Canopy USA Converts CAD$125.5 Million in TerrAscend Debt to Exchangeable Shares at CAD$5.10 per Share

TORONTO, Dec. 9, 2022  TerrAscend Corp. Today announced it has entered into an arrangement dated December 9, 2022 with Canopy USA, LLC (“Canopy USA”) and certain of its subsidiaries to convert CAD$125.5 million in aggregate loans plus accrued interest in exchange for 24,601,467 exchangeable shares in the capital of TerrAscend (the “Exchangeable Shares”) at a notional price of CAD$5.10 per Exchangeable Share and 22,474,130 new common share purchase warrants (the “New Warrants” and together with the Exchangeable Shares, the “New Securities”) to acquire common  shares in the capital of TerrAscend (the “Common Shares”) at a weighted average exercise price of CAD$6.07 per common share.

Jason Wild, Executive Chairman of TerrAscend, stated, “Canopy USA continues to be a trusted investor and partner. We thank them for their continued support as they increase their conditional ownership in the Company. This transaction, combined with the recent USD$30 million pay down of our Michigan loan, materially improves our balance sheet and reduces annual interest expense by approximately USD$10 million.”

TerrAscend, TerrAscend Canada Inc. and Arise Bioscience, Inc. (collectively, “TerrAscend Entities”) and Canopy USA, Canopy USA I Limited Partnership (“Canopy USA LP I”) and Canopy USA III Limited Partnership (“Canopy USA LP III”) entered into a Debt Settlement Agreement pursuant to which the TerrAscend Entities shall deliver to Canopy USA LP I and Canopy USA LP III an aggregate of 24,601,467 Exchangeable Shares and New Warrants with exercise prices ranging from CAD$3.74 to CAD$17.19 as consideration for extinguishing the debt obligations, including all principal and interest on the amounts outstanding thereunder. All of the New Warrants expire on December 31, 2032. Additionally, all of the existing warrants held by Canopy USA LP I and Canopy USA LP III consisting of 22,474,130 warrants (the “Prior Warrants”) originally issued to Canopy Growth Corporation and RIV Capital Corporation (previously Canopy Rivers Corporation) between 2019 and 2020 have been canceled.

Following the issuance of the New Securities, Canopy USA holds 63,492,037 Exchangeable Shares and 22,474,130 New Warrants and is deemed to own 1,072,450 Common Shares that are subject to an option for an aggregate exercise price of $1.00 (the “Option”). The Exchangeable Shares can be converted to common shares at Canopy USA LP I and Canopy USA LP III’s option, subject to the federal legalization of marijuana in the United States and compliance with applicable exchange listing rules. With the addition of the Exchangeable  Shares, Canopy USA’s conditional ownership in TerrAscend increased from 12.0% to 18.2%. Assuming the exercise of the 22,474,130 New Warrants and the Option to acquire 1,072,450 Common Shares, Canopy would hold approximately 23.4% of TerrAscend on a partially-diluted basis.

The Canadian Securities Exchange (“CSE”) has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

(This information is primarily sourced from TerrAscend.  Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).