UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A
PROXY
STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.)
Filed by the Registrant ☒
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Sec.240.14a-12
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TILRAY, INC.
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(Name of Registrant as Specified
in Its Charter)
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(Name of Person(s) Filing Proxy
Statement, if Other Than the Registrant)
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This Schedule 14A filing consists of the following press
release (the “Press Release”) from Tilray, Inc., a Delaware
corporation (“Tilray”), relating to Tilray’s Special Meeting of
Stockholders originally scheduled to be held on July 29, 2021, and
subsequently adjourned to August 19, 2021. This Schedule 14A should be read in
conjunction with the proxy statement filed with the U.S. Securities
and Exchange Commission on or about June 25, 2021.
The Press Release was first used or made available on August
17, 2021.
TILRAY ACQUIRES MAJORITY POSITION IN AMENDED MEDMEN CONVERTIBLE
NOTES
Investment Provides Tilray a Potential Accelerated Path into U.S.
Cannabis Market Upon Federal Legalization
Amendment and
Extension of Convertible Notes Enables MedMen to Reshape Balance
Sheet and Further Accelerate its Growth Trajectory
Tilray and
MedMen CEOs to Host a Conference Call and Webcast at 5:00 PM
Eastern Time
NEW YORK and LOS ANGELES – August
17, 2021 — Tilray,
Inc. (“Tilray”)
(Nasdaq l TSX: TLRY), a leading global cannabis-lifestyle and
consumer packaged goods company, and MedMen Enterprises Inc.
(“MedMen”) (CSE: MMEN)
(OTCQX: MMNFF), a premier American cannabis retailer, today announced that Tilray has
acquired the majority of
the outstanding senior secured convertible notes (the
“Notes”)
of MedMen that were originally held by certain funds affiliated
with Gotham Green Partners, LLC and other funds (collectively,
“GGP”).
The acquisition provides Tilray with a path, subject to
necessary regulatory approvals, to obtain a significant equity
position in MedMen through conversion of the Notes and exercise of
associated warrants (the “Warrants”) following U.S. cannabis legalization
(or Tilray’s waiver of such condition).In connection with the sale
of the Notes, MedMen and GGP amended the restrictive covenants and
extended the debt maturity to 2028 to provide MedMen the
flexibility to execute on its growth priorities and explore
additional strategic opportunities. In addition, MedMen separately
announced today a significant equity investment from a private
placement of MedMen Shares (as defined below) and warrants to a
group of investors.
MedMed is a leading cannabis retail
brand in the U.S., holding 21 licenses and 25 retail locations
across key urban centers, including the Bay Area, Los Angeles,
Boston, Chicago, and Las Vegas, and a significant position in
California, the world’s largest market. Prior to U.S. federal
legalization of cannabis, and subject to compliance with applicable
laws and stock exchange rules, MedMen will actively explore
opportunities to expand MedMen’s footprint across international
markets.
Irwin D. Simon, Tilray’s Chairman and
CEO, said, “Backed by accelerating trends towards
legalization globally, we are focused on building the world’s
leading cannabis-focused consumer branded company with a goal of $4
billion of revenue by the end of our fiscal 2024. The investment we
are announcing in MedMen securities today, one of the most
recognized brands in the $80 billion U.S. cannabis market, is a
critical step towards delivering on our objective as we work to
enable Tilray to lead the U.S. market when legalization
allows.”
Mr. Simon continued, “Our ability to maximize
value from this game-changing transaction rests on the support of
our shareholders at the upcoming Special Meeting to vote on our
Authorized Shares Proposal, which will increase the number of
authorized shares Tilray has available to not only complete this
transaction, but also to execute on other strategic
acquisitions. I cannot stress enough the importance of making
our shareholders’ voices count to enable us to maximize our
potential to create substantial value for our shareholders in the
near-term and in the future.”
