Canopy Growth Corporation (“Canopy” or the “Company”) (TSX: WEED) (NASDAQ: CGC) and Canopy USA, LLC (“Canopy USA”) today announced that each of the Company and Canopy USA has filed an early warning report under National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues in connection with the Company’s direct and indirect disposition of, and Canopy USA’s direct and indirect acquisition of beneficial ownership of: (i) 38,890,570 exchangeable shares (the “Exchangeable Shares”) in the capital of TerrAscend Corp. (“TerrAscend”); (ii) an option to acquire 1,072,450 common shares (the “Common Shares”) in the capital of TerrAscend for an aggregate exercise price of $1.00 (the “TerrAscend Option”); (ii) 2,152,733 Common Share purchase warrants (the “Warrants”) with an exercise price of C$3.74 per Common Share (the “TerrAscend 1A Warrants”); (iv) 15,656,242 Warrants with an exercise price of C$5.14 per Common Share (the “TerrAscend 1B Warrants”); (v) 2,225,714 Warrants with an exercise price of C$5.95 per Common Share (the “TerrAscend 2A Warrants”); (vi) 333,723 Warrants with an exercise price of C$6.49 per Common Share (the “TerrAscend 2B Warrants”); (vii) 1,926,983 Warrants with an exercise price of C$15.28 per Common Share (the “TerrAscend 3A Warrants”); and 178,735 Warrants with an exercise price of C$17.19 per Common Share (the “TerrAscend 3B Warrants”, together with the TerrAscend 1A Warrants, TerrAscend 1B Warrants, the TerrAscend 2A Warrants, TerrAscend 2B Warrants and TerrAscend 3A Warrants, the “TerrAscend Warrants”).
On October 24, 2022, Canopy Growth, certain of its wholly-owned subsidiaries and Canopy USA completed a series of transactions to effect a reorganization (the “Reorganization”). Pursuant to the Reorganization, among other things, Canopy USA or entities controlled by Canopy USA, acquired 38,890,570 Exchangeable Shares, the TerrAscend Option to acquire 1,072,450 Common Shares and 22,474,130 TerrAscend Warrants directly and indirectly from Canopy Growth.
Completion of the Reorganization resulted in a 100% decrease in Canopy Growth’s interest in the Exchangeable Shares on a non-diluted basis and an approximate 19.9% decrease in Canopy Growth’s interest in the Common Shares on a partially diluted basis, assuming the conversion of the 38,890,570 Exchangeable Shares into Common Shares and the exercise of the 22,474,130 TerrAscend Warrants and the TerrAscend Option to acquire 1,072,450 Common Shares. Immediately prior to the completion of the Reorganization, Canopy Growth owned 38,890,570 Exchangeable Shares and 22,474,130 TerrAscend Warrants and was deemed to own 1,072,450 Common Shares that are subject to the TerrAscend Option, representing 100% of the issued and outstanding Exchangeable Shares on a non-diluted basis and approximately 19.9% of the issued and outstanding Common Shares on a partially-diluted basis, assuming the conversion of the 38,890,570 Exchangeable Shares into Common Shares and the exercise of the 22,474,130 TerrAscend Warrants and the TerrAscend Option to acquire 1,072,450 Common Shares.
Immediately following the Reorganization, Canopy Growth no longer beneficially owns or controls any securities in the capital of TerrAscend. While Canopy Growth currently has no immediate plans or intentions with respect to the securities of TerrAscend, depending on market conditions, general economic and industry conditions, trading prices, TerrAscend’s business, financial condition and prospects and/or other relevant factors, Canopy Growth may develop such plans or intentions in the future and, at such time, may from time to time acquire additional securities of TerrAscend.
Immediately prior to completion of the Reorganization, neither Canopy USA nor Canopy USA I Limited Partnership, Canopy USA II Limited Partnership or Canopy USA III Limited Partnership (collectively, the “Canopy USA LPs”), of which Canopy USA is the general partner, beneficially owned or exercised control or direction over any Common Shares or convertible securities of TerrAscend.
Immediately following the Reorganization, Canopy USA beneficially owns, and exercises control or direction over, 38,890,570 Exchangeable Shares and 22,474,130 TerrAscend Warrants and is deemed to own 1,072,450 Common Shares that are subject to the TerrAscend Option, representing 100% of the issued and outstanding Exchangeable Shares on a non-diluted basis and approximately 19.9% of the issued and outstanding Common Shares on a partially-diluted basis, assuming the conversion of 38,890,570 Exchangeable Shares into Common Shares and the exercise of the 22,474,130 TerrAscend Warrants and the TerrAscend Option to acquire 1,072,450 Common Shares.
Canopy USA’s beneficial ownership interest is by virtue of its control of the Canopy USA LPs. Canopy USA LP I beneficially owns, and exercises control or direction over, 2,105,718 TerrAscend Warrants, representing approximately 0.8% of the issued and outstanding Common Shares on a partially-diluted basis, assuming the conversion of 2,105,718 TerrAscend Warrants. Canopy USA LP II beneficially owns, and exercises control or direction over, 38,890,570 Exchangeable Shares and is deemed to own 1,072,450 Common Shares that are subject to the TerrAscend Option, representing approximately 13.7% of the issued and outstanding Common Shares on a partially-diluted basis, assuming the conversion of 38,890,570 Exchangeable Shares into Common Shares and the exercise of the TerrAscend Option. Canopy USA LP III beneficially owns, and exercises control or direction over, 20,368,412 TerrAscend Warrants, representing approximately 7.5% of the issued and outstanding Common Shares on a partially-diluted basis, assuming the conversion of 20,368,412 TerrAscend Warrants.
Canopy USA beneficially holds the TerrAscend securities for investment purposes. While Canopy USA and/or the Canopy USA LPs currently have no immediate plans or intentions with respect to the securities of TerrAscend, depending on market conditions, general economic and industry conditions, trading prices, TerrAscend’s business, financial condition and prospects and/or other relevant factors, Canopy USA and/or the Canopy USA LPs may develop such plans or intentions in the future and, at such time, may from time to time acquire additional securities, dispose of some or all of the existing or additional securities or may continue to hold the securities of TerrAscend.
A copy of the early warning report filed by Canopy Growth with respect to the securities of TerrAscend will be available under TerrAscend’s profile on SEDAR at www.sedar.com or by contacting Canopy Growth at 855 558-9333.
A copy of the early warning report filed by Canopy USA will be available under TerrAscend’s profile on SEDAR at www.sedar.com or by contacting Canopy USA at (415) 882-0117.
TerrAscend’s head office is located at P.O. Box 43125, Mississauga, Ontario L5B 4A7. Canopy Growth’s head office is located at 1 Hershey Drive, Smiths Falls, Ontario, K7A 0A8 and Canopy USA’s head office is located at 35715 Hwy 40, Ste D102, Evergreen, Colorado, 80439.
