Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) announced that it has entered into an exchange agreement with Greenstar Canada Investment Limited Partnership, a wholly-owned subsidiary of Constellation Brands, Inc., in order to extinguish C$100 million (approximately USD$73.9 million) aggregate principal amount of the company’s outstanding 4.25% unsecured notes due 2023. The goal of the transaction is to preserve cash on hand and cut the company’s annual expenses.
Greenstar is buying and then canceling the C$100 million aggregate principal amount of the Existing Notes held by GCILP in exchange for:
- A cash payment to GCILP in the amount of unpaid and accrued interest owing under the Existing Notes held by GCILP; 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.
Canopy Growth will move forward with its plan to create a new class of non-voting and non-participating exchangeable shares, which will be convertible into the company’s common shares. Following the closing of the CBI Transaction and the creation of the Exchangeable Shares, the company maintains its intention to negotiate an exchange 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.
Canopy recently announced that it had entered into an agreement with an institutional investor for the purchase and sale of up to $150 million aggregate principal amount of senior unsecured convertible debentures. 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 are satisfied or waived.
“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”.