Canopy Growth to receive exchangeable shares, warrants and debt
in TerrAscend, increasing its direct conditional ownership in
TerrAscend from approximately 13%1 to approximately 21%
of the issued and outstanding shares on a fully-diluted basis
Canopy Growth to increase ownership in Vert Mirabel from
approximately 41% to approximately 67%
In exchange, Canopy Growth to fully retire its ownership
interest in Canopy Rivers, which currently represents approximately
27% and approximately 84% of the voting rights, provide cash
payment of $115 million and issue
3,750,000 common shares in Canopy Growth to Canopy Rivers.
SMITHS FALLS, ON, Dec. 21, 2020 /PRNewswire/ - Canopy Growth
Corporation ("Canopy Growth") (TSX: WEED) (NASDAQ: CGC) today
announced that it has entered into an arrangement agreement (the
"Arrangement Agreement") with its wholly-owned subsidiary The Tweed
Tree Lot Inc. ("Tweed NB"), Canopy Rivers Inc. ("Canopy Rivers")
(TSX: RIV) and its wholly-owned subsidiary Canopy Rivers
Corporation ("CRC") pursuant to which Canopy Growth will acquire
certain assets from CRC, as set out below, in exchange for cash,
common shares in the capital of Canopy Growth (the "Canopy Growth
Shares") and the surrender of all shares in the capital of Canopy
Rivers held by Canopy Growth by way of a plan of arrangement under
the Business Corporations Act (Ontario) (the "Arrangement").
"Canopy Rivers was established in 2017 as a strategic investment
vehicle for Canopy Growth, helping us pursue key business
opportunities including development of the Vert Mirabel greenhouse
which today is a very important component of our Canadian cannabis
operations," said David Klein, CEO,
Canopy Growth. "With our new strategy in place, it is appropriate
for us to divest our interest in Canopy Rivers to increase our
focus as a company."
Pursuant to the Arrangement, Canopy Growth will increase its
fully-diluted conditional ownership in TerrAscend Corp.
("TerrAscend") from approximately 13% to approximately 21% through
the acquisition of (i) 19,445,285 exchangeable shares in the
capital of TerrAscend; (ii) 2,225,714 common share purchase
warrants in the capital of TerrAscend with an exercise price of
$5.95 per share; (iii) 333,723 common
share purchase warrants in the capital of TerrAscend with an
exercise price of $6.49 per share;
and (iv) a $13.2 million loan
receivable owing by TerrAscend Canada Inc. to CRC. The securities
in the capital of TerrAscend are not currently convertible or
exercisable, and will not be convertible or exercisable until
federal laws in the United States
with respect to marijuana are amended.
Subject to certain rights of first refusal, Canopy Growth will
also acquire all of the common shares of Class A preferred shares
in the capital of Les Serres Vert Cannabis Inc. ("Vert Mirabel")
held by CRC, thereby increasing Canopy Growth's ownership of the
issued and outstanding common shares in the capital of Vert Mirabel
from approximately 41% to approximately 67%.
In addition, all of the obligations of Tweed NB, a Fredericton, New Brunswick based subsidiary of
Canopy Growth that was recently closed, owing to CRC pursuant to a
royalty agreement between the parties will be terminated. The
termination of the royalty agreement will provide Canopy Growth
with annual cash savings of approximately $2.9 million per year over the balance of the
24-year term of the agreement.
Canopy Growth currently owns 36,468,318 Class B multiple voting
shares ("MVS") and 15,223,938 Class A subordinate voting shares
("SVS") in the capital of Canopy Rivers, which represent
approximately a 27% ownership interest and 84% of the aggregate
voting rights of Canopy Rivers. Pursuant to the Arrangement, all of
the MVS and SVS held by Canopy Growth will be repurchased by Canopy
Rivers for cancellation on a cashless basis. Canopy Growth will not
have any equity, debt or other interest in Canopy Rivers following
completion of the Arrangement.
As additional consideration for the assets being transferred and
the termination of the royalty agreement, Canopy Growth will make a
cash payment to CRC of $115 million
and issue an aggregate of 3,750,000 Canopy Growth
Shares.
