Court Approves Pharmhouse's Asset Purchase Agreement

Rhea-AI Summary

RIV Capital announced a $25 million payment to reduce its estimated liability related to the PharmHouse Credit Facility, ahead of the court approval of PharmHouse's asset purchase agreement. The Ontario Superior Court validated the sale of PharmHouse's assets, enhancing RIV's financial position by lowering near-term debt servicing costs. This proactive measure coincided with recent asset disposals to Canopy Growth Corporation, generating a significant capital gain. The transaction is expected to close by June 30, 2021, with no anticipated material changes in the PharmHouse recoverability assessment.

Positive

• Reduction of estimated liability by $25 million, improving financial health.
• Anticipation of closing the asset sale by June 30, 2021.
• Proactive measures taken to lower near-term debt servicing costs.

Negative

• None.

RIV Capital will make payment to reduce estimated liability with respect to guarantee of PharmHouse Credit Facility by $25.0 million

TORONTO, March 11, 2021 /PRNewswire/ - RIV Capital Inc. ("RIV Capital'' or the "Company") (TSX: RIV) (OTC: CNPOF) today announced that PharmHouse Inc.'s ("PharmHouse") asset purchase agreement (the "Agreement") to sell various operating assets, including its facility and certain equipment located at the facility, has been approved by the Ontario Superior Court of Justice pursuant to a Court Order granted today in PharmHouse's proceedings under the Companies' Creditors Arrangement Act. The Agreement is subject to certain closing conditions, which the Company anticipates to be satisfied during the next fiscal quarter. The court-ordered stay of proceedings with respect to PharmHouse was also extended to June 30, 2021.

RIV Capital also announced that it will be making a voluntary payment of $25.0 million to the lenders of PharmHouse's $90.0 million non-revolving syndicated credit facility (the "PharmHouse Credit Facility") relating to the Company's estimated liability in respect of its guarantee of the PharmHouse Credit Facility (the "Guarantee Payment"). As noted in the Company's press release announcing the Agreement which was entered into by PharmHouse on March 3, 2021, the Company does not anticipate any material changes to the PharmHouse Recoverability Assessment presented in its interim consolidated financial statements for the three and nine months ended December 31, 2020, available on the Company's profile on SEDAR. As a result of the Guarantee Payment, the Company's estimated liability in respect of the PharmHouse Credit Facility will be reduced by $25.0 million. The Company is making the Guarantee Payment prior to March 31, 2021 in order to, among other things, reduce near-term debt servicing costs and for tax planning purposes in connection with the Company's recent disposition of certain assets to Canopy Growth Corporation, which resulted in a significant capital gain for the Company.

About RIV Capital

RIV Capital is an investment and acquisition company specializing in cannabis with a portfolio of 13 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. 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 expectation that the transaction contemplated pursuant to the Agreement will close in the next fiscal quarter; the Company's estimation with respect to changes to the PharmHouse recoverability assessment; the Company's estimated liability with respect to the PharmHouse Credit Facility, 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. 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 conditions contained in the Agreement will not be satisfied; that the transactions contemplated pursuant to the Agreement will not be completed on or before June 30, 2021; that the Company's liability with regards to the PharmHouse credit facility will materially differ from current expectations; 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 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, 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.

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SOURCE RIV Capital Inc.

FAQ

What is RIV Capital's planned payment regarding the PharmHouse Credit Facility?

RIV Capital plans to make a $25 million payment to reduce its estimated liability related to the PharmHouse Credit Facility.

When is the expected closure date for the PharmHouse asset purchase agreement?

The asset purchase agreement for PharmHouse is anticipated to close by June 30, 2021.

How does the $25 million payment affect RIV Capital's financial position?

The $25 million payment reduces RIV Capital's estimated liability, thus improving its financial health and lowering near-term debt servicing costs.

What does the Ontario Superior Court's approval mean for RIV Capital?

The court approval validates PharmHouse's asset sale, which is a critical step for RIV Capital in managing its financial liabilities.

Is there any expected change in the PharmHouse recoverability assessment?

RIV Capital does not anticipate any material changes to the PharmHouse Recoverability Assessment as a result of this payment.