VAUGHAN, ON, Feb. 25, 2022 /PRNewswire/ – CannTrust Holdings
Inc. ("CannTrust" or the "Company") (unlisted) today announced that
it has secured new investment partners, led by Marshall Fields
International B.V. ("Marshall Fields"), a subsidiary of Kenzoll
B.V., a Netherlands-based private
equity investment company.
"We are delighted to have found great partners who share our
vision for the future of the Company. This is the culmination of
two and a half years of hard work from the entire CannTrust team.
We have remediated and improved our operations, restored our
cannabis licenses, relaunched our business, settled all class
action litigation against the Company and others, and now secured
the right strategic partner." said Greg
Guyatt, Chief Executive Officer, CannTrust. "As we begin
this new era, we look forward to exiting CCAA and to sharing our
plans for the future in the coming weeks, beginning with our new
company name."
"CannTrust is a high-quality investment opportunity. We've been
consistently impressed with the current business, its operations
and management team and we're excited to be working together," said
Corné Melissen, Owner, Kenzoll B.V. "Over the past few years, we
have assembled business interests in the cannabis space in
Africa and the Netherlands, with a world class management
team dedicated to finding synergies where possible. We are
confident that Canadian legalization will give rise to more
jurisdictions following suit, and that CannTrust will provide us
with the North American foundation and industry expertise to become
a global leader."
Today, the Ontario Court of
Justice approved a proposed transaction pursuant to the
Companies Creditors' Arrangement Act ("CCAA"), along
with an extension of its stay order until the earlier of
March 25, 2022 or closing of the
transaction, at which time the Company expects to exit from its
CCAA proceedings. Under the proposed transaction:
- An investor group led by Marshall
Fields (the "Investors") has agreed to provide a
$5.5 million debtor-in-possession
loan (the "New DIP loan") to CannTrust Equity Inc. ("CannTrust
Equity") and CannTrust Inc. ("CannTrust Opco"), which will rank
behind the Company's existing $22.5
million DIP loan (the "Cortland DIP loan") from Cortland
Credit Lending Corporation;
- The Investors, including two members of the Company's
management team (who are not lenders under the New DIP loan), will
invest $11.2 million to acquire an
approximately 90% equity interest in CannTrust Equity (the "Private
Placement"), with CannTrust Holdings retaining the balance of the
equity in CannTrust Equity;
- The Company's existing approximately $336 million inter-company loan to CannTrust Opco
and the Company's 50% equity interest in Cannabis Coffee and Tea
Pod Company will be assigned to CannTrust Equity; and
- Upon closing of the Private Placement, the Investors will enter
into a unanimous shareholders agreement (the "USA"). The Company
anticipates that the USA will
provide for, among other things, an option (the "Exchange Option"),
expiring 18 months after the closing date of the Private Placement,
permitting the Investors to elect to exchange their CannTrust
Equity shares for a like number of CannTrust Holdings shares. The
Exchange Option will be exercisable by the Investors only if, among
other things, CannTrust Holdings obtains an order from the Ontario
Securities Commission ("OSC") revoking the OSC's "failure-to-file"
Cease Trade Order dated April 13,
2020.
The Company anticipates that the USA will provide that, if the Investors elect
to exercise the Exchange Option and acquire control of CannTrust
Holdings, the Company will use its commercially reasonable best
efforts to initiate a rights offering in accordance with National
Instrument 45-106 - Private Placements, offering an
opportunity for current CannTrust Holdings shareholders to
subscribe for additional common shares of the Company at a price
that will be determined by the Company's board of directors at the
time of the rights offering. The rights offering issue price would
be lower than the then-existing market price (if the shares are
then listed on a stock exchange) or their fair value (if the shares
are not then listed).
The New DIP loan will permit the Investors to convert all or
part of the principal and interest (accrued and unpaid) under the
loan into additional fully paid common shares of CannTrust Equity
at the same price per share payable at closing of the Private
Placement. If the New DIP loan is fully drawn and the lenders
elect to convert the entire New DIP loan into equity, the expected
combined ownership of the New Investors in CannTrust Equity will
increase to approximately 93% before giving effect to any shares
issuable under the rights offering.
CannTrust Equity intends to use the proceeds of the New DIP loan
and the Private Placement for general working capital purposes to
continue funding its growth strategy. Following closing of the
Private Placement, in consultation with the New Investor, the
Company intends to work towards applying to the OSC for an order
revoking the Cease Trade Order. The Company anticipates that
obtaining such an order will require, among other things, the
filing and/or restating of audited financial statements and the
preparation and filing of certain other public disclosures that are
required by applicable securities laws.
The Company intends to convene an annual general meeting of its
shareholders within four months of completing the Private
Placement.
For more information about CannTrust's CCAA proceedings, please
visit: www.ey.com/ca/canntrust.
About CannTrust
CannTrust is a federally regulated licensed cannabis producer.
We are proudly Canadian, operating a portfolio of brands including
estora, Liiv, Synr.g and XSCAPE, specifically designed to surprise
and delight patients and consumers.
