iAnthus Capital Holdings, Inc. (“iAnthus” or the “Company”) (CSE: IAN) (OTCPK: ITHUF), which owns, operates and partners with regulated cannabis operations across the United States provides an update with respect to the Company’s review of the Ontario Superior Court of Justice’s decision released on October 12, 2021 (the “Decision“).
Background
iAnthus entered into a Restructuring Support Agreement with the Lenders on July 10, 2020, which was amended on June 15, 2021 (together, the “RSA“).1 The RSA contemplated a future recapitalization transaction (the “Recapitalization Transaction“) whereby the principal amount of iAnthus’ liabilities to the Lenders would be reduced and, in exchange, the Lenders would acquire 97.25% of the equity in iAnthus (for further details on the Recapitalization Transaction, see the Company’s Management Information Circular dated August 14, 2020, a copy of which is available under the Company’s SEDAR profile at www.sedar.com).
The RSA contemplated that the Recapitalization Transaction would close by the “Outside Date”, failing which, each of the parties would have the right to terminate. The Outside Date chosen by the parties was initially June 30, 2021, but was extended by agreement among the parties to August 31, 2021 when the RSA was amended.
The Recapitalization Transaction has not closed. Necessary regulatory approvals are outstanding from certain U.S. state cannabis regulators.
On August 23, 2021, the Applicants2 had issued an application (the “Application“) with the Ontario Superior Court of Justice seeking declaratory relief validating their purported unilateral extension of the Outside Date from August 31, 2021 to “the date on which any regulatory approval or consent condition to implementation of the [Recapitalization Transaction] is satisfied or waived”. The Application was heard on the merits on September 23, 2021.
On October 12, 2021, Justice Penny of the Ontario Superior Court of Justice granted the declaration sought by the Applicants and ordered that the Outside Date in the RSA is extended to the date on which all regulatory approvals or consent conditions are satisfied or waived.
Appeal
The Company’s board of directors (the “Board“) reviewed the Decision with its legal advisors and the Board has determined to appeal, as is its right, to the Ontario Court of Appeal. The Company’s Notice of Appeal was served on the Lenders and filed today.
iAnthus will continue to comply with all of its obligations and pursue all of its rights under the RSA. Prior regulatory approvals in New York, Maryland and Massachusetts necessary to close the Recapitalization Transaction are still outstanding.3
