Canopy Growth Corporation Enters Exchange Agreement with Greenstar Canada Investment for $73.9 Million Debt Extinguishment
LOS ANGELES– Canopy Growth Corporation has recently announced that it has entered into an exchange agreement with Greenstar Canada Investment Limited Partnership (GCILP), a wholly-owned subsidiary of Constellation Brands, Inc., for the extinguishment of C$100 million (approximately USD$73.9 million) aggregate principal amount of the company’s outstanding 4.25% unsecured notes due 2023. As per the exchange agreement, Canopy Growth will acquire and cancel C$100 million aggregate principal amount of the existing notes held by GCILP in exchange for a cash payment to GCILP for the unpaid and accrued interest and a promissory note issuable to GCILP in the aggregate principal amount of C$100 million payable on December 31, 2024. The promissory note will bear interest at a rate of 4.25% per year, payable on maturity of the Promissory Note. The CBI transaction is expected to close on or about April 14, 2023, subject to customary closing conditions.
In addition, Canopy Growth intends to amend its articles to create a new class of non-voting and non-participating exchangeable shares, which will be convertible into company common shares. After the closing of the CBI Transaction and the creation of the Exchangeable Shares, the company plans to negotiate with GCILP to purchase for cancellation up to C$100 million aggregate principal amount of the Promissory Note in exchange for Exchangeable Shares, subject to the rules and policies of the Nasdaq and the Toronto Stock Exchange. This move is expected to preserve the company’s cash on hand and reduce its annual expenses.
As the CBI Transaction is considered a “related party transaction” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions, Canopy Growth is exempt from obtaining a formal valuation and minority approval of the company’s shareholders. The board of directors of the company has approved the CBI transaction, and directors who have interests in the transaction have disclosed their interest and abstained from voting. The company did not file a material change report 21 days prior to the closing of the CBI Transaction, as the details of the transaction had not been finalized at that time. Additionally, the company has not received nor has it requested a valuation of its securities or the subject matter of the CBI Transaction in the 24 months prior to the date of the announcement.
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