two major financial filings under orders from British Columbia’s securities watchdog. In the updated filings, Tilt attributed the writedown to overpaying for the acquired companies.

Around the same time, Tilt announced that it had signed a binding term sheet for a private placement of US$125-million convertible notes, and that the deal was expected to close in August.

The offering still has not closed, and in its e-mailed statement Wednesday, Tilt said it is “still exploring all options, including ones previously disclosed. Fortunately, as was seen by our July numbers, the business is in a better financial position than it was previously and is using this position to negotiate the best possible terms for the business and our shareholders.”

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