77 Percent of Tilray’s Total Shares Outstanding to be Released
Over Extended Two-Year Lock-up
Transaction to be Non-Dilutive for Tilray and Expected to be
Tax-Efficient for Privateer Stockholders
Tilray, Inc. (NASDAQ: TLRY), a global leader in cannabis
research, cultivation, production, and distribution, today
announced that it has signed a definitive merger agreement with its
largest stockholder Privateer Holdings, Inc. (“Privateer”) for a
transaction that will extend the lock-up on and provide for the
issuance of up to 75 million Tilray shares to Privateer’s equity
holders (and the cancellation of the 75 million shares currently
owned by Privateer). These shares currently represent 77 percent of
Tilray’s total shares outstanding. Tilray and Privateer previously
announced the signing of a non-binding Letter of Intent for this
transaction on June 10, 2019.
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Under the terms of the definitive agreement, the parties will
effect a downstream merger of Privateer with and into a
wholly-owned subsidiary of Tilray, with the Tilray subsidiary
surviving the merger, and the issuance by Tilray to Privateer
equity holders of newly issued and registered shares of Tilray
common stock and options to purchase shares of Tilray common stock
in an aggregate amount equal to the number of Tilray common shares
currently held by Privateer. As set forth in the definitive
agreement, at its sole election (to be made prior to closing),
Tilray may pay a portion of the merger consideration in cash in
lieu of issuing an equivalent number of shares of Tilray. All
Tilray shares held by Privateer and all outstanding Privateer stock
will be cancelled upon consummation of the merger.
Tilray was originally incubated and financed by Privateer as one
of its wholly-owned operating subsidiaries before closing a Series
A round of capital in February 2018 and then becoming the first
cannabis producer to complete an Initial Public Offering (IPO) on a
major U.S. stock exchange in July 2018. Earlier this year,
Privateer distributed its ownership of its three other operating
subsidiaries unrelated to Tilray directly to Privateer
stockholders, leaving no material assets in Privateer other than
the 75 million shares it currently holds in Tilray.
Pursuant to the terms of the definitive merger agreement, each
Privateer equity holder who receives the shares of Tilray stock in
the merger will be subject to a lock-up allowing for the sale of
such shares only under certain circumstances over a two-year
period. During the first year following the closing of the merger,
shares will be released only pursuant to certain offerings or sales
arranged by and at the discretion of Tilray. At the end of the
first year, to the extent not already released as a result of any
cash paid at closing and/or the aforementioned offerings or sales,
50 percent of the total shares subject to the lock-up will be
released. Over the course of the second year following closing, the
remaining shares will be subject to a staggered release in equal
quarterly increments.
Mark Castaneda, Chief Financial Officer of Tilray, said: “We
appreciate the long-term confidence that Privateer has in the
Tilray business and we look forward to having their investors as
part of our stockholder base. We believe this transaction will give
Tilray greater control and operating flexibility, while allowing us
to effectively manage our public float.”
Michael Blue, Managing Partner of Privateer, said: “We are
pleased to sign this agreement with Tilray, which we believe will
maximize overall returns for our visionary investors in a
tax-efficient manner while giving Tilray the operating flexibility
it needs to continue to be a leader in the rapidly emerging global
cannabis industry.”
In accordance with the terms of the transaction, the 16.7
million shares of Tilray Class 1 Common Stock (which have ten (10)
votes per share) will be issued to Brendan Kennedy, Christian Groh
and Michael Blue, the cofounders of Privateer, as part of their
proportionate share of the merger consideration, with the remainder
of the stock merger consideration being Tilray Class 2 Common Stock
(which have one (1) vote per share). The merger agreement provides
that $125 million worth of Tilray Class 2 Common Stock will be held
in escrow for 18 months following the closing of the transaction to
secure any potential indemnification claims, with the initial 50
percent of such escrow being withheld from all Privateer
stockholders on a pro rata basis, and the remaining 50 percent
coming solely from the Privateer cofounders.
