Cannabist Co Holdings Secures Support Agreement for Senior Note Exchange

Cannabist Co Holdings Inc. announced on February 27, 2025 that it has entered into a support agreement with certain noteholders representing approximately 61% of its outstanding Senior Notes. The agreement paves the way for the exchange of existing debt, comprised of three series of Senior Notes with maturities in 2025, 2026, and 2027, for a new suite of notes with an extended maturity date and enhanced financial covenants.

Under the terms of the transaction, holders of the 2025 Notes and the 2026 Notes will exchange their existing instruments for an equal principal amount of new senior secured notes due December 31, 2028, subject to two optional six‐month extensions. Additionally, holders of the 2027 Notes will have the option to elect either the new senior secured notes or a new series of convertible notes that retain the original conversion price but share the extended maturity of the new senior notes.

Key elements of the agreement include:
• Guarantee and Security – The new notes, totaling approximately US$270 million, will be guaranteed by Cannabist and its direct and indirect subsidiaries (with certain exceptions) and secured by substantially all of the company’s assets.
• Share Payment – Noteholders electing to receive the new senior secured notes will be issued approximately 118.2 million common shares, representing roughly 24.99% of the Company’s outstanding shares, subject to a contractual lock-up.
• Early Incentives – Early supporting noteholders, defined as those executing a joinder by March 10, 2025, may receive additional cash or securities incentives including an early consent fee and an asset sale consent fee payable in predetermined installments based on the proceeds from certain asset sales.
• Board Restructuring – As part of the transaction, two independent directors—selected from a slate provided by the supporting noteholders—will be added to the board. Furthermore, the Company’s board structure will be adjusted, including the elimination of four director positions at the upcoming annual meeting, to create a seven-member board.

The support agreement is being executed pursuant to a plan of arrangement under the Canada Business Corporations Act and is subject to customary conditions, including requisite approvals by holders of Senior Notes, regulatory consents, and approval by the Ontario Superior Court of Justice. Cannabist anticipates calling a meeting of senior noteholders to secure the necessary approvals and is targeting a closing in the first half of 2025, subject to all conditions being met.

The filing noted that the new senior notes will introduce tighter covenants, including requirements related to a net consolidated leverage ratio, minimum liquidity standards, asset sale consent fees, and restrictions on incurring additional obligations. These measures are designed to address the Company’s balance sheet and reduce potential dilution to its existing shareholders.

Additionally, to mitigate the dilutive effect arising from the issuance of new shares, existing shareholders (other than the recipients of the share payment) will receive anti-dilutive common share purchase warrants. These warrants will allow for the purchase of additional shares at a fixed price for a period of two years from the closing of the transaction.

The Company cautioned that various risks and uncertainties could impact the ultimate completion and benefits of the transaction. Among the concerns highlighted were the possibility of not receiving all necessary regulatory and noteholder approvals and the inherent risks of forward-looking statements as outlined in the Company’s public filings.

Cannabist’s restructured debt arrangement reflects an effort to extend maturities, bolster the balance sheet, and provide the Company with increased financial flexibility as it navigates its strategic initiatives going forward.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Cannabist’s 8K filing here.

Cannabist Company Profile

The Cannabist Company Holdings Inc engages in the cultivation, manufacture, and provision of cannabis products and related services in the United States and internationally. The company offers spanning flower, edibles, oils, and tablets under the Seed & Strain, Triple Seven, Hedy, gLeaf, Classix, Press, and Amber brand names.