The Arrangement will be subject to approval by 66 2/3 % of the
votes cast by holders of MVS and SVS, voting separately on a class
basis, as well as a simple majority of disinterested holders of SVS
voting at a special shareholder meeting expected to be held in the
first quarter of 2021. Certain funds managed by JW Asset
Management, LLC and all of the directors and officers of Canopy
Rivers holding an aggregate of approximately 24.5% of the
issued and outstanding SVS (excluding the SVS held by Canopy
Growth) have entered into voting support agreement agreements
with Canopy Growth and Canopy Rivers pursuant to which they have
agreed, among other things, to vote their SVS in favor of the
resolution to approve the Arrangement. The Arrangement does not
require the approval of the shareholders of Canopy Growth. In
addition to shareholder approval, the Arrangement is subject to
applicable approvals by the Ontario Superior Court of Justice, the
TSX and Nasdaq and certain other regulatory and closing
conditions.
___________________________
|
1
|
On a consolidated
basis, Canopy Growth has an indirect conditional ownership interest
in TerrAscend of approximately 15% by virtue of its ownership
interest in Canopy Rivers
|
About Canopy Growth
Canopy Growth (TSX:WEED,NASDAQ:CGC ) is a world-leading
diversified cannabis and cannabinoid-based consumer product
company, driven by a passion to improve lives, end prohibition, and
strengthen communities by unleashing the full potential of
cannabis. Leveraging consumer insights and innovation, we offer
product varieties in high quality dried flower, oil, softgel
capsule, infused beverage, edible, and topical formats, as well as
vaporizer devices by Canopy Growth and industry-leader Storz &
Bickel. Our global medical brand, Spectrum Therapeutics, sells a
range of full-spectrum products using its colour-coded
classification system and is a market leader in
both Canada and Germany. Through our award-winning
Tweed and Tokyo Smoke banners, we reach our adult-use consumers and
have built a loyal following by focusing on top quality products
and meaningful customer relationships. Canopy Growth has entered
into the health and wellness consumer space in key markets
including Canada, the United
States, and Europe through BioSteel sports
nutrition, and This Works skin and sleep solutions; and has
introduced additional federally-permissible CBD products
to the United States through our First & Free and
Martha Stewart CBD brands. Canopy Growth has an established
partnership with Fortune 500 alcohol leader Constellation Brands.
For more information visit www.canopygrowth.com.
Notice Regarding Forward Looking Statements
This press release contains "forward-looking statements" and
"forward-looking information" within the meaning of applicable U.S.
and Canadian securities laws (collectively, "forward-looking
statements"), which involve certain known and unknown risks and
uncertainties. Forward-looking statements predict or describe our
future operations, business plans, business and investment
strategies and the performance of our investments. These
forward-looking statements are generally identified by their use of
such terms and phrases as "intend," "goal," "strategy," "estimate,"
"expect," "project," "projections," "forecasts," "plans," "seeks,"
"anticipates," "potential," "proposed," "will," "should," "could,"
"would," "may," "likely," "designed to," "foreseeable future,"
"believe," "scheduled" and other similar expressions. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date the statement was made.
Forward–looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
management, are inherently subject to significant business,
economic and competitive risks, financial results, results,
performance or achievements expressed or implied by those
forward–looking statements and the forward-looking statements are
not guarantees of future performance. Accordingly, there are or
will be important factors that could cause actual outcomes or
results to differ materially from those indicated in these
statements. A discussion of some of the material factors applicable
to Canopy Growth can be found under the section entitled "Risk
Factors" in Canopy Growth's Annual Report on Form 10-K for the year
ended March 31, 2020, filed with the Securities and Exchange
Commission and with applicable Canadian securities regulators, as
such factors may be further updated from time to time in its
periodic filings with the Securities and Exchange Commission and
with applicable Canadian securities regulators, which can be
accessed at www.sec.gov/edgar and www.sedar.com,
respectively. These factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary
statements that are included in this press release and in the
filings. Any forward–looking statement included in this press
release is made as of the date of this press release and, except as
required by law, Canopy Growth disclaims any obligation to update
or revise any forward-looking statement. Readers are cautioned not
to put undue reliance on any forward-looking statement.
Forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/canopy-growth-announces-plan-of-arrangement-with-canopy-rivers-301196803.html
SOURCE Canopy Growth Corporation