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SMITHS FALLS, ON, March 11, 2020 /CNW/ – PRESS RELEASE – Canopy Growth Corporation and TerrAscend Canada Inc., a wholly owned subsidiary of TerrAscend Corp., have announced they have entered into a loan financing arrangement in the amount of C$80.5 million pursuant to a secured debenture. In connection with the loan, TerrAscend has issued 17,808,975 common share purchase warrants to the company.

Canopy Growth initially co-invested in TerrAscend in November 2017. On Nov. 30, 2018, Canopy Growth announced the completion of a restructuring transaction with TerrAscend pursuant to which TerrAscend restructured its share capital by way of a plan of arrangement under the Business Corporations Act (Ontario).

“TerrAscend Canada has proven its ability to thrive and this loan is a strong signal that Canopy Growth is confident in their ability to execute over the long term,” said David Klein, CEO of Canopy Growth. “We are encouraged by TerrAscend’s strong performance and we view the team’s experience as an important contributor to its continued success.”

“We are pleased to receive this loan from Canopy Growth as we enter into the next stage of TerrAscend’s growth and expansion,” said Jason Ackerman, executive chairman and interim CEO. “We look forward to continuing to work with Canopy Growth as new opportunities emerge and the regulatory landscape evolves.”

Use of Proceeds

The net proceeds are expected to be used by TerrAscend Canada for general corporate purposes and the funding of its Canadian operations, its Arise Bioscience U.S. hemp division, international expansion and the repayment of indebtedness. The funds cannot be used, directly or indirectly, in connection with or for any cannabis or cannabis-related operations in the United States, unless and until such operations comply with all applicable laws of the United States.

Transaction Overview

The debenture will bear interest at a rate of 6.10% per annum and will mature on March 10, 2030, or such earlier date in accordance with the terms of the debenture and all interest payments made pursuant to the Debenture are payable in cash by TerrAscend Canada. The debenture is secured by the assets of TerrAscend Canada, is not convertible and is not guaranteed by TerrAscend. The warrants are comprised of 15,656,242 common share purchase warrants with each first tranche warrant entitling Canopy Growth to acquire one common share of TerrAscend at an exercise price of $5.14 per share, subject to adjustment in certain events and 2,152,733 common share purchase warrants with each second tranche warrant entitling Canopy Growth to acquire one common share of TerrAscend at an exercise price of $3.74 per share, subject to adjustments in certain events. The warrants will be exercisable by Canopy Growth following changes in U.S. federal laws permitting the cultivation, distribution and possession of marijuana or to remove the regulation of such activities from the federal laws of the United States. The first tranche warrants expire on March 10, 2030, or such earlier date in accordance with the first tranche warrants and the second tranche warrants expire on March 10, 2031, or such earlier date in accordance with the second tranche warrants.