Canopy Growth arranges recapitalization transactions

Executive Summary

• Canopy Growth Corp. has entered into a series of transactions to recapitalize its balance sheet, extending all outstanding indebtedness maturities to January 2031 and increasing liquidity to approximately $425 million in cash on hand.
• The company secured a new term loan of approximately $162 million (U.S.) with net proceeds of $150 million (U.S.), which will be used to repay existing senior secured debt of ~$101 million (U.S.), fund working capital, and finance potential future acquisitions.
• Concurrently, Canopy Growth exchanged approximately $96.4 million (Canadian) of existing convertible debentures for new debentures due 2031, cash, common shares, and warrants, effectively restructuring its capital structure to support long-term growth and European market expansion.

Key Details

• Term Loan Structure:
  • Gross Principal: Approximately $162 million (U.S.), reflecting an original issue discount.
  • Net Proceeds: $150 million (U.S.).
  • Lenders: Group led by JGB Management Inc.
  • Maturity: January 2031.
  • Interest Rate: Term SOFR (subject to a 3.25% floor) + 6.25%.
  • Use of Proceeds: Repayment of ~$101 million (U.S.) senior secured debt due Sept 2027; working capital; general corporate purposes; potential future acquisitions.
  • Security: Secured by substantially all assets of the company and material subsidiaries.
  • Prepayment/Repayment:
    • Monthly interest payments in arrears.
    • Optional prepayment/repayment of up to $3 million (U.S.) per lender per calendar month after the first anniversary.
    • Interest make-whole equal to 12 monthly interest payments (less prior payments) for prepayments/repayments within the first year.
    • Exit fee of approximately $6.5 million (U.S.) (pro-rata for partial payments).
  • Covenants: Minimum cash requirement of the lesser of $90 million (U.S.) or the principal amount of the term loan.
• Convertible Debenture Exchange:
  • Existing Debt Exchanged: ~$96.4 million (Canadian) of convertible debentures due May 2029.
  • Counterparty: Single institutional investor.
  • Consideration Received by Investor:
    • $55 million (Canadian) of new convertible debentures due July 2031.
    • $10.5 million (Canadian) in cash.
    • 9,493,670 common shares.
    • 12,731,481 common share purchase warrants.
  • New Debenture Terms:
    • Interest Rate: 7.50% per annum, payable semi-annually in cash.
    • Conversion Price: $1.83 (Canadian) per common share.
• Warrant Issuance:
  • To Lenders: 18,705,577 common share purchase warrants.
    • Exercise Price: $1.30 (U.S.) per share.
    • Term: 5 years from closing.
  • To Investor (Exchange): 12,731,481 common share purchase warrants.
    • Exercise Price: $2.16 (Canadian) per share.
    • Term: 5 years from closing.
• Registration Rights:
  • Company agreed to file SEC registration statements covering resale of common shares issued in the exchange, shares underlying the debentures, and both investor and loan warrants.
• Advisers:
  • Financial Adviser: Canaccord Genuity Corp.
  • Canadian Counsel: Cassels Brock & Blackwell LLP.
  • U.S. Counsel (Loan): Goodwin Procter LLP.
  • U.S. Counsel (Exchange): Paul Hastings LLP.
  • Counsel to JGB Management: Haynes and Boone LLP and Stikeman Elliott LLP.
• Closing Date: Expected on or around January 8, 2026, subject to customary conditions.