Canopy Rivers Announces Proposed Restructuring of Investment in TerrAscend

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TORONTO, Oct. 09, 2018 (GLOBE NEWSWIRE) — Canopy Rivers Inc. (the “Company”) (TSXV: RIV) is pleased to announce it has entered into an arrangement agreement (the “Arrangement Agreement”) through its wholly-owned subsidiary, Canopy Rivers Corporation (“Canopy Rivers”), with TerrAscend Corp. (“TerrAscend”) (CSE: TER) pursuant to which TerrAscend will restructure its share capital by way of a plan of arrangement under the Business Corporations Act (Ontario) (the “Arrangement”).

TerrAscend wishes to pursue strategic transactions in the cannabis sector internationally, including select opportunities in the United States. To accommodate TerrAscend’s strategic pursuits, while also maintaining strict compliance with industry regulations and the policies of the various securities exchanges, Canopy Rivers has agreed to restructure its investment and waive certain restrictive covenants that were granted by TerrAscend in connection with the original investment by Canopy Rivers, Canopy Growth Corporation (TSX: WEED, NYSE: CGC), JW Opportunities Master Fund Ltd., JW Partners LP, and Pharmaceutical Opportunities Fund LP.

We are excited for our partners at TerrAscend to extend their investment and operating strategy into new global markets. As TerrAscend pursues international growth, beginning in what is anticipated to be the largest cannabis economy in the world, we believe their team is well-positioned to take advantage of opportunities in regulated jurisdictions, and we are confident in their ability to leverage their pharmaceutical resources and strategic relationship networks to identify and execute compelling transactions.

Bruce Linton, Chairman and Acting CEO of Canopy Rivers, and co-CEO of Canopy Growth Corporation

Canopy Rivers currently owns 11,285,456 common shares (the “Common Shares”) in the capital of TerrAscend and common share purchase warrants (the “Warrants”) entitling Canopy Rivers to acquire 9,545,456 Common Shares at a price of $1.10 per Common Share.

Pursuant to the Arrangement, Canopy Rivers will exercise its Warrants for no cash consideration, resulting in the net issuance of 8,159,456 Common Shares based on the five day volume weighted average trading price of the Common Shares of TerrAscend on the Canadian Securities Exchange (the “CSE”) for the period ending October 5, 2018, the last trading day prior to the date of the Arrangement Agreement. All Common Shares held by Canopy Rivers will thereafter be exchanged pursuant to the Arrangement for new, conditionally exchangeable shares in the capital of TerrAscend (the “Exchangeable Shares”).

The Exchangeable Shares will become convertible into Common Shares following changes in U.S. federal laws regarding the cultivation, distribution or possession of marijuana, the compliance of TerrAscend with such laws and the approval of the various securities exchanges upon which the holder’s securities are listed. The Exchangeable Shares are not transferrable or monetizable until exchanged into Common Shares. In the interim, each holder of Exchangeable Shares will not be entitled to voting rights, dividends or other rights upon dissolution of TerrAscend.

“We are optimistic regarding the continued evolution of global cannabis regulations,” said Linton. “The restructuring of our investment in TerrAscend is intended to create long-term value for our shareholders as it positions the Company with optionality and conditional future exposure to a significant new market in a manner that is compliant with the current policies of the exchanges and regulations that govern our industry.”

The Company does not engage in any U.S. cannabis-related activities as defined in Canadian Securities Administrators Staff Notice 51-532. While the Company has an interest in TerrAscend, TerrAscend has not engaged in cannabis-related activities in the U.S. to date and will not do so until closing of the Arrangement. Cannabis remains a Schedule I drug under the United States Controlled Substances Act, making it illegal under federal law in the U.S. to cultivate, distribute or possess cannabis.

For TerrAscend, the Arrangement will require approval by 66 2/3 percent of the votes cast by its shareholders as well as a simple majority of disinterested shareholders voting at a special shareholder meeting. The Arrangement is also subject to all necessary regulatory approvals, including that of the CSE.

About Canopy Rivers Inc.

The Company is a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. The Company works collaboratively with Canopy Growth (TSX:WEED, NYSE: CGC) to identify strategic counterparties seeking financial and/or operating support. The Company has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth and collaborate among themselves, which the Company believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem.

Original press release

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