TORONTO - Canopy Rivers Inc. ("CRI") (TSX: RIV, OTC: CNPOF), a venture capital firm specializing in cannabis, announces that as of February 4, 2020 Canopy Rivers Corporation ("Canopy Rivers"), a wholly-owned subsidiary of CRI, has amended the terms of its recent US$10 million loan (the "Loan") to TerrAscend Canada Inc. ("TerrAscend Canada"), a wholly-owned subsidiary of TerrAscend Corp. ("TerrAscend") (CSE: TER, OTCQX: TRSSF).
The Loan, announced October 2, 2019, included the purchase of 13,243 units, with each unit consisting of: (i) one unsecured convertible debenture of TerrAscend Canada with a principal amount of C$1,000 (the "Debentures"), and (ii) 25.2 common share purchase warrants of TerrAscend allowing for the purchase of common shares of TerrAscend (the "Common Shares") (the "Original Warrants") with an exercise price of C$6.49.
Following the announcement of the Loan and subsequent discussions with the Toronto Stock Exchange (the "TSX"), Canopy Rivers, TerrAscend Canada, and TerrAscend agreed to amend certain terms of the Loan.
Pursuant to the amended terms, the Debentures have been converted into a C$13,243,000 loan agreement (the "Loan Agreement") entered into between Canopy Rivers and TerrAscend Canada. Interest on the principal amount advanced pursuant to the Loan Agreement accrues at a rate of 6% per annum and all interest payments made pursuant to the Loan Agreement are payable in cash by TerrAscend Canada. The Loan Agreement is not convertible and is not guaranteed by TerrAscend. The principal amount under the Loan Agreement matures on October 2, 2024 or such earlier date in accordance with the terms of the Loan Agreement.
TerrAscend has also issued Canopy Rivers 2,225,714 common share purchase warrants of TerrAscend allowing for the purchase of Common Shares (the "Warrants"), exercisable upon the occurrence of certain events (each such event, a "Triggering Event") including: (i) the federal laws in the United States are amended to permit the general cultivation, distribution and possession of marijuana or to remove the regulation of such activities from the federal laws of the United States; and (ii) the stock exchange(s) on which securities of Canopy Rivers or its affiliates are listed permit the investment by Canopy Rivers in an entity that participates in the cultivation, distribution and possession of marijuana in the United States. The exercise price for the Warrants is C$5.95 per share and the Warrants expire on October 2, 2024. The Original Warrants remain issued and outstanding.
The net proceeds are expected to be used by TerrAscend Canada for general corporate purposes and will not be used, directly or indirectly, in connection with any cannabis or cannabis-related operations in the United States, unless and until such operations comply with all applicable laws of the United States.
Immediately prior to the conversion of the Debentures and the acquisition of the Warrants, Canopy Rivers held 19,445,285 non-voting and non-participating exchangeable shares of TerrAscend ("Exchangeable Shares") (representing 50% of the issued and outstanding Exchangeable Shares), the Debentures (representing approximately 5.4% of the outstanding Exchangeable Shares, calculated on a partially diluted basis assuming the full conversion into Exchangeable Shares of the principal amount of the Debentures held by Canopy Rivers only), and 333,723 Original Warrants (representing approximately 0.6% of the outstanding Common Shares, calculated on a partially diluted basis assuming the full exercise of the 333,723 Original Warrants held by Canopy Rivers only).
Immediately following the conversion of the Debentures and the acquisition of the Warrants, Canopy Rivers held 19,445,285 Exchangeable Shares and 2,559,437 common share purchase warrants of TerrAscend. In the event all of the 2,559,437 common share purchase warrants are fully exercised, Canopy Rivers would hold 2,559,437 Common Shares, representing approximately 4.6% of the outstanding Common Shares, calculated on a partially diluted basis assuming the full exercise of the 2,559,437 common share purchase warrants held by Canopy Rivers only. These combined holdings would represent approximately 29.2% of the issued and outstanding Common Shares, calculated on a partially diluted basis assuming the full conversion into Common Shares of the Exchangeable Shares held by Canopy Rivers only and the full exercise of the 2,559,437 common share purchase warrants held by Canopy Rivers only.
Canopy Rivers acquired the Warrants for investment purposes only and not with a view to materially affecting control of TerrAscend. Depending upon market conditions and other factors, and in compliance with applicable regulatory requirements, Canopy Rivers may, from time to time, acquire or dispose of additional securities of TerrAscend, in the open market, by private agreement or otherwise, or acquire interests in or enter into related financial instruments involving a security of TerrAscend.
The head office of Canopy Rivers is located at 40 King Street West, Suite 2504, Toronto, Ontario M5H 3Y2. The head office of TerrAscend is located at P.O. Box 43125, Mississauga, Ontario L5B 4A7.
A copy of the early warning report filed by CRI can be found under TerrAscend's profile on SEDAR at www.sedar.com or can be obtained by contacting CRI as set out below.
Canopy Rivers is a venture capital firm specializing in cannabis. Its unique investment and operating platform is structured to pursue investment opportunities in the emerging global cannabis sector. Canopy Rivers identifies strategic counterparties seeking financial and/or operating support. Canopy Rivers has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth Corporation (TSX: WEED, NYSE: CGC) and collaborate among themselves, which CRI believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire portfolio.
This news release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of CRI with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: the use of proceeds; and expectations for other economic, business, and/or competitive factors.
Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although CRI believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of CRI. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; the ability of Canopy Rivers to exercise the Warrants and the occurrence of a Triggering Event; changes in the use of proceeds; changes in general economic, business and political conditions, including changes in the financial and stock markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation and CRI's interpretation of various laws, regulations and policies; risk associated with divesting certain of CRI's investments; public opinion and perception of the cannabis industry; and the risk factors set out in CRI's annual information form dated July 15, 2019, filed with the Canadian securities regulators and available on CRI's profile on SEDAR at www.sedar.com.
Should one or more of these 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 CRI has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. CRI does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
SOURCE Canopy Rivers Inc.
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