SMITHS FALLS, Ontario, Feb. 21, 2022 – PRESS RELEASE – Canopy Growth Corporation announced it has entered into an agreement with an institutional investor for the purchase and sale of up to US$150 million aggregate principal amount of senior unsecured convertible debentures.
Pursuant to the terms of the agreement, the institutional investor purchased an initial $100 million of the convertible debentures and an additional $50 million of the convertible debentures will be purchased in the event that certain conditions outlined in the indenture (as defined below) are satisfied or waived. As further described below, no cash will be payable by Canopy Growth in any circumstances in respect of principal, interest or any other amounts owing pursuant to the terms of the convertible debentures.
“Canopy Growth is executing a strategy focused on accelerating growth and profitability by transforming our Canadian operations and fast-tracking entry into the U.S. market,” said Judy Hong, chief financial officer of Canopy Growth. “Building on other recent actions taken to enhance cash flow, this attractive capital immediately adds to Canopy Growth’s cash on hand and provides additional flexibility to continue advancing strategic priorities.”
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The convertible debentures were purchased pursuant to a registration statement on Form S-3ASR with the U.S. Securities and Exchange Commission with respect to the offer and sale of the convertible debentures and the common shares of the company underlying the convertible debentures. The convertible debentures were sold at US$1,000 per convertible debenture and bear interest at a rate of 5% per annum, payable in common shares at the earlier of (i) the time of conversion of the convertible debentures; or (ii) Feb. 28, 2028 (the “maturity date”).
No cash payment will be payable by Canopy Growth in any circumstances in respect of principal, interest or any other amounts owing pursuant to the terms of the indenture dated Feb. 21, 2023, between the company and Computershare Trust Company of Canada (the “indenture”), as trustee, governing the convertible debentures. The convertible debentures are convertible into common shares at the option of the institutional investor at a conversion price equal to 92.5% of the three-day, volume-weighted average price of the common shares ending on the trading day prior to conversion. On the maturity date, the principal amount of the convertible debentures, including any accrued but unpaid interest, will also be paid in common shares.
The company intends to use the proceeds from the offering for working capital and general corporate purposes.
Additionally, the company does not plan to list the convertible debentures on the Nasdaq, or any other securities exchange or other trading system.
ATB Capital Markets Inc. acted as sole placement agent in connection with this offering.