Tom Lynch, MedMen’s Chairman and CEO,
added, “Our management team has spent the past 18 months
executing a disciplined turnaround plan. We are grateful to our
stakeholders for their patience and support as we worked to fix the
business and rebuild trust and credibility. We believe that
patience has paid off, as these efforts have succeeded in
attracting partners who share our vision for building the world’s
most powerful cannabis retail brand. In addition, the proceeds from
the private placement and amendments to the Notes, gives MedMen the
cash and flexibility to match our revenue trajectory to our
operational expertise and internationally renowned brand. MedMen
2.0 is here, and we are thrilled to embark on the next stage of our
journey.”
Transaction Overview
Under the terms of the transaction, a
newly formed limited partnership (the “SPV”)
established by Tilray and other strategic investors acquired an
aggregate principal amount of approximately U.S.$165.8 million of
the Notes and the Warrants, all of which were originally issued by
MedMen and held by GGP, representing 75% of the outstanding Notes
and 65% of the outstanding Warrants. Tilray’s interest in the SPV
represents rights to 68% of the Notes and related Warrants held by
the SPV, which are convertible into, and exercisable for,
approximately 21% of the outstanding Class B subordinate voting
shares of MedMen (the “MedMen
Shares”) upon
closing of the transaction. Tilray’s ability to convert the
Notes and exercise the Warrants is dependent
upon U.S.
federal legalization of cannabis or Tilray’s waiver of such
requirement as well as any additional regulatory
approvals. As
consideration for Tilray’s interest in the Notes and Warrants, and
subject to Tilray receiving the stockholder approval necessary to
increase the number of shares of its authorized capital stock,
Tilray will issue approximately 9.0 million shares of its common
stock to GGP; provided,
however, that if
Tilray has not received the stockholder approval by December 1,
2021, GGP may elect to receive cash rather than Tilray shares.
Tilray’s previously scheduled Special Meeting of Stockholders will
be held this Thursday, August 19, 2021. MedMen did not receive any proceeds
from the transfer of the Notes.
In connection with the transactions,
the parties agreed to amend and restate (the “Amendment and
Restatement”) the
facility governing the Notes (the “Facility”) to,
among other things, extend the maturity date to August 16, 2028,
eliminate any cash interest obligations and instead provide for
pay-in-kind interest, eliminate certain repricing provisions, and
eliminate and revise certain restrictive covenants. Accrued
pay-in-kind interest on the Notes will be convertible at price
equal to the trailing 30-day volume weighted average price of the
MedMen Shares, as and when such pay-in-kind interest becomes due
and payable, subject to the maximum permitted discount under the
rules of the Canadian Securities Exchange. The Notes held by
holders on the date of the amendment and restatement may not be
prepaid by MedMen until legalization of the general cultivation,
distribution and possession of marijuana at the federal level in
the United States or the removal of the regulation of such
activities from the U.S. federal laws. Any such prepayment shall
require at least six months’ notice. If Notes are transferred
following the date of the amendment and restatement (the
“effective
date”), such Notes
may not be prepaid until the earlier of the third anniversary of
the effective date or 90 days following the transfer of such Notes
to such holders. Transfers of Notes will be permitted subject only
to notice and compliance with securities laws. The Notes will also
provide the holders of the Notes with a top-up right to acquire
additional MedMen Shares and a pre-emptive right with respect to
future financings of the Company, subject to certain exceptions,
upon the issuance by MedMen of certain equity or equity-linked
securities. No changes have been made to the conversion and
exercise prices of the Notes or related Warrants.
This news release shall not
constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of the securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful. The
securities being offered have not been registered under the United
States Securities Act of 1933, as amended (the “U.S. Securities
Act”), and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements of the U.S. Securities Act, and applicable state
securities laws. The MedMen has agreed to provide customary
registration rights to holders of the Notes with respect to the
MedMen Shares underlying the Notes and related Warrants and the
investors in the private placement.
For further transaction details,
investors and security holders may obtain a copy of the
presentation associated with the transaction on the MedMen website
at https://investors.medmen.com and on the investor page of
Tilray’s website at https://ir.tilray.com.
