TORONTO, April 22, 2022 /PRNewswire/ – RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) (“RIV Capital” or the “Company”) today announced completion of the initial closing (the “Initial Closing”) of its previously disclosed transaction involving Etain, LLC and Etain IP LLC, owners and operators of legally licensed cannabis cultivation and retail dispensaries in the state of New York (the “Etain Acquisition”). Pursuant to the Initial Closing, RIV Capital is acquiring the non-regulated portion of the Etain companies for approximately US$198 million through a combination of cash and newly issued Class A common shares of RIV Capital (the “Common Shares”). An additional amount of approximately US$49 million through a combination of cash and Common Shares will be paid subject to, among other things, receipt of all required regulatory approvals, including from the New York Cannabis Control Board and the New York State Office of Cannabis Management.
Concurrent with the Initial Closing, The Hawthorne Collective, Inc. (“The Hawthorne Collective”), a wholly-owned subsidiary of The Scotts Miracle-Gro Company, completed its additional US$25 million investment in RIV Capital, evidenced by a newly issued convertible note with a principal amount of approximately C$31.3 million (being the Canadian dollar equivalent of US$25 million based on the daily average exchange rate posted by the Bank of Canada on the day prior to the date of the related note purchase agreement) and a conversion price of C$1.65 per Common Share. As previously announced, the additional investment was undertaken pursuant to rights existing under The Hawthorne Collective’s previous convertible note investment in RIV Capital.
Early Warning Reporting Disclosure
BrandCo HoldCo, LLC (“HoldCo”) announces, pursuant to applicable requirements of Canadian securities laws that it has acquired (the “Acquisition”) 21,092,335 Common Shares pursuant to the Initial Closing at a price of C$1.65 per Common Share and approximately C$34.8 million in the aggregate, representing approximately 12.9% of the issued and outstanding Common Shares. Prior to the Acquisition, HoldCo did not beneficially own or control any Common Shares. Upon consummation of the final closing of the Etain Acquisition, it is expected that HoldCo will, subject to customary purchase price adjustments, acquire an additional 5,273,084 Common Shares at a value of C$1.65 per Common Share.
HoldCo completed the Acquisition for investment purposes. Subject to applicable laws and the terms of the Etain Investor Rights Agreement (as defined below), HoldCo may acquire additional securities of RIV Capital or may dispose of any or all of its holdings of Common Shares, from time to time through, among other things, transactions on the open market or in private transactions or otherwise, on such terms and at such times as HoldCo may deem advisable depending upon an ongoing evaluation of the Common Shares, the Company, prevailing market conditions, the availability of Common Shares at prices that would make the purchase or sale of Common Shares desirable, other investment opportunities, liquidity requirements of HoldCo, respectively, and/or other considerations and in such manner as it deems appropriate, subject to applicable laws,
In connection with the Initial Closing, RIV Capital, HoldCo and the former beneficial owners of Etain entered into an investor rights agreement (the “Etain Investor Rights Agreement”) providing HoldCo and such former beneficial owners with, among other things, registration, information and certain nomination rights.
A copy of the early warning report filed by HoldCo in connection with the above will be filed on SEDAR and made available under RIV Capital’s profile on SEDAR at www.sedar.com.
HoldCo is located at 172 Prospect Hill Road, Brewster, New York, 10509. For further information, please contact Hillary Peckham at 914-482-2481.
RIV Capital is an operating and brand platform that aims to acquire, invest in and develop U.S. cannabis companies to build the cannabis industry of tomorrow, today. By bringing together people, capital and ideas, we aim to provide shareholders with exposure to exceptional cannabis companies in strategically attractive states poised for significant growth. Backed by our in-house expertise and cannabis domain knowledge, we aim to develop operators and brands who can build market share while we expand the geographic and strategic scope of our multistate platform. RIV Capital also has a strategic relationship with The Hawthorne Collective, a wholly owned subsidiary of The Scotts Miracle-Gro Company, pursuant to which RIV Capital is The Hawthorne Collective’s preferred vehicle for investments not under the purview of other Scotts Miracle-Gro subsidiaries.
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