Investment Will Help Drive Growth and Deepen
R&D
DENVER, Nov. 15,
2022 /PRNewswire/ - (TSX: CWEB) (OTCQX: CWBHF)
Charlotte's Web Holdings, Inc. ("Charlotte's Web," or the
"Company") the market leader in hemp-derived cannabidiol ("CBD")
wellness products, today announced a US$56.8
million investment (the "Investment") from a subsidiary of
BAT (LSE: BATS) and (NYSE: BTI), which provides the Company with
incremental capital to fund growth initiatives, including the
Company's expanding portfolio of botanical wellness products.
BAT's Investment has been made via a convertible debenture in
the amount of US$56.8 million. The
debenture is currently convertible into a non-controlling equity
stake in Charlotte's Web of approximately 19.9% and is convertible
at BAT's discretion.
Jacques Tortoroli, CEO of
Charlotte's Web said: "This Investment will provide Charlotte's Web
with funding that we anticipate will help unlock deeper and broader
research and development that is key to our continued innovation,
global footprint, and the advancement of our intellectual property
portfolio."
Kingsley Wheaton, Chief Growth
Officer at BAT, said: "The appeal of Charlotte's Web is clear to
us: a wide portfolio of high-quality products, strong brand equity,
an extensive retail presence and robust B2C e-commerce platform
serving a loyal US consumer base, and a track record of in-depth
scientific research."
The Investment provides substantial liquidity at an attractive
cost of capital for Charlotte's Web. Upon closing of this
investment, Charlotte's Web will have pro-forma cash and short-term
investments of approximately US$65
million.
Debenture Terms
The Investment was made by BAT's subscription for an unsecured
convertible debenture issued by Charlotte's Web (the "Debenture")
in the principal amount of C$75.3
million due November 14, 2029.
The principal amount of the Debenture is currently convertible into
approximately 19.9% of the outstanding common shares of Charlotte's
Web and, subject to adjustment in accordance with the terms of the
Debenture, is a conversion price of C$2.00 per common share on the Toronto Stock
Exchange (TSX). The Debenture will bear interest at a rate of 5%
per annum with a step down to 1.5% following the date that federal
laws in the United States permit,
authorize or do not prohibit the use of CBD as an ingredient in
food products and dietary supplements.
Concurrently with entering into the Debenture, BAT and
Charlotte's Web entered into an investor rights agreement (the
"IRA"). The IRA provides BAT with certain rights, including
the right to nominate 20% of the members of the Company's board of
directors (the "Board") for so long as BAT and its affiliates'
partially diluted ownership of the Company's common shares is at
least 15% (with a stepdown in BAT's nomination rights to 10% of the
members of the Board). BAT's nomination rights terminate upon
BAT and its affiliates' partially diluted ownership of the
Company's common shares declining below 10% for, subject to certain
exceptions in the IRA, a 30 day period. The IRA also provides
BAT with certain pre-emptive rights on the issuance of common
shares of the Company and top-up rights in respect of certain
issuances of common shares of the Company that are not otherwise
subject to a pre-emptive rights. Subject to the provisions of
the IRA, the pre-emptive rights and top-up rights provide BAT with
an opportunity to maintain its percentage ownership of the
Company's common shares from time-to-time as though the Debenture
was converted at the applicable time.
Lazard acted as financial advisor and DLA Piper (Canada) LLP and DLA Piper (US) LLP acted as
legal counsel to Charlotte's Web. Jones
Day acted as legal counsel to BAT.
About Charlotte's Web Holdings,
Inc.
Charlotte's Web Holdings, Inc., a Certified B Corporation
headquartered in Denver, is the
market leader in innovative hemp extract wellness products under a
family of brands that includes Charlotte's Web™, CBD Medic™, and
CBD Clinic™. Charlotte's Web whole-plant CBD extracts come in
full-spectrum and broad-spectrum (THC-free) options, including the
world's only broad-spectrum CBD certified NSF for Sport®, which is
the official CBD of Major League Baseball©. Founded by the seven
Stanley Brothers, ignited the CBD
industry when they came to global prominence with the coverage of a
young girl's astounding reaction to their hemp extract. Their
advocacy changed laws, public perception, and research around the
vast health potential of plant-based solutions. The Stanleys built
their business with the mission to bring safe, botanical options to
health seekers worldwide. Charlotte's Web branded premium quality
products start with proprietary hemp genetics that are American
farm-grown using organic and regenerative cultivation practices.
