TerrAscend Corp., the first global cannabis company licensed for sales in the U.S., Canada, and the EU, announced that the terms of its previously announced US$10 million loan (the “Loan”) from Canopy Rivers Corporation, a wholly-owned subsidiary of Canopy Rivers Inc., to TerrAscend Canada Inc., a wholly-owned subsidiary of TerrAscend, have been amended. The original terms of the Loan were announced on October 2, 2019 and included the purchase of 13,243 units, with each unit consisting of (i) one unsecured convertible debenture of TerrAscend Canada with a principal amount of C$1,000 (the “Debentures”), and (ii) 25.2 common share purchase warrants of TerrAscend (the “Original Warrants”) with an exercise price of C$6.49.
After the October 2, 2019 announcement of the Loan and subsequent discussions with the Toronto Stock Exchange (the “TSX”), TerrAscend, TerrAscend Canada, and Canopy Rivers mutually agreed to amend certain terms of the Loan.
Pursuant to the amended terms, the Debentures have been converted into a C$13,243,000 loan agreement (the “Loan Agreement”) entered into between Canopy Rivers and TerrAscend Canada. Pursuant to the Loan Agreement, interest on the principal amount outstanding will accrue at a rate of 6% per annum, and all interest payments are payable in cash by TerrAscend Canada. The principal amount under the Loan Agreement matures on October 2, 2024 or such earlier date in accordance with the terms of the Loan Agreement.
TerrAscend has also issued Canopy Rivers 2,225,714 common share purchase warrants of TerrAscend (the “Warrants”), exercisable upon the occurrence of certain events (each such event, a “Triggering Event”), including (i) the federal laws in the United States are amended to permit the general cultivation, distribution and possession of marijuana or to remove the regulation of such activities from the federal laws of the United States, and (ii) the stock exchange(s) on which securities of Canopy Rivers or its affiliates are listed permit the investment by Canopy Rivers in an entity that participates in the cultivation, distribution and possession of marijuana in the United States. The exercise price for the Warrants is C$5.95 per share and the Warrants expire on October 2, 2024. The Warrants are subject to certain forced exercise rights that may be exercised by TerrAscend if the five-day VWAP of TerrAscend’s common shares equals or exceeds $10.82, subject to the occurrence of certain other conditions, all as more particularly set out in the certificate evidencing the Warrants. The Original Warrants remain issued and outstanding.
TerrAscend Canada intends to use the proceeds for general corporate purposes and the proceeds will not be used, directly or indirectly, in connection with any cannabis or cannabis-related operations in the United States, unless and until such operations comply with all applicable laws of the United States.