Constellation Brands Announces Conversion of Common Shares and
Exchange of Promissory Note Into Exchangeable Shares of Canopy
Growth Corporation
Constellation Brands, Inc. (NYSE: STZ), a leading beverage alcohol
company, announced today that its indirect, wholly-owned
subsidiaries, Greenstar Canada Investment Limited Partnership
(“Greenstar”) and CBG Holdings LLC (“CBG”), have converted (the
"Conversion”) their common shares (“Common Shares”) of Canopy
Growth Corporation (“Canopy”) into non-voting and non-participating
exchangeable shares of Canopy (“Exchangeable Shares”). The
amendment to Canopy’s share capital and the creation of the
Exchangeable Shares were authorized by Canopy shareholders at a
special meeting held on April 12, 2024 (the “Amendment”). Greenstar
and Canopy also agreed to exchange (the “Note Exchange” and
together with the Conversion, the “Transactions”) C$81.2 million of
the principal amount of the C$100 million promissory note due
December 2024 issued by Canopy (the “Note”) for Exchangeable Shares
pursuant to an exchange agreement between Greenstar and Canopy (the
“Exchange Agreement”). Pursuant to the Exchange Agreement,
Greenstar forgave all accrued but unpaid interest on the Note
together with the remaining principal amount of the Note.
Constellation had previously disclosed its intention to complete
the Transactions following Canopy shareholder approval of the
Amendment.
“We are pleased to complete the conversion of our Common Share
ownership interest in Canopy into Exchangeable Shares,” said Bill
Newlands, Constellation’s President and CEO. “While we remain
supportive of Canopy’s strategy, this Transaction is expected to
eliminate the impact to our equity in earnings and is aligned to
our intent to not deploy additional investment in Canopy as we’ve
previously stated in our capital allocation priorities.”
Prior to the completion of the Transactions, Greenstar and CBG
held an aggregate of 17,149,925 Common Shares (representing
approximately 18.8% of the issued and outstanding Common Shares)
after giving effect to the reverse stock split completed by Canopy
in December 2023, and Greenstar also held the Note. Canopy issued
Greenstar 9,111,549 Exchangeable Shares in connection with the Note
Exchange, calculated based on a price per share of C$8.91.
As a result of the Transactions, Greenstar and CBG now hold an
aggregate of 26,261,474 Exchangeable Shares, which Constellation
believes to be all of the issued and outstanding Exchangeable
Shares as of April 18, 2024, and no other securities of Canopy.
In connection with the Conversion, Greenstar, CBG, and Canopy
have terminated the investor rights agreement, administrative
services agreement, co-development agreement, and all other
commercial arrangements between them and their subsidiaries, other
than the consent agreement pursuant to which Greenstar and CBG
consented to the Amendment, certain termination agreements, and the
Exchange Agreement. As a result, Constellation has no further
governance rights in relation to Canopy, including rights to
nominate members to the Board of Directors of Canopy (the “Canopy
Board”), or approval or consulting rights related to certain
transactions of Canopy. All nominees of Constellation resigned from
the Canopy Board effective April 18, 2024.
Pursuant to their terms, the Exchangeable Shares are convertible
into Common Shares on a one-for-one basis at any time at the
election of Greenstar and CBG. Greenstar and CBG do not intend to
convert any of their outstanding Exchangeable Shares for Common
Shares or own any Common Shares, in each case until such time as
the U.S. domestic sale of marijuana could not reasonably be
expected to violate the Controlled Substances Act, the Civil Asset
Forfeiture Reform Act (as it relates to violation of the Controlled
Substances Act), and all related applicable anti-money laundering
laws. For early warning reporting purposes, Constellation will be
deemed to beneficially own the Common Shares issuable on conversion
of the Exchangeable Shares. Based on the assumptions noted above
and assuming no further issuances of Common Shares or Exchangeable
Shares, if Constellation were to convert all such Exchangeable
Shares into Common Shares it would hold an aggregate of 26,261,474
Common Shares (representing approximately 26.2% of the currently
issued and outstanding Common Shares, inclusive of the as-converted
Exchangeable Shares).