Conference
Call
Tilray and MedMen will host a
conference call to discuss today’s announcement at 5:00 p.m. ET.
Investors interested in participating in the live call can dial
(877) 458-4121 from Canada and the U.S. or (323) 794-2597 from
international locations.
There will also be a
simultaneous, live webcast available on the Investors section of
the Company’s website at www.tilray.com. The webcast will also be
archived after the call concludes.
Advisors
Moelis & Company LLC is
serving as exclusive financial advisor to MedMen. Weil, Gotshal
& Manges LLP, Cassels Brock & Blackwell LLP and Manatt,
Phelps & Phillips, LLP are serving as legal counsel to MedMen.
DLA Piper LLP (U.S.) and DLA Piper (Canada) LLP acted as legal
counsel to Tilray. Davies Ward Phillips & Vineberg LLP acted
for Serruya Private Equity. Canaccord Genuity Corp. is serving as
exclusive financial advisor to Gotham Green. KTBS Law, LLP,
Honigman, LLP, Stubbs Alderton & Markiles, LLP and SkyLaw
Professional Corporation acted as legal counsel to Gotham
Green.
About Tilray,
Inc.
Tilray, Inc. is a leading global
cannabis-lifestyle and consumer packaged goods company with
operations in Canada, the United States, Europe, Australia, and
Latin America that is changing people’s lives for the better – one
person at a time – by inspiring and empowering the worldwide
community to live their very best life by providing them with
products that meet the needs of their mind, body, and soul and
invoke a sense of wellbeing. Tilray’s mission is to be the trusted
partner for its patients and consumers by providing them with a
cultivated experience and health and wellbeing through
high-quality, differentiated brands and innovative products.
A pioneer in cannabis research, cultivation, and distribution,
Tilray’s unprecedented production platform supports over 20 brands
in over 20 countries, including comprehensive cannabis offerings,
hemp-based foods, and alcoholic beverages.
For more information on how we
open a world of wellbeing, visit www.Tilray.com.
About
MedMen
MedMen is a premier American
cannabis retailer with an operational footprint in California,
Nevada, Illinois, Arizona, Massachusetts, and Florida. MedMen
offers a robust selection of high-quality products, including
MedMen-owned brands MedMen Red and LuxLyte through its premium
retail stores, proprietary delivery service, as well as curbside
and in-store pick up. MedMen Buds, an industry-first loyalty
program, provides exclusive access to promotions, product drops and
content. MedMen believes that a world where cannabis is legal and
regulated is safer, healthier, and happier. Learn more about MedMen
at www.medmen.com.
Early Warning
Reporting Matters
Pursuant to the Transaction,
Tilray, located at 655 Madison Ave., New York, New York 10065,
acquired beneficial ownership or control or direction over Notes in
the principal amount of U.S.$165.8 million and Warrants to acquire
approximately 135.3 million MedMen Shares held by the SPV. If the
Notes were converted and the Warrants exercised immediately
following the completion of the Transaction, the SPV would control
940.5 million MedMen Shares and Tilray would hold beneficial
ownership of approximately 639.5 million MedMen Shares. In
addition to Tilray’s interests in the Notes and Warrants, as a
holder of Notes, the SPV (in which Tilray has a 68% beneficial
ownership) has certain top-up rights from MedMen, which will enable
the SPV to subscribe for additional MedMen Shares to maintain its
proportionate ownership of MedMen, subject to certain issuances
excluded from the top-up rights, and will enable Tilray to maintain
its proportionate beneficial interest in MedMen. The SPV’s
acquisition of the purchased Notes and Warrants, and Tilray’s
beneficial ownership of such securities, requires the disclosure
included in this press release under the heading “Early-Warning
Reporting Matters” and the filing of an early warning report (the
“Early Warning Report”) for
purposes of National Instrument 62-103 - The Early Warning System and Related
Take-Over Bid and Insider Reporting Issues. A copy of
the Early Warning Report will be filed under MedMen’s profile on
www.SEDAR.com.
