Constellation To Increase Canopy Share Through Debt Swap
July 5, 2022Canada-based cannabis player Canopy Growth, backed by Constellation Brands, is paying out shares and cash to sweep up a significant portion of its debt that’s set to mature next year. Canopy announced it has entered into privately negotiated exchange agreements with various parties collectively holding nearly $200 million in convertible notes.
Under the terms of the exchange, Canopy will pay approximately $198 million in shares and $2.4 million cash to buy back the unsecured convertible notes. Constellation Brands, which already holds a nearly 40% stake in Canopy Growth, is participating in the transaction. It will acquire a minimum of 21.9 million shares and a maximum of 30.7 million shares, further increasing its stake in the company. For context, Constellation currently holds approximately 142.3 million Canopy shares.
For its fiscal year through March, Canopy saw net revenues decline 5% to C$520.3 million ($410.9m). Flower sales were down 11% for the full year, totaling C$211.7 million (167.2m) in revenue. Canopy’s full year adjusted EBITDA showed a loss of C$415.4 million ($328m). The company says it’s focused on growing market share in key segments while continuing to build its U.S. brand stable with deals such as its recent plays for Wana Brands and Jetty Extracts, both contingent upon federal legalization.—Danny Sullivan
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