On May 30, 2024, RIV Capital Inc. and Cansortium Inc. entered into a definitive arrangement agreement pursuant to which Cansortium will acquire all of the shares of RIV Capital by way of a court-approved plan of arrangement pursuant to the Business Corporations Act (Ontario).
Under the terms of the arrangement agreement, RIV Capital shareholders will receive 1.245 of a common share of Cansortium in exchange for each RIV Capital share held. Upon closing of the transaction, Cansortium shareholders are expected to hold approximately 51.25% of the combined business, and RIV Capital shareholders, including The Hawthorne Collective, Inc., are expected to hold approximately 48.75%.
In connection with the transaction, Hawthorne has agreed to exchange its existing unsecured convertible notes with a principal amount of US$175 million, including any accrued and unpaid interest, payable by RIV Capital, for non-voting shares of Cansortium. In addition, RIV Capital agreed to advance Cansortium an interest-bearing bridge loan up to US$8.975 million, convertible into Cansortium shares upon the occurrence of certain events of default, and at the option of RIV Capital at a price of US$0.17 per Cansortium share. Cansortium also obtained the consent of its lenders to the transaction and entered into an amended credit agreement which provides, among other things, amended financial covenants, a revised minimum liquidity covenants of US$10 million and a pay-down on closing of US$10 million.
The transaction remains subject to the satisfaction of certain closing conditions customary in transactions of this nature, including regulatory, court and shareholder approval.
Cassels is acting for RIV Capital.