Tilray’s interests in the Notes
and Warrants were acquired by Tilray for investment purposes and
its strategic rationale described in this press release. In
accordance with applicable securities laws and subject to
applicable stock exchange requirements, Tilray may from time to
time and at any time, directly or otherwise, increase or decrease
its ownership, control or direction of MedMen Shares and Tilray and
the SPV each reserves the right to acquire or dispose of any or all
of the Notes, Warrants, top-up related securities or any MedMen
Shares received on conversion or exercise thereof in accordance
with applicable securities laws. Tilray’s and the SPV’s
determination may be driven by market conditions, future strategic
planning, the business and prospects of the MedMen and any other
factors that Tilray or the SPV, as applicable, may consider
relevant from time to time.
Related Party
Transaction
The Amendment and Restatement,
including the issuance of the top-up right and the pre-emptive
right, are considered to be “related party transactions” under
Multilateral Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions (“MI
61-101”) insofar as they involve GGP and Parallax Master
Fund LP. Both GGP and its controlled funds, and Parallax Master
Fund LP and its controlled funds, are related parties (as defined
in MI 61-101) to MedMen and lenders under the Facility. Unless
there is an exemption, MedMen would ordinarily be required to
obtain a formal valuation and “minority approval”, being approval
of disinterested shareholders of MedMen, with respect to the
Amendment and Restatement. As reported in MedMen’s Unaudited
Interim Condensed Consolidated Financial Statements for the Nine
Months Ended March 27, 2021 and March 28, 2020, MedMen’s
accumulated deficit and a negative net working capital (current
liabilities greater than current assets) as of March 26, 2021, as
well as a net loss and negative cash flow from operating activities
for the reporting period then ended raise substantial doubt about
MedMen’s ability to continue as a going concern. MedMen is relying
on the exemption from obtaining a formal valuation available in
section 5.5(b) of MI 61-101 and the exemption from obtaining
minority approval available in section 5.7(e) of MI 61-101. MedMen
meets the requirements set out section 5.5(b) of MI 61-101 because
the Shares are only traded on the facilities of the Canadian
Securities Exchange. MedMen meets the requirements set out in
section 5.7(e) of MI 61-101 based on the board of directors of
MedMen, acting in good faith, having determined, and MedMen’s
independent directors (being all the directors), acting in good
faith, unanimously having determined that MedMen is in serious
financial difficulty, that the Amendment and Restatement are
designed to improve MedMen’s financial position, and that the
Amendments are reasonable in MedMen’s circumstances. The material
change report for the Amendment and Restatement will not be filed
more than 21 days prior to closing, as the transactions that
constitute the related party transaction were effectively closed
upon of execution of the Amendment and Restatement, and until
execution, there was no material change that could be
disclosed.
Cautionary Statement Concerning
Forward-Looking Statements
Certain statements contained in this
press release constitute “forward-looking statements” within
the meaning
of federal securities laws, including the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are
predictions based on expectations and projections about future
events and are not statements of historical fact. You can identify
forward-looking statements by the use of forward-looking
terminology such as “plan,” “continue,” “expect,” “anticipate,”
“intend,” “predict,” “believe,” “project,” “estimate,” “likely,”
“believe,” “might,” “seek,” “may,” “will,” “remain,” “potential,”
“can,” “should,” “could,” “future”, “is positioned” and similar
expressions, or the negative of those expressions, or similar words
or phrases that are predictions of or indicate future events or
trends and that do not relate solely to historical matters. You can
also identify forward-looking statements by discussions of the
Tilray’s or MedMen’s strategic initiatives, including productivity
and synergies initiatives, our future performance and results of
operations.
Forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, levels of activity, performance or
achievements of Tilray or MedMen, or industry results, to be
materially different from any future results, levels of activity,
performance or achievements expressed or implied by such
forward-looking statements, and you should not rely on them as
predictions of future events. Forward-looking statements depend on
assumptions, data or methods that may be incorrect or imprecise and
may not be able to be realized. We do not guarantee that the
transactions and events described will happen as described (or that
they will happen at all). Forward-looking statements include
statements regarding intentions, beliefs, projections, outlook,
analyses, or current expectations for the Tilray or MedMen
business; the legalization of cannabis under U.S. federal laws and
Tilray’s ability to become the world’s leading cannabis-focused
consumer branded company with $4 billion of revenue by 2024; and
Tilray’s receipt of stockholder approval to increase its authorized
capital stock. Certain material factors, estimates, goals,
projections, or assumptions were used in drawing the conclusions
contained in the forward-looking statements throughout this
communication. Many factors could cause actual results, performance
or achievement to be materially different from any forward-looking
statements, and other risks and uncertainties not presently known
to Tilray or MedMen, as applicable, or that Tilray or MedMen, as
applicable, deems immaterial could also cause actual results or
events to differ materially from those expressed in the
forward-looking statements contained herein. For a more detailed
discussion of these risks and other factors, see the Annual Report
on Form 10-K of Tilray for the fiscal year ended May 31, 2021. The
forward-looking statements included in this communication are made
as of the date of this communication and MedMen does not undertake
any obligation to publicly update such forward-looking statements
to reflect new information, subsequent events or otherwise unless
required by applicable securities laws.
A variety of factors, including
known and unknown risks, many of which are beyond the control of
Tilray or MedMen, could cause actual results to differ materially
from the forward-looking statements in this press release and other
reports filed with, or furnished to, the SEC and other regulatory
agencies by Tilray or MedMen and made by the directors, officers,
other employees, and other persons authorized to speak on behalf of
Tilray or MedMen. Such factors include, without limitation: (i) if,
when and to the extent cannabis is legalized at the federal level
in the United States; (ii) the ability of either company to
effectively grow and expand retail operations in the United
States; (iii) ability to effectively deal with the
restrictions, limitations and health issues presented by the
COVID-19 pandemic; (iv) the respective management teams’
perceptions of historical trends, current conditions and expected
future developments; (v) the ability to effectively manage growth,
including anticipated and unanticipated costs; (vi) achieving the
anticipated results of the Tilray or MedMen’s strategic plans,
including growing market share; (vii) the adequacy of each
company’s capital resources and liquidity, including but not
limited to, availability of sufficient cash flow to successfully
execute their respective growth strategies (either within the
expected timeframe or at all); (viii) the ability to raise
necessary or desired funds to achieve their respective strategic
business plans; (ix) obtaining and maintaining all required
licenses, approvals and permits; (x) favorable production levels
and sustainable costs; (xi) inputs, suppliers and skilled labor
being unavailable or available only at uneconomic costs; (xii);
(xiii) adverse future legislative and regulatory developments
involving medical and recreational marijuana; (xiv) consumer
interest in the companies’ respective products and products of
other brands that MedMen may offer in its stores; (xv) competition;
(xvi) government regulation of either company’s activities and
products including, but not limited, to the areas of taxation and
environmental protection; (xviii) the risks of operating or
investing in the marijuana industry in the United States; (xviii)
the outcome of any claims, litigation and proceedings of which
either company is a party, including any settlements of litigation
or pending regulatory or government investigations or actions or
other legal contingencies; (xix) either company’s ability to
conduct operations in a safe, efficient and effective manner; (xx)
changes in general economic, business and political conditions in
which the companies operate, including changes in the financial
markets; changes in applicable laws generally and (xxi) and those
other risk factors discussed in MedMen’s Form 10 (as amended) or in
the risk factors discussed in Tilray’s Annual Report on Form 10-K,
and other continuous disclosure filings, all available under either
at www.sec.gov (with respect to both MedMen and Tilray) or
www.sedar.com (solely with respect to MedMen).
Tilray Media Contact
Berrin Noorata, news@tilray.com
Tilray Investor Relations
Raphael Gross, Raphael.Gross@icrinc.com, +1-203-682-8253
MedMen Media Contact
Lisa Weser, MedMen@Trailblaze.co
MedMen Investor Relations
Contact
Morry Brown, morry.brown@MedMen.com