Canopy Growth and TerrAscend’s Arise Bioscience Enter Debt Financing Agreement
Canopy Growth completes US$20 million loan to Arise Bioscience Inc.
SMITHS FALLS and TORONTO, ON, Dec. 10, 2020 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) and Arise Bioscience Inc. (“Arise”), a wholly owned subsidiary of TerrAscend Corp. (“TerrAscend”) (CSE: TER) (OTCQX: TRSSF) engaged only in the legal sale of CBD products, today announced they have entered into a loan financing arrangement in the amount of US$20 million (the “Loan”) pursuant to a secured debenture (the “Debenture”). In connection with the Loan, TerrAscend has issued 2,105,718 common share purchase warrants to the Company (the “Warrants”).
Canopy Growth initially co-invested in TerrAscend in November 2017. On November 30, 2018, Canopy Growth announced the completion of a restructuring transaction with TerrAscend pursuant to which TerrAscend restructured its share capital by way of a plan of arrangement under the Business Corporations Act (Ontario). Subsequently, in March 2020, Canopy Growth loaned CAD $80.5 million to TerrAscend Canada Inc.
TerrAscend’s management continues to perform very well in high-growth, competitive markets. With this additional loan into TerrAscend’s Arise business unit, we are confident the team will continue to execute at a high level and that they are well positioned to drive strong value creation for Canopy shareholders.
David Klein, CEO, Canopy Growth
Jason Ackerman, Chief Executive Officer and Executive Chairman of TerrAscend, added, “I’d like to thank the Canopy Growth team for their ongoing support and investment as we scale our operations. I’m proud to consider them partners and look forward to continuing to execute on the opportunity ahead.”
Use of Proceeds
Arise is only engaged in the legal sale of CBD products and does not sell THC products. The Loan proceeds are expected to be used by Arise for general corporate purposes, the repayment of indebtedness and/or for other permitted purposes under the terms of the Debenture. The funds will not be used, directly or indirectly, in connection with or for any cannabis or cannabis-related operations in the United States, unless and until such operations comply with all applicable laws of the United States.
Transaction Overview
The Debenture will bear interest at a rate of 6.10% per annum and will mature on December 9, 2030 or such earlier date in accordance with the terms of the Debenture and all interest payments made pursuant to the Debenture are payable in cash by Arise beginning in the fourth year after issuance of the Debenture. The Debenture is secured by the assets of Arise, is not convertible, and is not guaranteed by TerrAscend. The Warrants are comprised of: (a) 1,926,983 common share purchase warrants (the “First Tranche Warrants”) with each First Tranche Warrant entitling Canopy Growth to acquire one common share of TerrAscend at an exercise price of CAD $15.28 per share; and (b) 178,735 common share purchase warrants (the “Second Tranche Warrants”) with each Second Tranche Warrant entitling Canopy Growth to acquire one common share of TerrAscend at an exercise price of CAD $17.19 per share. The Warrants will be exercisable by Canopy Growth following changes in U.S. federal laws permitting the cultivation, distribution, and possession of marijuana or to remove the regulation of such activities from the federal laws of the United States and the Loan is repayable by Arise at anytime. The First Tranche Warrants expire on December 9, 2030 or such earlier date in accordance with the First Tranche Warrants and the Second Tranche Warrants expire on December 9, 2031 or such earlier date in accordance with the Second Tranche Warrants.
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, we offer 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. Our 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 our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have 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 federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit www.canopygrowth.com.
About TerrAscend
TerrAscend is a leading North American cannabis operator with vertically integrated operations in Pennsylvania, New Jersey, and California in addition to operating as a licensed producer in Canada. TerrAscend operates an award-winning chain of Apothecarium dispensary retail locations as well as scaled cultivation, processing and manufacturing facilities on both the East and West coasts. TerrAscend’s best-in-class cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use market. The Company owns a number of synergistic businesses and brands, including The Apothecarium, Ilera Healthcare, State Flower, Valhalla Confections, and Arise Bioscience Inc. For more information, visit www.terrascend.com.
