TORONTO, Feb. 23, 2021 /CNW/ - RIV Capital Inc. (formerly
Canopy Rivers Inc.) ("RIV Capital" or the "Company")
(TSX: RIV) (OTC: CNPOF) is pleased to announce the completion
of the previously announced plan of arrangement (the
"Arrangement") involving Canopy Growth Corporation
("Canopy Growth") (TSX: WEED) (NASDAQ: CGC).
Pursuant to the Arrangement, RIV Capital, through its
wholly-owned subsidiary, RIV Capital Corporation (formerly Canopy
Rivers Corporation) ("RCC"), transferred its interests in
TerrAscend Corp. ("TerrAscend"), TerrAscend Canada Inc.
("TerrAscend Canada"), Les Serres Vert Cannabis Inc.
("Vert Mirabel") (other
than the shares transferred to Serres
Bertrand as described below), and The Tweed Tree Lot Inc.
("Tweed Tree Lot") (collectively, the "Transferred
Assets") to Canopy Growth in exchange for approximately
$115 million in cash, 3,647,902
common shares of Canopy Growth (having a value of approximately
$170.3 million as at the close of
trading on the Toronto Stock Exchange (the "TSX") on
February 22, 2021), and the
cancellation of all 36,468,318 Multiple Voting Shares
("MVS") and 15,223,938 Subordinate Voting Shares
("SVS") of RIV Capital held by Canopy Growth.
Concurrent with the closing of the Arrangement, and following
the previously announced exercise by Les Serres Stéphane Bertrand
Inc. ("Serres Bertrand") of its right of first
refusal to purchase its proportionate interest in the common shares
of Vert Mirabel (the "ROFR Shares") from RIV Capital, the
Company also received a $3.4 million
cash payment from Serres Bertrand
for 117 ROFR Shares, representing 11.7% of the issued and
outstanding common shares of Vert Mirabel.
The Arrangement delivers immediate benefits to the Company
beyond the significant cash and share consideration it received
from Canopy Growth. The value received by RIV Capital, after taking
into account the cancellation of the MVS and SVS held by Canopy
Growth, is accretive to minority shareholders. In addition, the
Arrangement eliminates the Company's dual class share structure,
which provides the Company with enhanced strategic flexibility and
a more attractive capital structure for the purposes of
investments, acquisitions, and capital-raising.
"The closing of this transaction is a milestone for RIV Capital
and our shareholders as we continue to pivot towards the prospering
U.S. market," said Narbé Alexandrian, President and CEO,
RIV Capital. "We believe that the
evolving regulatory environment and market conditions make now an
ideal time to enter the U.S., the most attractive cannabis market
in the world. Over the past several years, we have developed the
strategic relationships and domain expertise needed to succeed in
the U.S. With the substantial capital and strategic flexibility
acquired in this deal, we believe that we are uniquely positioned
to take advantage of the opportunities in the U.S. market, and
believe our strategic pivot will generate positive returns for our
shareholders."
In the coming months, the Company plans to pursue one or several
material investment(s) in, or acquisition(s) of, U.S.-based
cannabis companies. The U.S. market has developed at a
year-over-year compound annual growth rate of 22% since 2017, and
is expected to grow to approximately US$31.4
billion by 2024.1 As legislators at
both the state and federal levels eye legalization or other efforts
at regulatory reform, the total addressable market for adult-use
cannabis is expected to continue to grow at a material rate in the
coming years. Accordingly, the Company believes that there are a
number of opportunities in both legal and soon-to-be-legal states
to transact with operators that could benefit from RIV Capital's
industry expertise, liquidity, and public listing status. To the
extent that such investments or acquisitions are inconsistent with
the policies of the TSX, the Company may initiate the process to
de-list from the TSX and list its securities on a stock exchange
that does not prohibit such investments or acquisitions at such
time.
Concurrent with completion of the Arrangement, Canopy Growth's
nominees on the Company's board of directors resigned from the
board. The Company intends to replace the departing directors with
new directors having skills and experience that complement those of
the remaining directors, taking into account the Company's new
strategy and focus. As Canopy Growth is no longer the controlling
shareholder, has no board representation, and does not have any
financial interests in RIV Capital, the Company will now
comprehensively re-evaluate its business and investment strategy
and pursue previously unavailable opportunities. All existing
governance agreements between Canopy Growth and the Company have
been terminated and, as a result, any adverse effects in the market
resulting from a lack of clarity as to the Company's overarching
corporate strategy will be eliminated.
Early Warning Disclosure Regarding TerrAscend
Completion of the Arrangement resulted in a 100% decrease in RIV
Capital's interest in TerrAscend and TerrAscend Canada.
Immediately prior to the completion of the Arrangement, RIV
Capital beneficially owned (i) 19,445,285 exchangeable shares
in the capital of TerrAscend, (ii) warrants to purchase 2,225,714
common shares in the capital of TerrAscend at an exercise price of
C$5.95 per share, (iii) warrants to
purchase 333,723 common shares in the capital of TerrAscend at an
exercise price of C$6.49 per share,
and (iv) a loan in the principal amount of approximately
$13.2 million owed by TerrAscend
Canada to RCC (collectively, the "TerrAscend
Securities").
Following the completion of the Arrangement, RIV Capital no
longer beneficially owns or exercises control over any of the
TerrAscend Securities. While RIV
Capital currently has no immediate plans or intentions with
respect to the securities of TerrAscend, depending on regulatory
changes, market conditions, general economic and industry
conditions, trading prices, TerrAscend's business, financial
conditions and prospects and/or other relevant factors, RIV Capital
may develop such plans or intentions in the future and, at such
time, may from time to time acquire additional securities of
TerrAscend.
