SMITHS
FALLS, ON, June 29, 2022 /CNW/ - Canopy Growth
Corporation ("Canopy Growth" or the "Company") (TSX:
WEED) (NASDAQ: CGC) announced today that it has entered into
privately negotiated exchange agreements (collectively, the
"Exchange Agreements") with a limited number of holders (the
"Noteholders"), including Constellation Brands, Inc.
("CBI") through its wholly-owned subsidiary Greenstar
Canada Investment Limited Partnership ("GCILP"), of the
Company's outstanding 4.25% unsecured convertible senior notes due
2023 (the "Notes"), to acquire approximately C$255.4 million (approximately USD$198 million) aggregate principal amount of
the Notes from the Noteholders (the "Transaction") in
exchange for common shares of the Company (the "Canopy
Shares") and approximately C$3
million (USD$2.35 million) in
cash for accrued and unpaid interest (the "Cash
Payment").
GCILP, a subsidiary of CBI (together "Constellation"), is
participating in the Transaction and will acquire a minimum of
21,929,914 Canopy Shares and up to 30,701,880 Canopy Shares
pursuant to its Exchange Agreement.
Transaction Details
In accordance with the terms of the Exchange Agreements, Canopy
Growth has agreed to acquire the Notes from the Noteholders for an
aggregate purchase price (excluding accrued and unpaid interest
which will be paid in cash as part of the Cash Payment) of
approximately C$252.8 million
(approximately USD$196 million) (the
"Purchase Price"), which will be payable in such number of
Canopy Shares (the "Share Consideration") as is equal to the
Purchase Price divided by the volume-weighted average trading price
(the "VWAP") of the Canopy Shares on the Nasdaq Global
Select Market (the "Nasdaq") for the 10 consecutive trading
days beginning on, and including, June 30,
2022 (the "Averaging Price" and such period of time
being the "Averaging Period"), subject to a floor price of
US$2.50 (the "Floor Price") and a
maximum price equal to US$3.50, which
is the closing price of the Canopy Shares on the Nasdaq on
June 29, 2022 (the "Market
Price").
The Share Consideration, for Noteholders other than GCILP, will
be satisfied by the issuance of Canopy Shares in up to two tranches
as follows: (a) on the initial closing of the Transaction,
anticipated to be June 30, 2022,
34,073,160 Canopy Shares (the "Initial Closing Shares") will
be issued to the Noteholders; and (b) in the event that the
Averaging Price calculated over the Averaging Period is less than
the Market Price, on or about July 18,
2022 (the "Final Closing"), up to such number of
Canopy Shares as is equal to the excess of the Purchase Price
divided by the Averaging Price over the Initial Closing Shares. The
Share Consideration for GCILP will be issued solely on the Final
Closing based on the Averaging Price.
In the event that the daily VWAP of the Canopy Shares on the
Nasdaq during the Averaging Period (a) exceeds the Market Price,
then the daily VWAP for such trading day will instead be deemed to
be the Market Price; or (b) is less than the Floor Price, then the
daily VWAP for such trading day will instead be deemed to be the
Floor Price, such that in no circumstances will more than
78,404,305 Canopy Shares be issuable pursuant to the
Transaction.
The Notes were issued pursuant to an indenture dated
June 20, 2018, among the Company,
GLAS Trust Company LLC ("GLAS Trust"), as U.S. trustee, and
Computershare Trust Company of Canada, as Canadian trustee, as supplemented
by supplement no. 1 to the indenture dated April 30, 2019 and supplement no. 2 to the
indenture dated June 29, 2022
(collectively, the "Indenture"). As a result of supplement
no. 2 to the Indenture dated June 29,
2022 between the Company, Computershare Trust Company, N.A.
(as replacement U.S. trustee following GLAS Trust's resignation)
and Computershare Trust Company of Canada (the "Second Supplemental
Indenture"), the Company irrevocably surrendered its right to
settle the conversion of any Note by Physical Settlement or
Combination Settlement (as each such term is defined in the
Indenture). As a result, the conversion of any Note on or after the
date hereof will be settled by Cash Settlement (as such term is
defined in the Indenture) and in no event will any Canopy Shares be
issuable upon conversion of any Note. A copy of the Second
Supplemental Indenture will be available on the Company's SEDAR
profile page at www.sedar.com and on EDGAR at www.sec.gov.
