Canopy Rivers Inc. (“Canopy Rivers” or the “Company“) (TSX: RIV) (OTC: CNPOF), through its wholly-owned subsidiary, Canopy Rivers Corporation, has entered into a definitive share purchase agreement (the “Share Purchase Agreement“), effective as of December 30, 2020, with RAMM Pharma Corp. (“RAMM“) (CSE: RAMM), pursuant to which the Company has sold its 49% common equity interest in Canapar Corp. (“Canapar“) to RAMM for consideration of up to $9.0 million (the “Transaction“).
Under the terms of the Share Purchase Agreement, on closing, RAMM delivered a cash payment of $7.0 million to Canopy Rivers to purchase the Company’s 29,833,333 common shares in Canapar. The Transaction also includes contingent consideration of $2.0 million, to be paid upon achievement of certain operational milestones. The contingent portion of the consideration will be satisfied, at RAMM’s sole discretion, in either cash or through the issuance of common shares in RAMM to the Company.
“The divestment of our equity interest in Canapar represents an important reallocation of capital as we adjust our go-forward investment strategy,” said Narbé Alexandrian, President and CEO, Canopy Rivers. “We thank Canapar for their work and partnership. As Canopy Rivers turns a new page, however, it’s important to narrow our focus and recalibrate our capital deployment and exposure to better align with our new strategic direction.”
Canopy Rivers initially invested in Sicily-based Canapar in the summer of 2018, and subsequently led a $25 million financing in early 2019. Since that time, regulatory and market challenges have caused significant delays in Canapar’s timeline for commercialization relative to the company’s original expectations.
About Canopy Rivers
Canopy Rivers is a venture capital firm 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. Our mission is to invest in innovators across the cannabis value chain, help them grow, and ultimately create value by guiding these companies towards a monetization event. Together with our portfolio, we are helping build the cannabis industry of tomorrow, today.
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, but is not limited to, information and statements regarding: the Transaction and its anticipated benefits; the Company’s belief that the conditions to the payment of the contingent consideration will be satisfied; the anticipated cash proceeds of the Transaction net of the associated tax liability and transaction costs; the Company’s beliefs as to markets with near-term growth potential; the Company’s go-forward investment strategy; the Company’s belief that cannabis can remain resilient during economic downturns and its expectations regarding the role that the Company’s portfolio companies will play in the cannabis sector; the Company’s expected focus and priorities for the coming quarters; and 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: risks associated with Canapar’s ability to achieve the viable operation of its cannabidiol extraction unit; assumptions concerning the Transaction and the operations and capital expenditure plans following completion of the Transaction; credit, liquidity and additional financing risks for the Company and its investees; stock market volatility; regulatory and licensing 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; divestiture risks; and the risk factors set out in the Company’s AIF, 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.
SOURCE Canopy Rivers Inc.