- Option to acquire Acreage exercised to facilitate acquisition by Canopy USA
- Acreage enters into amended and restated credit agreement with new lender syndicate
NEW YORK, June 4, 2024 – PRESS RELEASE – Acreage Holdings Inc., a vertically integrated, multistate operator of cannabis cultivation and retailing facilities in the U.S., reported a series of corporate events and actions, including:
(i) the exercise of the call option to acquire all of the issued and outstanding Class E subordinate voting shares of the company (each, a “fixed share”) in accordance with the arrangement agreement between Acreage and Canopy Growth Corp. dated April 18, 2019, as amended (the “fixed share arrangement agreement”); and
(ii) the execution of an amended and restated credit agreement (the “amended and restated credit agreement”) with a new syndicate of lenders, including 11065220 Canada Inc.
“This is a transformative moment which reflects the determination of our partners and team to deliver a clear path for growth and look forward to this next step in Acreage’s journey as part of the Canopy USA ecosystem,” Acreage CEO Dennis Curran said. “The debt restructuring and option exercise to commence Canopy USA’s acquisition of the company, combined with our operational restructuring and our focus on reduced costs, should enable us to reach our potential, and we are especially excited about Acreage’s opportunities in Ohio, Pennsylvania, New York, and New Jersey.”
Call Option Exercise and Floating Share Arrangement Update
Notice of the call option was delivered to Acreage, initiating the acquisition of all issued and outstanding fixed shares (the “fixed share acquisition”). The fixed share acquisition is anticipated to occur immediately after the acquisition of the Class D subordinate voting shares of Acreage (the “floating shares”) pursuant to the plan of arrangement under the Business Corporations Act (British Columbia) (the “floating share arrangement”) in accordance with the arrangement agreement (the “floating share arrangement agreement”) dated Oct. 24, 2022, as amended, among Acreage, Canopy and Canopy USA (the “floating share acquisition” and together with the fixed share acquisition, the “acquisitions”). Upon the closing of the acquisitions, Canopy USA will own 100% of the issued and outstanding shares of Acreage.
“These are major steps forward for Acreage and Canopy USA, and consistent with the strategy outlined by Canopy Growth to allow our shareholders to benefit from our ownership of nonvoting shares in Canopy USA,” Canopy Growth CEO David Klein said. “We’re excited to see this strategy advancing as more of Canopy USA’s priority markets come online for adult use across the Midwest and Northeast.”
While Canopy, Canopy USA, and the Acreage are eager, and actively working, to close the acquisitions as promptly as possible, closing of the acquisitions remains subject to completion of the conditions set forth in the fixed share arrangement agreement and floating share arrangement agreement. Acreage anticipates the acquisitions will close during the first half of 2025 following receipt of required regulatory approvals.
Amended and Restated Credit Agreement
11065220 Canada Inc., a subsidiary of Canopy, exercised its option, in part, to acquire certain outstanding debt of Acreage. Concurrently, Acreage entered into the amended and restated credit agreement. The amended and restated credit agreement will continue to bear interest at a variable rate of U.S. prime plus 5.75% per annum, payable monthly in arrears, with a prime floor of 5.5%, and a maturity date of Jan. 1, 2026. Effective immediately, interest under the amended and restated credit agreement will be payable in cash or in kind, at Acreage’s election, through Nov. 30, 2024.
“The amended and restated credit facility is anticipated to allow us to improve cash flows,” Acreage interim Chief Financial Officer Philip Himmelstein said. “With this amendment and the restatement of financial covenants and remediation of defaults, we are well-positioned to succeed in our core markets as we continue to evaluate all options for raising capital and improving cash flow and profitability.”
