Canopy Growth Reports Fundamental Shift

Canopy Growth Reports Fundamental Change

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) (the”Company”) today provided a Fundamental Change Notice, Notice of Right to Convert, Notice of Make-Whole Fundamental Change and Related Conversion Rate Adjustment, and Offer to Repurchase for Cash (the”Notice”) to holders of its C$600,000,000 aggregate principal amount of 4.25% Convertible Senior Notes Due 2023 (the”Notes”), pursuant to the Indenture, dated June 20, 2018, among the Company, GLAS Trust Company LLC, as U.S. trustee and Computershare Trust Company of Canada, as Canadian trustee (the”Indenture”). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Indenture.

Pursuant to the Subscription Agreement dated as of August 14, 2018, between the Company and CBG Holdings LLC (“CBG”), on November 1, 2018, the Company issued 104,500,000 common shares (the”Common Shares”) and 139,745,453 common share purchase warrants (the”Warrants”) to CBG. CBG is an affiliate of Constellation Brands, Inc. (“Constellation”), which, upon closing of the issuance of the Common Shares and the Warrants (the”Investment”), is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of approximately 56% of the voting control over the Company’s common shares. The closing of this Investment constitutes a Fundamental Change under the terms of the Indenture.

As a result of the Fundamental Change, the Company has commenced a tender offer (the”Notes Tender Offer”) to repurchase, at the option of each holder, any and all the Notes. Pursuant to the terms of the Indenture, the Notes and the Notice, each holder has the right (the”Fundamental Change Repurchase Right”), at the option of each holder, to require the Company to repurchase all of such holder’s Notes, or any part of the principal amount thereof that’s equivalent to C$1,000 or an integral multiple of C$1,000, for money, on December 5, 2018 (the”Fundamental Change Repurchase Date”). The repurchase price (the “Fundamental Change Repurchase Price”) to be paid by the Company for Notes validly surrendered and not validly withdrawn will be 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date. Holders may exercise their Fundamental Change Repurchase Right by delivering notice (the”Fundamental Change Repurchase Notice”) through the transmittal procedures of The Depository Trust Company (“DTC”), at any time before 5:00 p.m., New York City time, on December 4, 2018 (the”Fundamental Change Expiration Time”) and by delivering the Notes described in the Fundamental Change Repurchase Notice through the transmittal procedures of DTC. Any holder may withdraw its submission of a Fundamental Change Repurchase Notice (in whole or in part) by delivering a written notice of withdrawal through the transmittal procedures of DTC anytime before the Fundamental Change Expiration Time.

The Fundamental Change Repurchase Right is subject, in all respects, to the terms and conditions of this Indenture, the Notes, the Notice and any related notice materials, as amended and supplemented from time to time.

In addition, the Indenture provides that, as a result of the Investment and notwithstanding the Fundamental Change Repurchase Right, the Notes became convertible, at the option of the holder, beginning on September 18, 2018 and are convertible at any time until 5:00 p.m., New York City time, on December 5, 2018 (the”Conversion Period”). In order to convert the Notes, a holder must provide the proper instruction form pursuant to DTC’s book-entry conversion program and transfer such Notes through the transmittal procedures of DTC, before the end of the Conversion Period. Holders may not convert any Notes with respect to which a Fundamental Change Repurchase Notice has already been delivered unless such Fundamental Change Repurchase Notice is validly withdrawn. Notes properly surrendered for conversion might not be withdrawn.

Pursuant to the terms of the Indenture, the final of the Investment also constitutes a Make-Whole Fundamental Change. Because of this, the Company’s conversion obligation related to Notes which are converted from and including the date on which the Make-Whole Fundamental Change occurred, November 1, 2018, until 5:00 p.m., New York City time, on December 4, 2018 (the”Make-Whole Fundamental Change Period”), will be raised by 2.9846 additional common shares (the”Additional Shares”). The initial conversion rate for the Notes is 20.7577 common stocks per C$1,000 principal amount of Notes and the Additional Shares will be added to the initial conversion rate such that conversion rate for the Notes will be 23.7423 common stocks per C$1,000 principal amount of Notes validly surrendered for conversion during the Make-Whole Fundamental Change Period. If holders convert Notes during the Conversion Period but following the Make-Whole Fundamental Change Period, the conversion rate for the Notes will not be improved by the Additional Shares. The Company may elect to repay conversions in cash, common shares or a combination of cash and common shares. The right of holders to convert their Notes is distinct from the Fundamental Change Repurchase Right.

Conversion rights with respect to the Notes is subject, in all respects, to the terms and conditions of this Indenture, the Notes, the Notice and any related notice materials, as amended and supplemented from time to time.

Holders should review the Notice carefully and consult with their own financial and tax advisors. None of the Company, its affiliates, or its or their respective boards of directors, employees, advisors or representatives, or the trustees, the paying agent or the conversion agent for the Notes, is making any representation or recommendation to holders as to whether to tender or refrain from tendering their Notes from the Notes Tender Offer or to exercise their conversion rights (if at all).

The Notice detailing the Fundamental Change Repurchase Right and the conversion rights with respect to the Notes has been supplied to the holders through the facilities of DTC.

THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL THE NOTES. AFTER THE COMPANY FILES THE TENDER OFFER STATEMENT (INCLUDING THE OFFER TO REPURCHASE AND RELATED MATERIALS) WITH THE SEC, NOTEHOLDERS MAY OBTAIN A FREE COPY OF THE TENDER OFFER STATEMENT (INCLUDING THE OFFER TO REPURCHASE AND RELATED MATERIALS) AND OTHER DOCUMENTS THAT THE COMPANY FILES WITH THE SEC AT THE WEBSITE MAINTAINED BY THE SEC AT WWW.SEC.GOV (http://WWW.SEC.GOV) OR BY CONTACTING THE COMPANY AT -LRB-855-RRB- 558-9333. NOTEHOLDERS ARE URGED TO CAREFULLY READ THESE MATERIALS PRIOR TO MAKING ANY DECISION WITH RESPECT TO THE NOTES TENDER OFFER.

About Canopy Growth Corporation 
Canopy Growth Corporation, a corporation organized and existing under the Canada Business Corporations Act, is a world-leading diversified cannabis and hemp firm, offering different brands and curated cannabis varieties in dried, oil and Softgel capsule types.

Released at Fri, 02 Nov 2018 13:19:57 +0000

Posted in: Investing

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