Canopy Rivers Inc. provided an update on its 49%-owned joint venture, PharmHouse Inc.
On October 29, 2020, PharmHouse received a court order from the Ontario Superior Court of Justice (the “Court”) to initiate a sale and investment solicitation process (“SISP”) to identify interest in, and opportunities for, a sale of, or investment in, all or part of PharmHouse’s assets or business. This may include a restructuring, recapitalization, or other form of reorganization of PharmHouse’s business and affairs. Phase one of the SISP concluded on November 30, 2020, and a number of non-binding offers were received. PharmHouse, with the assistance of the monitor and the SISP advisor, have selected a number of parties to bring forward to the next phase of the SISP, and binding offers for phase two of the SISP are due on or about February 16, 2021.
The Company also announced an amendment to the debtor-in-possession financing arrangement (the “DIP Financing”) entered into between the Company and PharmHouse on September 15, 2020. As a result of this amendment, the maximum principal amount available to be drawn by PharmHouse pursuant to the DIP Financing has increased by approximately $2.5 million from approximately $7.2 million to $9.7 million, and the maturity date has been extended from December 29, 2020 to February 28, 2021. It is expected that this amendment will provide PharmHouse with sufficient funding to continue its day-to-day operations throughout phase two of the SISP and up to the revised maturity date. In the event that the restructuring proceedings have not concluded by the revised maturity date, PharmHouse may require additional capital. On December 18, 2020, the Court approved the DIP Financing amendment and extended the stay of proceedings in respect of PharmHouse until February 28, 2021, inclusively.
“We remain committed to resolving the PharmHouse matter in the best interests of our shareholders,” said Narbé Alexandrian, President and CEO of Canopy Rivers. “We believe that the DIP Financing provides PharmHouse with the capital needed to maintain full operations in the short term, and we believe that this will also ensure the best outcome for our shareholders in the long term.”
PharmHouse commenced formal proceedings under the Companies’ Creditors Arrangement Act (“CCAA”) on September 15, 2020, and has continued its regular operations throughout its restructuring process. This includes growing and harvesting cannabis, and working towards finalizing new commercial agreements in the Canadian cannabis sector. Canopy Rivers currently anticipates that PharmHouse’s CCAA proceedings will conclude before the end of the Company’s current fiscal year and the Company continues to work collaboratively with PharmHouse’s bank lending syndicate throughout this process.
Canopy Rivers is a venture capital firm specializing in cannabis with a portfolio of 18 companies across various segments of the cannabis value chain.
