Retirement of Approximately $263 Million of Debt Strengthens Canopy Growth's
Balance Sheet and Preserves Cash to Support Future Growth
SMITHS
FALLS, ON, July 18, 2022 /PRNewswire/ - Canopy Growth
Corporation ("Canopy Growth" or the "Company") (TSX:
WEED) (NASDAQ: CGC) announced today that it has closed (the
"Final Closing") its previously announced exchange
transaction (the "Transaction") of certain 4.25% unsecured
notes due 2023 (the "Notes") in order to reduce its debt
obligations by approximately $263
million. Constellation Brands, Inc. ("CBI"), through
its wholly-owned subsidiary Greenstar Canada Investment Limited
Partnership ("GCILP"), participated in the Transaction.
"As we navigate global economic and capital market headwinds,
this action has enabled us to deleverage our balance sheet,
preserve cash, and reduce interest payments by addressing a
substantial portion of our 4.25% unsecured notes," said
Judy Hong, Chief Financial Officer
at Canopy Growth. "We continue to assess all available options to
further optimize our balance sheet and address the remaining 4.25%
unsecured notes in advance of their maturity to ensure Canopy
Growth is well positioned to continue investing in the highest
potential areas of our business to drive future growth."
Pursuant to the terms and conditions of the Transaction, Canopy
Growth acquired and cancelled approximately $263 million (approximately USD$203.6 million) aggregate principal amount of
its outstanding Notes from a limited number of holders (the
"Noteholders"), including GCILP, a subsidiary of CBI, for an
aggregate purchase price (excluding accrued and unpaid interest in
the amount of approximately $5.4
million (approximately USD$4.2
million), which was paid in cash) of $260 million (approximately USD$201.6 million) (the "Purchase Price")
payable in common shares of the Company (the "Canopy
Shares").
The Company satisfied the Purchase Price as follows: (a) on the
initial closing, 35,662,420 Canopy Shares (the "Initial Closing
Shares") were issued to the Noteholders, other than GCILP,
based on a price equal to USD$3.50
per Canopy Share, which was the closing price of the Canopy Shares
on the Nasdaq Global Select Market ("Nasdaq") on
June 29, 2022; and (b) on the Final
Closing 11,896,536 Canopy Shares were issued to the Noteholders,
other than GCILP, based on the volume-weighted average trading
price of the Canopy Shares on the Nasdaq for the 10 consecutive
trading days beginning on, and including, June 30, 2022, being USD$2.6245 (the "Averaging Price"). In
addition, on the Final Closing, 29,245,456 Canopy Shares were
issued to GCILP based on a price per Canopy Share equal to the
Averaging Price.
Pursuant to the Transaction, the Company acquired and cancelled
$100 million (approximately
USD$77.5 million) aggregate principal
amount of the Notes held by GCILP in exchange for
29,245,456 Canopy Shares, representing approximately 6.7% of
the issued and outstanding Canopy Shares on a non-diluted basis
immediately prior to the Final Closing. Upon completion of the
Transaction, CBI, though GCILP and CBG Holdings LLC, holds
171,499,258 Canopy Shares, representing approximately 35.7% of the
issued and outstanding Canopy Shares on a non-diluted basis.
GCILP's participation in the Transaction (the "Insider
Participation") is considered to be a "related party
transaction" within the meaning of Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). Pursuant to Section 5.5(a)
and 5.7(1)(a) of MI 61-101, the Company is exempt from obtaining a
formal valuation and minority approval of the Company's
shareholders with respect to the Insider Participation as the fair
market value of the Transaction is below 25% of the Company's
market capitalization as determined in accordance with MI 61-101.
In addition, the Transaction was approved by the board of directors
of the Company with Ms. Judy A.
Schmeling, a director of CBI, Mr. Garth Hankinson, Chief Financial Officer and
Executive Vice President of CBI, Mr. Robert
Hanson, Executive Vice President and President – Wine &
Spirits Division of CBI and Mr. James
Sabia, Executive Vice President and President - Beer
Division of CBI, each having disclosed their interest in the
Transaction by virtue of their positions with CBI and abstaining
from voting thereon. The Company did not file a material change
report 21 days prior to the closing of the Transaction as the
details of the Insider Participation in the Transaction had not
been finalized at that time.