A copy of the early warning report filed by RIV Capital with
respect to the TerrAscend Securities will be available under RIV
Capital's profile on SEDAR at www.sedar.com or by contacting the
Company at ir@rivcapital.com.
RIV Capital's head office is located at 40 King St. West, Suite 2504, Toronto, Ontario, M5H 3Y2.
_______________________________________
1 Arcview Research and BDS
Analytics, "The State of Legal Marijuana Markets - 6th Edition"
(2019).
|
About RIV Capital
RIV Capital is an investment and acquisition company
specializing in cannabis with a portfolio of 14 companies across
various segments of the cannabis value chain. We believe that
bringing together people, capital, and ideas raises the potential
of the entire cannabis industry. By leveraging our industry
insights, in-house expertise, and thesis-driven approach to
investing, we aim to provide shareholders with exposure to
specialized and disruptive cannabis companies.
Forward-Looking Statements
This news release contains statements which constitute
"forward-looking information" within the meaning of applicable
securities laws, including statements regarding the plans,
intentions, beliefs and current expectations of the Company with
respect to future business activities and operating performance.
Forward-looking information is often identified by the words "may",
"would", "could", "should", "will", "intend", "plan", "anticipate",
"believe", "estimate", "expect" or similar expressions and includes
information regarding the Company's expectation with respect to the
Company's anticipated focus on, ability to execute on, and expected
success in, its strategy in the U.S. cannabis market; the
anticipated benefits of the Arrangement; the anticipated benefits
of the collapse of the dual-class share structure; the
attractiveness of the Company's shares as acquisition currency
following the Arrangement; the potential de-listing from the TSX
and listing on an alternative exchange; the future composition of
the Company's board; the possible future investment and acquisition
opportunities available to the Company; the expected increase in
the size of the U.S. cannabis market; the business and investment
strategy of the Company following completion of the Arrangement and
any investments or acquisitions in furtherance thereof; plans with
respect to TerrAscend securities; and the Company's expectations
for other economic, business, and/or competitive factors.
Investors are cautioned that forward-looking information is
not based on historical fact but instead reflects management's
expectations, estimates or projections concerning future results or
events based on the opinions, assumptions and estimates of
management considered reasonable at the date the statements are
made. Although the Company believes that the expectations reflected
in such forward-looking information are reasonable, such
information involves risks and uncertainties, and undue reliance
should not be placed on such information, as unknown or
unpredictable factors could have material adverse effects on future
results, performance or achievements of the Company. The Company's
actual financial position and results of operations may differ
materially from management's current expectations.
Among the key factors that could cause actual results to
differ materially from those projected in the forward-looking
information are the following: competitive conditions in the
cannabis industry that may impact the Company; the status of
cannabis as a controlled substance; the legislative and regulatory
structure governing the cannabis industry in Canada and the U.S.; credit liquidity, and
additional financing risks for the Company and its investees; the
entry into the U.S. market by the Company; the potential for the
Company's board of directors and shareholders to be prosecuted for
aiding and abetting violations of U.S. federal law; enhanced
scrutiny of the Company's investments and operations if the Company
invests in or operates U.S. cannabis businesses; the effect of
operating or investing in the U.S. on the Company's existing
contractual arrangements and business relationships; the risks
associated with U.S. banking and anti-money laundering laws and
regulations; the classification of the Company's income as proceeds
of crime and the ability of the Company to declare or pay dividends
or effect other distributions or the repatriation of funds back to
Canada; risks associated with the
termination, renegotiation and enforcement of material contracts;
credit, liquidity and additional financing risks for the Company
and its investees; litigation risks; stock market volatility;
regulatory and licensing risks; cannabis pricing risks; changes in
cannabis industry growth and trends; changes in the business
activities, focus and plans of the Company and its investees and
the timing associated therewith; the Company's actual financial
results and ability to manage its cash resources; changes in
general economic, business and political conditions, including
challenging global financial conditions and the impact of the novel
coronavirus pandemic; competition risks; potential conflicts of
interest; the regulatory landscape and enforcement related to
cannabis, including political risks and risks relating to
regulatory change; changes in the Company's relationship with its
investees; changes in applicable laws; compliance with extensive
government regulation, including the Company's interpretation of
such regulation; changes in the global sentiment towards, and
public opinion of, the cannabis industry; reliance on material
contracts; risk of default by investees; divestiture risks; and the
risk factors set out in the Company's annual information form for
the year ended March 31, 2020 and the
Company's management information circular in connection with the
Arrangement, filed with the Canadian securities regulators and
available on the Company's profile on SEDAR at
www.sedar.com.
Should one or more of these risks or uncertainties
materialize, or should assumptions underlying the forward-looking
information prove incorrect, actual results may vary materially
from those described herein as intended, planned, anticipated,
believed, estimated or expected. Although the Company has attempted
to identify important risks, uncertainties and factors that could
cause actual results to differ materially, there may be others that
cause results not to be as anticipated, estimated or intended. The
Company does not intend, and does not assume any obligation, to
update this forward-looking information except as otherwise
required by applicable law.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/riv-capital-closes-plan-of-arrangement-involving-canopy-growth-paving-way-for-entry-into-us-market-301233608.html
SOURCE RIV Capital Inc.