At CannTrust, we are committed to providing an exceptional
customer experience, as well as consistent and quality products
through standardized processes. Our greenhouse produces Grade A
cannabis flower, with products currently being sold in dried
flower, pre-roll, vape, oil drops and capsule formats. Founded in
2013, our continued success in the medical cannabis market and
subsequent expansion into the recreational business, led to us
being named Licensed Producer of the Year at the Canadian Cannabis
Awards 2018.
CannTrust is committed to research and innovation, investing in
developing technologies for new products in the medical,
recreational, and wellness markets, while contributing to the
growing body of evidence-based research regarding the use and
efficacy of cannabis.
Learn more at www.canntrust.com.
About Marshall Fields International B.V. and Kenzoll
B.V.
Marshall Fields International B.V. is a subsidiary of Kenzoll
B.V., a Netherlands-based private
equity investment company. Kenzoll B.V. is based in Amsterdam, the Netherlands and controlled by
Corné Melissen. Kenzoll B.V.'s portfolio comprises investments in
energy, technology and cannabis.
Learn more at https://kenzoll.com/
Forward-Looking Statements
This press release contains "forward-looking information" within
the meaning of Canadian securities laws and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and other applicable
United States safe harbor laws,
and such statements are based upon CannTrust's current internal
expectations, estimates, projections, assumptions and beliefs and
views of future events.
Forward-looking information and forward-looking statements can
be identified by the use of forward-looking terminology such as
"believes", "expect", "likely", "may", "will", "should", "intend",
"anticipate", "potential", "proposed", "estimate" and other similar
words, including negative and grammatical variations thereof, or
statements that certain events or conditions "may", "would" or
"will" happen, or by discussions of strategy.
The forward-looking information and statements in this news
release include statements relating to CannTrust's ongoing CCAA
proceedings, its efforts to obtain new debt and equity financing
and to settle related contractual and governance items, some of
which have not been finalized and remain subject to reaching
agreement with persons who are not controlled by the Company.
Forward-looking information and statements necessarily involve
known and unknown risks, including, without limitation: the
Company's limited cash and other liquidity; the risk that the
Company or CannTrust Equity will be unable to raise further
liquidity; the risk that, if CannTrust Equity requires additional
equity, the Company's investment in CannTrust Equity could be
diluted further; the risk that the Company will be unable to
complete the Private Placement or agree on satisfactory terms for
the USA or the New Investor DIP
loan; the risk that CannTrust Equity or its affiliates could
default under the Cortland DIP loan or the New DIP loan, which are
secured against substantially all of the Company's assets; the risk
that the Company will not be able to cure its disclosure defaults
under securities laws and obtain an order from the OSC to revoke
the CTO, on commercially reasonable terms, or at all; the impact of
any regulatory and other investigations or proceedings; the risks
associated with general economic conditions and/or adverse industry
events; the risk of loss of markets; the risk of future legislative
and regulatory developments in Canada, the United
States and elsewhere; the state of the cannabis industry in
Canada generally; the ability of
the Company to attract and retain suitable directors, officers and
employees; the risks that, even if the CTO can be revoked, the
Company will be unable to obtain a stock exchange listing for the
Company's common shares; the risk that CannTrust will be unable to
satisfy the requirements of such exchange; and the ability of
CannTrust to successfully implement its business strategies.
Any forward-looking information and statements speak only as of
the date on which they are made, and, except as required by law,
CannTrust does not undertake any obligation to update or revise any
forward-looking information or statements, whether as a result of
new information, future events or otherwise. New factors emerge
from time to time, and it is not possible for CannTrust to predict
all such factors. When considering these forward-looking
information and statements, readers should keep in mind the risk
factors and other cautionary statements in CannTrust's Annual
Information Form dated March 28, 2019
(the "AIF") and filed with the applicable Canadian securities
regulatory authorities on SEDAR at www.sedar.com and filed as an
exhibit CannTrust's Form 40-F annual report under the United States
Securities Exchange Act of 1934, as amended, with the United States
Securities and Exchange Commission on EDGAR at www.sec.gov (the
"March 2019 Form 40-F"). The risk
factors and other factors noted in the AIF could cause actual
events or results to differ materially from those described in any
forward-looking information or statements. Readers are also
reminded that CannTrust remains in default of its periodic
disclosure requirements under applicable securities laws and stock
exchange requirements, that its most recent AIF, Form 40-F and
other disclosures do not reflect all risk factors that currently
face the Company, and that the Company has not completed or filed
the restatements of the financial statements included in the AIF or
the March 2019 Form 40-F or otherwise
filed an amendment to such Form 40-F, and that the Company is
permitted by the Initial Order of the Superior Court of Justice to
not to correct its prior filings or make any further filings in
respect of periodic disclosure requirements under applicable
securities laws and stock exchange requirements. None of the
Company's securities is listed for trading on any stock exchange in
any jurisdiction and, in Canada,
trading in the Company's securities is subject to a cease-trade
order issued on April 13, 2020 by the
Ontario Securities Commission for CannTrust's failure to comply
with its disclosure obligations under applicable securities
laws.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/canntrust-announces-new-investment-partners-provides-timeline-for-ccaa-exit-301490916.html
SOURCE CannTrust Holdings Inc.