Rivers shareholders approve plan of arrangement with Canopy Growth

TORONTO - Canopy Rivers Inc. (“Rivers” or the “Company”) (TSX: RIV) (OTC: CNPOF) is pleased to announce that its shareholders voted today to approve the previously announced plan of arrangement (the “Arrangement”) involving Canopy Growth Corporation (“Canopy Growth”) (TSX: WEED) (NASDAQ: CGC).  

Approximately 99.87% of the votes cast by Rivers’ shareholders were voted in favour of the Arrangement, including approximately 99.85% of the votes cast by Rivers’ shareholders other than Canopy Growth, whose votes were required to be excluded pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. Approval was required from at least (i) two-thirds of the votes cast by the holders of Subordinated Voting Shares (“SVS”), voting separately as a class; (ii) two-thirds of the votes cast by Canopy Growth, as the sole holder of all of the Multiple Voting Shares (“MVS”), voting separately as a class; and (iii) a simple majority of votes cast by holders of SVS, voting separately as a class, excluding the votes attaching to the SVS held by Canopy Growth.

“We are thrilled by both the high voting turnout and the tremendous support we received for the Arrangement,” said Narbé Alexandrian, President and CEO, Rivers. “We believe that this deal provides substantial value to shareholders, which was highlighted by the overwhelming support we received today. We look forward to delivering on this vote of confidence as we execute on our new strategy focused on opportunities in the U.S. market.”

Right of First Refusal in respect of the Vert Mirabel Shares

The Company also announced today that Les Serres Stéphane Bertrand Inc. (“Serres Bertrand”) has exercised its right of first refusal to purchase its proportionate interest of the common shares (the “ROFR Shares”) in Les Serres Vert Cannabis Inc. (“Vert Mirabel”) from Rivers, which was triggered as a result of the Arrangement.

Accordingly, the Company, through its wholly-owned subsidiary, RIV Capital Corporation (formerly Canopy Rivers Corporation) (“RCC”), has entered into a definitive purchase agreement (the “Share Purchase Agreement”) with Serres Bertrand in respect of the ROFR Shares, pursuant to which RCC will sell to Serres Bertrand 117 ROFR Shares, representing 11.7% of the issued and outstanding common shares of Vert Mirabel, for cash consideration of approximately $3.4 million (the “ROFR Transaction”). 

The ROFR Transaction is expected to be completed on the same day as the Arrangement, subject to the satisfaction of certain conditions in favour of RCC, including the deposit by Serres Bertrand of the cash consideration, and the consummation of the Arrangement. The Company expects that both the Arrangement and the ROFR Transaction will close prior to the end of February.  

The ROFR Transaction will result in a downward adjustment to the number of common shares of Canopy Growth that RCC will receive pursuant to the Arrangement by approximately 103,000 shares, such that RCC will now receive approximately 3.65 million common shares of Canopy Growth. The remaining shares of Vert Mirabel held by RCC will be transferred to Canopy Growth pursuant to the Arrangement. If the conditions to completion of the ROFR Transaction are not satisfied, all of the ROFR Shares will be transferred to Canopy Growth as part of the Arrangement.

About Canopy Rivers

Canopy Rivers is an investment and acquisition company specializing in cannabis with a portfolio of 17 companies across various segments of the cannabis value chain. We believe that bringing together people, capital, and ideas raises the potential of the entire cannabis industry. By leveraging our industry insights, in-house expertise, and thesis-driven approach to investing, we aim to provide shareholders with exposure to specialized and disruptive cannabis companies.

Forward Looking Statements

This news release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. To the extent any forward-looking information in this news release constitutes “financial outlooks” within the meaning of applicable Canadian securities laws, the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes information regarding: the Company’s belief that the ROFR Transaction will be completed; the anticipated cash proceeds from the ROFR Transaction; Serres Bertrand’s ability to meet certain conditions in order to complete the ROFR Transaction; the Company’s belief that the Arrangement and the ROFR Transaction will close on the same day; the value provided to shareholders by the Arrangement; that shareholders supported the Arrangement because of the values derived from it; the Company’s anticipated focus on its strategy in the U.S. market; the Company’s expectation that the Arrangement will close prior to the end of February 2021; and the Company’s expectations for other economic, business, and/or competitive factors.

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. Our actual financial position and results of operations may differ materially from management’s current expectations. 

Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the possibility that the Arrangement will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, the required approval of the court, or other approvals and other conditions of closing necessary to complete the Arrangement, or for other reasons, the occurrence of any event, change or other circumstances that could give rise to the termination of the Arrangement; the possibility that the ROFR Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, the conditions of closing necessary to complete the ROFR Transaction, or for other reasons, the occurrence of any event, change or other circumstances that could give rise to the termination of the Share Purchase Agreement; the delay of implementation of the Arrangement or failure to complete the Arrangement for any reason; the Company’s ability to alter its capital structure on the anticipated terms; the inability of Serres Bertrand to meet certain conditions pursuant to the Share Purchase Agreement, including the delivery of the cash consideration thereunder; credit liquidity, and additional financing risks for the Company and its investees; the entry into the U.S. market by the Company; the potential for the company's board of directors and shareholders to be prosecuted for aiding and abetting violations of U.S. federal law; enhanced scrutiny of the Company's investments and operations if the Company invests in or operates U.S. cannabis businesses; the effect of operating or investing in the U.S. on the Company's existing contractual arrangements and business relationships; the risks associated with U.S. banking and anti-money laundering laws and regulations; the classification of the Company's income as proceeds of crime and the ability of the Company to declare or pay dividends or effect other distributions or the repatriation of funds back to Canada; risks associated with the termination, renegotiation and enforcement of material contracts; credit, liquidity and additional financing risks for the Company and its investees; litigation risks; stock market volatility; regulatory and licensing risks; cannabis pricing risks; changes in cannabis industry growth and trends; changes in the business activities, focus and plans of the Company and its investees and the timing associated therewith; the Company’s actual financial results and ability to manage its cash resources; changes in general economic, business and political conditions, including challenging global financial conditions and the impact of the novel coronavirus pandemic; competition risks; potential conflicts of interest; the regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; changes in the Company’s relationship with Canopy Growth and its investees; changes in applicable laws; compliance with extensive government regulation, including the Company’s interpretation of such regulation; changes in the global sentiment towards, and public opinion of, the cannabis industry; reliance on material contracts; risk of default by investees; divestiture risks; and the risk factors set out in the Company’s annual information form for the year ended March 31, 2020 and the Company’s management information circular in connection with the Arrangement, filed with the Canadian securities regulators and available on the Company’s profile on SEDAR at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

For further information:
Media:
media@rivcapital.com

Investor Relations:
ir@canopyrivers.com