The Transaction was conducted as a private placement, and the
Canopy Shares issued in the Transaction were issued pursuant to the
exemption from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), afforded by
Section 4(a)(2) of the Securities Act in transactions not involving
any public offering. This press release is neither an offer to sell
nor a solicitation of an offer to buy any securities described
above, nor will there be any offer, solicitation or sale of any
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful.
Advisors
Cassels Brock & Blackwell LLP
and Latham & Watkins LLP acted as legal counsel to Canopy
Growth. HudsonWest LLC and BMO Capital Markets acted as financial
advisors and exchange agents to Canopy Growth.
About Canopy Growth
Canopy Growth (TSX:WEED, NASDAQ:CGC) is a world-leading
diversified cannabis and cannabinoid-based consumer product
company, driven by a passion to improve lives, end prohibition, and
strengthen communities by unleashing the full potential of
cannabis. Leveraging consumer insights and innovation, Canopy
Growth offers product varieties in high-quality dried flower, oil,
softgel capsule, infused beverage, edible, and topical formats, as
well as vaporizer devices by Canopy Growth and industry-leader
Storz & Bickel. Canopy Growth's global medical brand, Spectrum
Therapeutics, sells a range of full-spectrum products using its
colour-coded classification system and is a market leader in both
Canada and Germany. Through Canopy Growth's award-winning
Tweed and Tokyo Smoke banners, Canopy Growth reaches its adult-use
consumers and has built a loyal following by focusing on top
quality products and meaningful customer relationships. Canopy
Growth has entered into the health and wellness consumer space in
key markets including Canada,
the United States, and
Europe through BioSteel sports
nutrition, and This Works skin and sleep solutions; and has
introduced additional hemp derived CBD products to the United States through its First & Free
and Martha Stewart CBD brands. Canopy Growth has an established
partnership with Fortune 500 alcohol leader Constellation
Brands.
Notice Regarding
Forward-Looking Information
This news release contains "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and "forward-looking information"
within the meaning of applicable Canadian securities legislation.
Often, but not always, forward-looking statements and information
can be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "estimates", "intends",
"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" or "will" be
taken, occur or be achieved. Forward-looking statements or
information involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Company or its subsidiaries to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements or
information contained in this news release. Examples of such
statements and uncertainties include statements with respect to
the benefits of the debt repurchase and expectations for other
economic, business, and/or competitive factors.
Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking information,
including inherent uncertainty associated with projections;
expectations regarding future investment, growth and expansion of
operations; regulatory and licensing risks; changes in general
economic, business and political conditions, including changes in
the financial and stock markets and the impacts of increased rates
of inflation; legal and regulatory risks inherent in the cannabis
industry, including the global regulatory landscape and enforcement
related to cannabis, political risks and risks relating to
regulatory change; risks relating to anti-money laundering laws;
compliance with extensive government regulation and the
interpretation of various laws regulations and policies; public
opinion and perception of the cannabis industry; and such other
risks contained in the public filings of the Company filed with
Canadian securities regulators and available under the Company's
profile on SEDAR at www.sedar.com and with the
United States Securities and Exchange Commission through EDGAR
at www.sec.gov/edgar, including the Company's annual
report on Form 10-K for the year ended March
31, 2022.
In respect of the forward-looking statements and information,
the Company has provided such statements and information in
reliance on certain assumptions that they believe are reasonable at
this time. Although the Company believes that the assumptions and
factors used in preparing the forward-looking information or
forward-looking statements in this news release are reasonable,
undue reliance should not be placed on such information and no
assurance can be given that such events will occur in the disclosed
time frames or at all. Should one or more of the foregoing risks or
uncertainties materialize, or should assumptions underlying the
forward-looking information prove incorrect, actual results may
vary materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. Although the Company
has attempted to identify important risks, uncertainties and
factors which could cause actual results to differ materially,
there may be others that cause results not to be as anticipated,
estimated or intended. The forward-looking information and
forward-looking statements included in this news release are made
as of the date of this news release and the Company does not
undertake any obligation to publicly update such forward-looking
information or forward-looking information to reflect new
information, subsequent events or otherwise unless required by
applicable securities laws.
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SOURCE Canopy Growth Corporation