Canopy Growth to Cease Funding BioSteel Business Unit Furthering Business Transformation and Focus on North American Cannabis Leadership
- Canopy Growth expects to recover proceeds from BioSteel sale process
- Canopy Growth expects positive Adjusted EBITDA in remaining business units exiting FY2024
- None.
BioSteel filing immediately eliminates significant cash burn for Canopy Growth and provides for an orderly realization of value of BioSteel's assets through a sale process
As the senior secured lender to BioSteel, Canopy Growth expects to recover proceeds from the anticipated sale process
Management reaffirms its expectation to achieve positive Adjusted EBITDA in all remaining business units exiting FY2024, as the Company focuses on driving growth in its Canadian and
As part of its efforts to simplify its business and reduce cash burn, Canopy Growth previously announced that it was reviewing strategic options for the Company's BioSteel business unit, including a potential sale of the business unit. BioSteel's business was a significant drag on Canopy Growth's profitability and cash flow, representing approximately
Canopy Growth's financial position is expected to be further strengthened through the immediate removal of the cash expenditures associated with funding the BioSteel business unit and the potential cash proceeds from the orderly sale of BioSteel's assets. Further, the Company anticipates the removal of the previously identified material weakness related to the BioSteel business segment upon disposition. In addition, with BioSteel's operating loss and cash burn eliminated, Canopy Growth reiterates its expectation to achieve positive Adjusted EBITDA across its remaining business units exiting FY2024.
"Canopy Growth has marked yet another major milestone in our transformation plan, as while BioSteel's business has shown significant year-over-year revenue growth, and we believe the brand remains an attractive asset, it does not align with Canopy Growth's cannabis focused asset-light strategy. We have repeatedly demonstrated that we will take decisive action to enhance our profitability and ensure we are focused and positioned to be a leader in the North American cannabis sector," said David Klein, Chief Executive Officer.
- Since July 1, 2023, reduction of the Company's overall debt by approximately CAD
, with further reductions totalling approximately CAD$349 million expected over the next two quarters1.$95 million - Agreement to sell Hershey Drive facility for CAD
. Upon the completion of the sale, Canopy Growth will have sold a total of seven properties for an aggregate gross amount of approximately CAD$53 million since April 1, 2023.$155 million - Achieved cost reduction of CAD
in Q1 FY2024, bringing total cost reductions to CAD$47 million since the beginning of FY2023.$172 million - Management continues to expect restructuring initiatives announced in FY2023 to deliver combined Selling, General & Administrative Expense and Cost of Goods Sold reduction of CAD
to CAD$240 million by the end of FY2024.$310 million U.S. THC companies that are expected to be acquired by CanopyUSA , LLC ("CanopyUSA ") continue to demonstrate momentum, strengthening and expanding their businesses and Canopy Growth continues to work with regulators to advance its novel structure.
BioSteel has obtained an initial order from the CCAA Court which provides for, among other things: (i) a stay of proceedings in favor of BioSteel and its two
The CCAA process will allow the BioSteel business to maximize the value of its assets through a court supervised sales process. Canopy Growth remains BioSteel Canada's largest creditor and shareholder and anticipates receiving its proportionate share of any recoveries in the CCAA process.
_________________________________________ |
1 This number assumes that the convertible debentures issued on July 14, 2023 with an aggregate principal amount of approximately |
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by
Canopy Growth is a leading North American cannabis and consumer packaged goods ("CPG") company dedicated to unleashing the power of cannabis to improve lives. Through an unwavering commitment to our consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Canopy Growth's CPG portfolio features targeted 24-hour skincare and wellness solutions from This Works, gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology made in
Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the
Beyond our world-class products, Canopy Growth is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment—pioneering a future where cannabis is understood and welcomed for its potential to help achieve greater wellbeing and life enhancement.
For more information visit www.canopygrowth.com
References to information included on, or accessible through, our website do not constitute incorporation by reference of the information contained at or available through our website, and you should not consider such information to be part of this press release.
This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Often, but not always, forward-looking statements and information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. Examples of such statements and uncertainties include statements with respect to BioSteel's intention to complete proceedings under the CCAA; the outcome of the CCAA proceedings and any potential recovery for its stakeholders, including Canopy Growth; the impact on Canopy Growth's financial position, including the potential cash proceeds from the sale of BioSteel's assets; the anticipated removal of the previously identified material weakness related to the BioSteel business segment; expectations regarding the potential success of, and the costs and benefits associated with the Company's transformation plan, including the completion of the Company's sale of its Hershey facility; the assumption that the convertible debentures issued on July 14, 2023 are settled in common shares of the Company; the occurrence and outcome of the Company's restructuring initiatives and Canopy
Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including BioSteel's ability to complete any future potential transactions in connection with the CCAA proceedings and the terms and conditions thereof; risks relating to the CCAA process, including uncertainty of any residual value for BioSteel's stakeholders under the CCAA process; negative operating cash flow; uncertainty of additional financing; use of proceeds; volatility in the price of the Company's common shares; inherent uncertainty associated with projections; expectations regarding future investment, growth and expansion of operations; regulatory and licensing risks; changes in general economic, business and political conditions, including changes in the financial and stock markets and the impacts of increased rates of inflation; legal and regulatory risks inherent in the cannabis industry, including the global regulatory landscape and enforcement related to cannabis; additional dilution; political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry; and such other risks contained in the public filings of the Company filed with Canadian securities regulators and available under the Company's profile on SEDAR at www.sedar.com and with the Securities and Exchange Commission through EDGAR at www.sec.gov/edgar, including under the heading "Risk Factors" in the Company's annual report on Form 10-K for the year ended March 31, 2023 and its subsequently filed quarterly reports on Form 10-Q.
In respect of the forward-looking statements and information, the Company has provided such statements and information in reliance on certain assumptions that they believe are reasonable at this time. Although the Company believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. Should one or more of the foregoing 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 which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake any obligation to publicly update such forward-looking information or forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.
View original content to download multimedia:https://www.prnewswire.com/news-releases/canopy-growth-to-cease-funding-biosteel-business-unit-furthering-business-transformation-and-focus-on-north-american-cannabis-leadership-301927863.html
SOURCE Canopy Growth Corporation