GCILP currently holds C$200
million aggregate principal amount of Notes. Pursuant to the
Transaction, the Company will acquire C$100
million (approximately USD$77.5
million) aggregate principal amount of the Notes held by
GCILP. GCILP will be issued a number of Canopy Shares based on the
VWAP during the Averaging Period, provided that GCILP will receive
a minimum of 21,929,914 Canopy Shares (based on the Floor
Price) and a maximum of 30,701,880 (based on the Market
Price), representing between 5.4% and 7.6% of the issued and
outstanding Canopy Shares on a non-diluted basis.
Constellation, though GCILP and CBG Holdings LLC, currently
holds 142,253,802 Canopy Shares, representing 35.3% of the issued
and outstanding Canopy Shares on a non-diluted basis. GCILP's
participation in the Transaction (the "Insider
Participation") will be considered to be a "related party
transaction" within the meaning of Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). Pursuant to Section 5.5(a)
and 5.7(1)(a) of MI 61-101, the Company is exempt from obtaining a
formal valuation and minority approval of the Company's
shareholders with respect to the Insider Participation as the fair
market value of the Transaction is below 25% of the Company's
market capitalization as determined in accordance with MI 61-101.
In addition, the Transaction was approved by the board of directors
of the Company with Ms. Judy A.
Schmeling, a director of CBI, Mr. Garth Hankinson, Chief Financial Officer and
Executive Vice President of CBI, Mr. Robert
Hanson, Executive Vice President and President – Wine &
Spirits Division of CBI and James
Sabia, Executive Vice President and President - Beer
Division of CBI, each having disclosed their interest in the
Transaction by virtue of their positions with CBI and abstaining
from voting thereon.
The Transactions are being conducted as private placements, and
any Canopy Shares to be issued in the Transaction will be issued
pursuant to the exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"),
afforded by Section 4(a)(2) of the Securities Act in transactions
not involving any public offering. This press release is neither an
offer to sell nor a solicitation of an offer to buy any securities
described above, nor will there be any offer, solicitation or sale
of any securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
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, Canopy
Growth offers 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. Canopy Growth's 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 Canopy Growth's award-winning
Tweed and Tokyo Smoke banners, Canopy Growth reaches its adult-use
consumers and has 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 hemp derived CBD products to the United States through its First & Free
and Martha Stewart CBD brands. Canopy Growth has an established
partnership with Fortune 500 alcohol leader Constellation
Brands.
Notice Regarding
Forward-Looking Information
This news release contains "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and "forward-looking information"
within the meaning of applicable Canadian securities legislation.
Often, but not always, forward-looking statements and information
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 or
information involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Company or its subsidiaries to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements or
information contained in this news release. Examples of such
statements and uncertainties include statements with respect to
the benefits of the debt repurchase, the anticipated date of
issuance of the Initial Closing Shares, the anticipated date of the
issuance of any additional Canopy Shares following the Averaging
Period and expectations for other economic, business, and/or
competitive factors.
Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking information,
including inherent uncertainty associated with projections; the
diversion of management time on Transaction-related issues;
expectations regarding future investment, growth and expansion of
operations; regulatory and licensing risks; changes in general
economic, business and political conditions, including changes in
the financial and stock markets and the impacts of increased rates
of inflation; legal and regulatory risks inherent in the cannabis
industry, including the global regulatory landscape and enforcement
related to cannabis, political risks and risks relating to
regulatory change; risks relating to anti-money laundering laws;
compliance with extensive government regulation and the
interpretation of various laws regulations and policies; public
opinion and perception of the cannabis industry; and such other
risks contained in the public filings of the Company filed with
Canadian securities regulators and available under the Company's
profile on SEDAR at www.sedar.com and with the United
States Securities and Exchange Commission through EDGAR at
www.sec.gov/edgar, including the Company's annual report
on Form 10-K for the year ended March 31,
2022.
In respect of the forward-looking statements and information,
the Company has provided such statements and information in
reliance on certain assumptions that they believe are reasonable at
this time. Although the Company believes that the assumptions and
factors used in preparing the forward-looking information or
forward-looking statements in this news release are reasonable,
undue reliance should not be placed on such information and no
assurance can be given that such events will occur in the disclosed
time frames or at all. Should one or more of the foregoing 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 which could cause actual results to differ materially,
there may be others that cause results not to be as anticipated,
estimated or intended. The forward-looking information and
forward-looking statements included in this news release are made
as of the date of this news release and the Company does not
undertake any obligation to publicly update such forward-looking
information or forward-looking information to reflect new
information, subsequent events or otherwise unless required by
applicable securities laws.
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SOURCE Canopy Growth Corporation