VAUGHAN, ONTARIO–CannTrust Holdings Inc. (unlisted) today announced that its Fourth Amended & Restated Plan of Compromise, Arrangement and Reorganization dated July 7, 2021 has been implemented.
The implementation of the CCAA Plan follows its approval by the Ontario Superior Court of Justice on July 16, 2021 and the approval of the US class action settlement by the United States District Court Southern District of New York on December 2, 2021. Amongst other steps, the Company has contributed $50 million to a trust established to facilitate the class action settlements in full satisfaction of the actions against it and $2.7 million in trust for settlement of various claims under its CCAA proceedings.
As planned, upon the implementation of the CCAA plan, four Directors of the Company resigned from the Board of Directors with immediate effect. CannTrust has accepted resignations from Chairman of the Board Robert Marcovitch, along with Directors Mitchell Sanders, Mark Dawber and Shawna Page.
Notwithstanding the significant progress made by the CannTrust Group in these proceedings, including successfully obtaining the reinstatement of its licences from Health Canada, restructuring its operations, resuming production and processing operations, reaching key settlements, and the development, approval and sanction of the CCAA Plan, the Canadian cannabis industry generally, and the CannTrust Group specifically, have faced challenges. As a result, the CannTrust Group does not have sufficient liquidity to operate beyond the near term.
CannTrust is in default of the minimum EBITDA covenant under its DIP loan. The DIP lender has not agreed to waive the default although it continues to advance funds under the facility.
Despite the implementation of the CCAA Plan, CannTrust’s CCAA proceedings are continuing to facilitate further discussions with potential investors and strategic partners, and to develop an orderly wind-down plan to maximize the value of its assets in the event that a financing or strategic transaction option cannot be finalized. The Company’s current stay period extends to January 31, 2022. For more information about CannTrust’s CCAA proceedings, please visit: www.ey.com/ca/canntrust.
This press release contains “forward-looking information” within the meaning of Canadian Securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbor laws, and such statements are based upon CannTrust’s current internal expectations, estimates, projections, assumptions and beliefs and views of future events.
Forward-looking information and forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expect”, “likely”, “may”, “will”, “should”, “intend”, “anticipate”, “potential”, “proposed”, “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may”, “would” or “will” happen, or by discussions of strategy.
The forward-looking information and statements in this news release include statements relating to CannTrust’s ongoing CCAA proceedings, its efforts to finalize a financing or strategic transaction and its effort to develop an orderly wind-down plan in the event that a transaction can not be finalized. Forward-looking information and statements necessarily involve known and unknown risks, including, without limitation: the Company’s limited cash and other liquidity; the risk that the Company will be unable to raise further liquidity; the impact of any regulatory and other investigations; the Company’s ongoing review of strategic and financing alternatives; risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments in Canada, the United States and elsewhere; the state of the cannabis industry in Canada generally; CannTrust’s ability to timely cure its disclosure defaults and obtain an order revoking the OSC’s cease-trade order; the willingness of a stock exchange to list the Company’s common shares and CannTrust’s ability to satisfy the requirements of such exchange; and, the ability of CannTrust to successfully implement its business strategies.
Any forward-looking information and statements speak only as of the date on which they are made, and, except as required by law, CannTrust does not undertake any obligation to update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for CannTrust to predict all such factors. When considering these forward-looking information and statements, readers should keep in mind the risk factors and other cautionary statements in CannTrust’s Annual Information Form dated March 28, 2019 (the “AIF”) and filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com and filed as an exhibit CannTrust’s Form 40-F annual report under the United States Securities Exchange Act of 1934, as amended, with the United States Securities and Exchange Commission on EDGAR at www.sec.gov (the “March 2019 Form 40-F”). The risk factors and other factors noted in the AIF could cause actual events or results to differ materially from those described in any forward-looking information or statements. Readers are also reminded that CannTrust remains in default of its periodic disclosure requirements under applicable securities laws and stock exchange requirements, that its most recent AIF, Form 40-F and other disclosures do not reflect all risk factors that currently face the Company, and that the Company has not completed or filed the restatements of the financial statements included in the AIF or the March 2019 Form 40-F or otherwise filed an amendment to such Form 40-F, and that the Company is permitted by the Initial Order of the Superior Court of Justice to not to correct its prior filings or make any further filings in respect of periodic disclosure requirements under applicable securities laws and stock exchange requirements. None of the Company’s securities is listed for trading on any stock exchange in any jurisdiction and, in Canada, trading in the Company’s securities is subject to a cease-trade order issued on April 13, 2020 by the Ontario Securities Commission for CannTrust’s failure to comply with its disclosure obligations under applicable securities laws.