SMITHS FALLS, ON, Jan. 16, 2017 /CNW/ - Canopy Growth Corporation
("Canopy Growth" or the "Company") (TSX: CGC) has closed the
acquisition of the property at 1 Hershey Drive that currently
houses Canopy Growth's headquarters and the Tweed Inc. (Tweed)
production facilities.
"Increasing the scale of our cannabis production capacity is
vitally important to our operations," said Bruce Linton, Chairman and CEO of Canopy Growth.
"Even as a diversified producer using greenhouse growing and indoor
growing facilities, we know there will be a need for commercial
processing space that can be used to convert cannabis and
cannabinoids into higher margin products like edibles, as well as
complimentary products such as vape pens, or sophisticated medical
delivery options that may be allowed under future legal frameworks.
Almost tripling the footprint of our headquarters means more
potential for our business, for the economy of Smiths Falls, and for Tweed's customers."
The entire 472,000 sq. ft. footprint could almost triple current
production and processing capacity, making it by far the largest
indoor cannabis production facility in Canada and likely the world. The 42-acre site
could also house hundreds of thousands of square feet of additional
production and processing space, either indoors or in greenhouse
growing platforms.
Tweed has already transformed 168,000 sq. ft. of licensed space
into Canada's most innovative
cannabis production space. Twelve of 39 potential growing rooms are
operational with another 12 multi-level growing rooms under
construction and nearing completion. An R&D area has been used
to drive innovation with some of Canada's leading researchers and universities.
Oil extraction capabilities, a separate Dealer's Licence area, an
in-house Quality Assurance lab, and the industry's only seed
breeding area have all been added and brought online in the last
three years.
The building, property and chattels were acquired for
$6.6 million, of which $923,980 was settled with the issuance of 94,397
common shares of Canopy Growth, based on a 5-day VWAP of
$9.7882 ending the day before
closing. The remainder was paid in cash on closing. As a part
owner of the facility prior to the transaction, Bruce Linton received 70,800 of the 94,397
shares issued. These shares are subject to a 4-month lockup.
The acquisition is considered a "related party transaction"
within the meaning of Multilateral Instrument 61-101 —
Protection of Minority Security Holders in Special
Transactions ("MI 61-101") because Bruce Linton, a director and officer of Canopy
Growth is also a shareholder of the vendor Tweed Hershey Drive Inc.
MI 61-101 provides that, unless exempted, an issuer proposing to
undertake a related party transaction is required to prepare a
formal valuation of the subject matter of the proposed transaction
and to provide holders of the class of affected securities a
summary of such valuation. MI 61-101 also requires that, unless
exempted, the issuer seek approval of the transaction by a majority
of the votes cast by the "minority" holders of the affected
securities.
To ensure a fair valuation, John
Bell, an independent Director of Canopy Growth led the
purchase negotiation. The Company also obtained an
independent appraisal to support the final price negotiated.
Canopy Growth has relied on an exemption available pursuant to
MI 61-101 from the formal valuation and minority approval
requirements. MI 61-101 provides that if, at the time the
transaction is agreed to, neither the fair market value of the
subject matter of, nor the fair market value of the consideration
for the transaction, insofar as it involves interested parties,
exceeds 25% of the issuer's market capitalization (calculated in
accordance with MI 61-101), the formal valuation and minority
approval requirements do not apply to such transaction. The
acquisition of 1 Hershey Drive is exempt from the formal valuation
and minority approval requirements of MI 61-101 because neither the
fair market value of 1 Hershey Drive nor the fair market value of
the purchase price for the acquisition of 1 Hershey Drive exceeds
25% of Canopy Growth's market capitalization.
The consideration paid was provided for in the Use of Proceeds
in a recently completed bought deal, which closed on December 22, 2016. The Smiths Falls facility and significant
improvements completed, underway and planned will act as an
important asset and security that could be viewed favourably by
commercial institutional lenders to recycle the equity invested and
finance future expansion plans with non-dilutive funding at
competitive rates. The Company previously leased Tweed's production
and office space at 1 Hershey Drive, an arrangement that permitted
the Company to defer the financial burden of unused portions of the
building, which have sat vacant since 2008 when Hershey Canada Inc.
vacated the property, until the commercial opportunity supported
the need to expand the Company's operating footprint.
"The future looks bright for Tweed and Canopy Growth's
operations in this facility," continued Linton. "It might even be
time to reopen the famous Visitor Centre and start training tour
guides."
Here's to Future Growth.
About Tweed
Tweed is a globally recognized marijuana
production brand. It has built a large and loyal following by
focusing on quality products and meaningful customer relationships.
Tweed doesn't just sell marijuana, it facilitates a conversation
about a product we've all heard about but haven't met intimately
yet. It is approachable and friendly, yet reliable and trusted. As
marijuana laws liberalize around the world, Tweed will expand its
leading Canadian position around the globe. Learn more at
www.tweed.com.
About Canopy Growth Corporation
Canopy Growth is a
world-leading diversified cannabis company, offering diverse brands
and curated cannabis strain varieties in dried and oil extract
forms. Through its wholly‑owned subsidiaries, Canopy Growth
operates numerous state-of-the-art production facilities with over
half a million square feet of indoor and greenhouse production
capacity. Canopy Growth has established partnerships with leading
sector names in Canada and abroad.
For more information visit www.canopygrowth.com.
Notice Regarding Forward Looking Statements
This news release contains forward-looking statements. Often, but
not always, forward-looking statements can be identified by the use
of words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Canopy Growth Corporation, Tweed
Inc., Tweed Farms Inc. or Bedrocan Canada Inc. to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Examples of
such statements include future operational and production capacity,
the impact of enhanced infrastructure and production capabilities,
and forecasted available product selection. The forward-looking
statements included in this news release are made as of the date of
this news release and Canopy Growth Corp. does not undertake an
obligation to publicly update such forward-looking statements to
reflect new information, subsequent events or otherwise unless
required by applicable securities legislation.
Neither the TSX Exchange nor its Regulation Services Provider
(as that term is defined in policies of the TSX Exchange) accepts
responsibility for the adequacy or accuracy of this release.
SOURCE Canopy Growth Corporation