On July 14, 2023, Canopy Growth Corporation entered into a series of agreements, including privately negotiated redemption agreements with certain holders of its unsecured senior notes due July 15, 2023 and agreements with certain of its lenders under its term loan credit agreement dated March 18, 2021, that will have the overall effect of deleveraging Canopy Growth’s balance sheet by $437 million over the next six months and lowering annual interest costs by $20 to $30 million.
Pursuant to the terms of the redemption agreements, approximately $193 million of the $225 million aggregate principal amount under the outstanding existing notes due July 15, 2023 will be redeemed on the closing date for (i) a cash payment of approximately $101 million; (ii) the issuance of approximately 90.4 million common shares; and (iii) the issuance of approximately $40.4 million debentures. The debentures will be convertible into common shares at the option of the holder any time following shareholder approval at a conversion price equal to $0.55, subject to adjustment in certain events.
Under the terms of the amended credit agreement, Canopy Growth will make a cash payment of $93 million to reduce $100 million of principal indebtedness under the credit facility. Canopy Growth also agreed to direct proceeds from certain completed and contemplated asset sales to reduce indebtedness under the credit facility and receive principal reductions at $0.95 on the dollar toward such repayments and the removal of certain onerous financial covenants.
Cassels is acting as strategic and legal counsel for Canopy Growth.