NEW YORK, Jan. 22, 2024 – PRESS RELEASE – The Cannabist Co. Holdings Inc., one of the largest and most experienced cultivators, manufacturers and retailers of cannabis products in the U.S., announced that, further to its previously announced intention to repurchase up to US$25 million of principal amount of 6% senior secured convertible notes due June 2025 of the company, it has entered into a binding agreement with certain offshore institutional investors to conditionally effect such repurchase for common shares of the company.
“We are pleased to have reached agreement on the previously announced transaction to reduce leverage and decrease interest expense, maintaining momentum for our balance sheet improvement plan. We are grateful for the constructive relationship with our investors that enabled this transaction to come to fruition and look forward to delivering on additional initiatives in the months ahead,” The Cannabist Co. CEO David Hart said.
Pursuant to the terms of the agreement, the investors shall:
- by Jan. 31, 2024, exchange, assign, transfer and sell US$5 million principal amount of 2025 convertible notes in consideration of common shares issued at a price per common share equal to the greater of CAD$0.41 per common share and the 12.5% discount to the five-day volume weighted average price of the common shares (the “initial exchange price”) on Cboe Canada Inc. (the “exchange”) prior to receipt of a transfer notice;
- upon fulfillment of certain conditions related to the trading price of the common shares on the exchange, on or prior to Feb. 29, 2024, transfer US$5 million principal amount of 2025 convertible notes in consideration of common shares issued at the initial exchange price, and
- upon fulfillment of certain conditions related to the trading price of the common shares on the exchange, on or prior to June 30, 2024, transfer in three separate equal tranches, an aggregate of US$15 million principal amount of 2025 convertible notes in consideration of common shares issued at a price per common share equal to the greater of CAD$0.57 per common share and the 12.5% discount to the five-day volume weighted average price of the common shares on the exchange prior to receipt of a transfer notice, in each case, subject to adjustment in certain instances.
In the event the conditions are fulfilled and the investors fail to transfer their 2025 convertible notes in accordance with the terms of the agreement, the company has the right, but not the obligation, to require the investors to transfer some or all of the portion of the $25 million of 2025 convertible notes still held by the investors. Assuming all of the conditions are fulfilled, and the entire US$25 million principal amount of 2025 convertible notes are transferred for common shares issued at the minimum prices set out in the agreement, a maximum of 68,564,698 common shares would be issued in connection with the repurchase.
In connection with the repurchase, the company obtained waivers from holders of, in the aggregate, US$34.5 million principal amount of 2025 convertible notes confirming that they did not object to the company completing the repurchase and confirming that they had no intention of participating in a repurchase of their 2025 convertible notes on similar terms.
Should the holders of the balance of the 2025 convertible notes (representing an aggregate amount of US$5 million) participate in a similar repurchase of their 2025 convertible notes, the company expects that approximately US$3.57 million principal amount of 2025 convertible notes could be repurchased, with the remaining balance being potentially transferred for new notes.
In connection with the repurchase, ATB Capital Markets acted as exclusive financial adviser to the company and to the company’s special committee.