The transaction has been unanimously approved by each of the
Special Committee of Tilray’s Board of Directors (comprised of
independent directors) and Privateer’s Board of Directors. The
merger and the transactions contemplated in connection therewith
will be consummated only if all conditions to closing set forth in
the merger agreement are satisfied, including the requisite
approval of the merger by the stockholders of Privateer and Tilray.
Both parties intend to complete the transaction as expeditiously as
possible.
About Tilray® Tilray is a global pioneer in the research,
cultivation, production and distribution of cannabis and
cannabinoids currently serving tens of thousands of patients and
consumers in thirteen countries spanning five continents.
About Privateer Holdings, Inc. Privateer Holdings is the
world’s first private equity firm to invest exclusively in legal
cannabis. The Privateer Holdings team has raised $200 million to
invest in cannabis brands. Learn more at
www.privateerholdings.com.
Forward Looking Statements This press release contains
“forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and “forward-looking
information” within the meaning of Canadian securities laws, or
collectively, forward-looking statements. Forward-looking
statements in this press release may be identified by the use of
words such as, “may”, “would”, “could”, “will”, “likely”, “expect”,
“anticipate”, “believe, “intend”, “plan”, “forecast”, “project”,
“estimate”, “outlook” and other similar expressions, including
statements in respect to Tilray and the consummation of the merger.
Forward-looking statements are not a guarantee of future
performance and are based upon a number of estimates and
assumptions of management in light of management’s experience and
perception of trends, current conditions and expected developments,
as well as other factors that management believes to be relevant
and reasonable in the circumstances, including assumptions in
respect of current and future market conditions, the current and
future regulatory environment and future approvals and permits.
Actual results, performance or achievement could differ materially
from that expressed in, or implied by, any forward-looking
statements in this press release, and, accordingly, you should not
place undue reliance on any such forward-looking statements and
they are not guarantees of future results. Please see the heading
“Risk Factors” in Tilray’s Quarterly Report on Form 10-Q, which was
filed with the Securities and Exchange Commission (“SEC”) and
Canadian securities regulators on August 13, 2019, assumptions,
uncertainties and other factors that may cause actual future
results or anticipated events to differ materially from those
expressed or implied in any forward-looking statements. Tilray does
not undertake and specifically declines any obligation to update
any forward-looking statements that are included herein, except in
accordance with applicable securities laws.
Important Merger Information and Additional Information
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed transaction,
Tilray will file relevant materials with the SEC. Tilray will file
a Registration Statement on Form S-4 that includes a proxy
statement of Tilray and which also constitutes a prospectus of
Tilray. Tilray and Privateer will mail the final proxy
statement/prospectus to the respective stockholders of Tilray and
Privateer. Investors are urged to read the proxy
statement/prospectus regarding the proposed transaction when it
becomes available, because it will contain important
information. The proxy statement/prospectus and other relevant
documents that have been or will be filed by Tilray with the SEC
are or will be available free of charge at the SEC’s website,
www.sec.gov, or by directing a request when such a filing is made
to Tilray Investor Relations at ICR, 685 Third Avenue, Second
Floor, New York, NY 10017, attention: Katie Turner.
Tilray and certain of its directors, executive officers and
other members of management and employees may be considered
participants in the solicitation of proxies in connection with the
proposed transaction. Information about the directors and
executive officers of Tilray is set forth in its definitive proxy
statement which was filed with the SEC on April 15, 2019 and can be
obtained free of charge from the sources listed above.
Investors may obtain additional information regarding the interests
of such participants by reading the proxy statement/prospectus
Tilray will file with the SEC when it becomes available.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190909005492/en/
Tilray Media: +1-833-206-8161, news@tilray.com Investors:
Katie Turner, +1-646-277-1228, Katie.turner@icrinc.com
Privateer Holdings Media: Zack Hutson,
Zack.Hutson@privateerholdings.com Investors: Mary Ellen Fukuhara,
IR@privateerholdings.com
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