The Company's hemp extracts have naturally occurring botanical
compounds including cannabidiol ("CBD"), CBC, CBG, terpenes,
flavonoids, and other beneficial compounds. The Company's CW Labs
R&D division advances hemp science at a center of excellence in
Louisville, Colorado. Charlotte's
Web product categories include CBD oil tinctures (liquid
products), CBD gummies (sleep, stress, exercise recovery), CBD
capsules, CBD topical creams and lotions, as well as CBD pet
products for dogs. Through its vertically integrated business
model, Charlotte's Web maintains stringent control over product
quality and consistency with 20+ product lot testing for quality
assurance. Charlotte's Web products are distributed to more than
15,000 retail locations, over 8,000 health care practitioners, and
online through the Company's website at
https://www.charlottesweb.com/.
© Major League Baseball trademarks and copyrights are used
with permission of Major League Baseball. Visit MLB.com.
About BAT
BAT is a leading, multi-category consumer goods business with a
purpose to build A Better Tomorrow™ by reducing the health impact
of its business through offering a greater choice of enjoyable and
less risky products for adult consumers.
The company continues to be clear that combustible cigarettes
pose serious health risks, and the only way to avoid these risks is
not to start or to quit. BAT encourages those who would otherwise
continue to smoke to switch completely to
scientifically-substantiated, reduced-risk alternatives*†. In order
to deliver this, BAT is transforming into a truly consumer-centric
multi-category consumer products business.
BAT's ambition is to have 50 million consumers of its
non-combustible products by 2030 and to generate £5billion of New
Categories revenue by 2025. BAT has set stretching ESG targets
including achieving carbon neutrality for Scopes 1 & 2 by 2030
and eliminating unnecessary single-use plastic and making all
plastic packaging reusable, recyclable or compostable by 2025.
BAT employs over 52,000 people and operates in over 175
countries. The BAT Group generated revenue of £25.68 billion in
2021 and profit from operations of £10.2 billion.
The company's Strategic Portfolio is made up of its global
cigarette brands and a growing range of reduced-risk*† New Category
tobacco and nicotine products and traditional non-combustible
tobacco products. These include vapour, tobacco heating products,
modern oral products including tobacco-free nicotine pouches, as
well as traditional oral products such as snus and moist snuff. In
the first half of 2022, we had 20.4 million consumers of our
non-combustible products, a rise of 2.1 million on full year
2021.
Find out more about BAT.
* Based on the weight of evidence and assuming a complete switch
from cigarette smoking. These products are not risk free and are
addictive.
† Our products as sold in the US, including Vuse, Velo, Grizzly,
Kodiak, and Camel Snus, are subject to FDA regulation and no
reduced-risk claims will be made as to these products without
agency clearance.
Forward-Looking
Information
Certain information in this news release constitutes
forward-looking statements and forward-looking information within
the meaning of the Private Securities Litigation Reform Act of 1995
and other applicable securities laws (collectively,
"forward-looking information"). In some cases, but not
necessarily in all cases, forward looking information can be
identified by the use of forward-looking terminology such as
"plans", "targets", "expects" or "does not expect", "is expected",
"an opportunity exists", "is positioned", "estimates", "intends",
"assumes", "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", "will"
or "will be taken", "occur" or "be achieved". In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances contain
forward-looking information.
Statements containing forward-looking information are not
historical facts, but instead represent management's current
expectations, estimates and projections regarding the future of
our business, future plans, strategies, projections, anticipated
events and trends, the economy and other future conditions.
Forward-looking information is necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by the Company as of the date of this news release, are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such statements containing forward-looking
information. Although these statements containing forward-looking
information are based on assumptions the Company considers to be
reasonable based on the information available on the date such
statements are made, such statements are not guarantees of future
performance and readers are cautioned against placing undue
reliance on forward-looking information. Specifically, this press
release contains forward-looking information relating to, but not
limited to: the anticipated uses of proceeds of the investment by
Charlotte's Web, and the amount of Charlotte's Web's pro forma cash
and short term investments.
The material factors and assumptions used to develop the
forward-looking information herein include, but are not limited to,
international and political considerations; regulatory changes;
and the factors discussed throughout the "Risk Factors" section of
the Company's most recently filed annual information form available
on www.SEDAR.com and in the Company's most
recently filed Annual Report on Form 10-K and quarterly report on
Form 10-Q as amended, and other filings with the Securities and
Exchange Commission available on www.SEC.gov. Except
as required by applicable securities laws, the Company undertakes
no obligation to publicly update any forward-looking information,
whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or
otherwise.
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SOURCE Charlotte's Web Holdings, Inc.