Late last week, leading North American cannabis operator TerrAscend announced that it had reached an agreement with Canopy USA and certain of its subsidiaries to convert $92 million in aggregate loans plus accrued interest. The transaction was in exchange for 24,601,467 exchangeable shares in the capital of TerrAscend at a nominal price of $3.76 per exchangeable share and 22,474,130 new common stock purchase warrants. The purpose of the transaction is to acquire common shares in the capital of TerrAscend at a weighted average exercise price of $4.48 per common share.
Jason Wild, CEO of TerrAscend, commented that Canopy USA continues to be viewed as a reliable partner and investor. He and his team appreciate all the support from this company as it increases its conditional ownership in TerrAscend. He added, “This transaction, combined with the recent $30 million pay down of our Michigan loan, materially improves our balance sheet and reduces annual interest expense by approximately $10 million.”
It is important to note that all existing warrants (22,474,130) held by Canopy USA LP I and Canopy USA LP III issued to Canopy Growth Corporation and RIV Capital Corporation between 2019 and 2020 have been canceled. All new Warrants expire on December 31, 2032. With the issuance of the new warrants, Canopy USA owns 63,492,037 Exchangeable Shares and 22,474,130 New Warrants and is deemed to own 1,072,450 common shares, which are subject to an option for an aggregate exercise price of $1.
In addition, the exchangeable shares have the ability to be converted into shares of common stock at the option of Canopy USA LP I and Canopy USA LP III. This transaction is subject to compliance with applicable stock exchange listing standards and the federal legalization of cannabis in the US.