IMPORTANT ADDITIONAL INFORMATION Constellation
has no other present plans or future intentions that relate to
Canopy. Constellation may from time to time dispose of Exchangeable
Shares or other securities of Canopy, convert its Exchangeable
Shares into Common Shares (provided that Constellation does not
intend to convert any of its outstanding Exchangeable Shares for
Common Shares or own any Common Shares, in each case until such
time as the U.S. domestic sale of marijuana could not reasonably be
expected to violate the Controlled Substances Act, the Civil Asset
Forfeiture Reform Act (as it relates to violation of the Controlled
Substances Act), and all related applicable anti-money laundering
laws), dispose of any Common Shares acquired upon exchange of
Exchangeable Shares, or conduct other transactions, in the future,
either on the open market or in private transactions, in each case,
depending on a number of factors, including general market and
economic conditions, other available investment opportunities,
regulatory developments, or other factors determined by
Constellation. Depending on market conditions, general economic and
industry conditions, Canopy’s business and financial condition,
and/or other relevant factors, Constellation may develop other
plans or intentions in the future.
A copy of the early warning report filed in connection with this
press release will be available on Canopy’s profile on SEDAR+ at
www.sedarplus.ca or may be obtained by contacting Constellation’s
Investor Center at 1‑888-922-2150.
FORWARD-LOOKING STATEMENTS This news release
contains forward-looking statements. All statements other than
statements of historical fact are forward-looking statements. The
word “expect” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain such identifying words. These statements may
relate to business strategy, future operations, prospects, plans
and objectives of management, as well as information concerning
expected actions of third parties, including statements related to
the Exchangeable Shares, Canopy’s strategy, the impact to
Constellation’s equity in earnings, Constellation’s intent to not
deploy additional investment in Canopy, and potential future
transactions. All forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those set forth in, or implied by, such forward-looking
statements. No assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur.
The forward-looking statements are based on management’s current
expectations and should not be construed in any manner as a
guarantee that such actions will in fact occur or will occur on the
timetable contemplated hereby. All forward-looking statements speak
only as of the date of this news release and Constellation
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise.
In addition to risks and uncertainties associated with ordinary
business operations, the forward-looking statements contained in
this news release are subject to other risks and uncertainties,
including the accuracy of all projections and other factors and
uncertainties disclosed from time-to-time in Constellation’s
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the fiscal year ended February 28,
2023 and Quarterly Report on Form 10-Q for the fiscal quarter ended
November 30, 2023, which could cause actual future performance to
differ from current expectations. Constellation disclaims any
responsibility for all disclosure issued by Canopy.
ABOUT CONSTELLATION BRANDSConstellation Brands
(NYSE: STZ) is a leading international producer and marketer of
beer, wine, and spirits with operations in the U.S., Mexico, New
Zealand, and Italy. Our mission is to build brands that people love
because we believe elevating human connections is Worth Reaching
For. It’s worth our dedication, hard work, and calculated risks to
anticipate market trends and deliver more for our consumers,
shareholders, employees, and industry. This dedication is what has
driven us to become one of the fastest-growing, large CPG companies
in the U.S. at retail, and it drives our pursuit to deliver what’s
next.
Every day, people reach for our high-end, iconic imported beer
brands such as those in the Corona brand family like the flagship
Corona Extra, Modelo Especial and the flavorful lineup of Modelo
Cheladas, Pacifico, and Victoria; our fine wine and craft spirits
brands including The Prisoner Wine Company, Robert Mondavi Winery,
Casa Noble Tequila, and High West Whiskey; and our premium wine
brands such as Kim Crawford and Meiomi.
As an agriculture-based company, we have a long history of
operating sustainably and responsibly. Our ESG strategy is embedded
into our business and our work focuses on serving as good stewards
of the environment, enhancing social equity within our industry and
communities, and promoting responsible beverage alcohol
consumption. These commitments ground our aspirations beyond
driving the bottom line as we work to create a future that is truly
Worth Reaching For.
To learn more, visit www.cbrands.com and follow us on X,
Instagram, and LinkedIn.
MEDIA CONTACTS |
INVESTOR RELATIONS CONTACTS |
Amy Martin 585-678-7141 /
amy.martin@cbrands.comCarissa Guzski 315-525-7362 /
carissa.guzski@cbrands.com |
Snehal Shah 847-385-4940 /
snehal.shah@cbrands.comDavid Paccapaniccia 585-282-7227 /
david.paccapaniccia@cbrands.com |
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A downloadable PDF copy of this news release can be found
here: http://ml.globenewswire.com/Resource/Download/9394e47e-fb35-4a68-b89e-0d17dfdfe3fc
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