Ms. Judy Hong reports

CANOPY GROWTH ENHANCES FINANCIAL FLEXIBILITY AND DELIVERS COMPANY BALANCE SHEET BY $437 MILLION

Canopy Growth Corp. has entered into a series of agreements, including privately negotiated redemption agreements, with certain holders of its unsecured senior notes due July 15, 2023, and agreements with certain of its lenders under its term loan credit agreement dated March 18, 2021, that will have the overall effect of deleveraging the company's balance sheet.

Highlights:

• Total debt reduction: approximately $437-million expected over the next two quarters;
• Annualized interest expense savings: approximately $20-million to $30-million;
• Discount capture: repayment of principal owing under the credit agreement between 93 per cent and 95 per cent of par;
• Elimination of call premium: ability to prepay remainder of loan at par;
• Enhanced equity capitalization: conversion of approximately 41 per cent of existing notes into common shares.

As a result of the agreements with our secured and unsecured lenders, the company is expected to reduce its total debt by approximately $437-million over the next six months and lower annual interest costs by approximately $20-million to $30-million. Following the completion of the transactions contemplated by the redemption agreements, the company will preserve approximately $92-million in cash by settling approximately $193-million aggregate principal amount of the existing notes with a mix of consideration that includes common shares of the company and newly issued unsecured non-interest bearing convertible debentures. Additionally, the company will reduce $100-million of principal indebtedness under the credit facility provided under the credit agreement for a cash payment of $93-million, with the expectation of further principal reductions at 95 cents on the dollar upon completion of certain asset sales.

The company believes that its enhanced financial flexibility, delevering of its balance sheet and the anticipated results of the business transformation under way continue to ensure that Canopy Growth has a sustainable business platform and remains positioned to be a leader in the $50-billion North American cannabis market.

"We are pleased to have worked constructively with our lenders to reach these agreements which enable Canopy Growth to preserve cash and further improve its balance sheet through accretive and meaningful reductions in its overall debt," said Judy Hong, chief financial officer, Canopy Growth. "We believe these latest milestones, in addition to actions Canopy Growth has taken to strengthen its balance sheet and its continued execution on the cost reduction program will provide investors and all of our stakeholders with increased confidence in our path to long-term value creation."

"We are pleased to have been able to come to an agreement with Canopy Growth that will strengthen its balance sheet and provide a path towards continued improvements in its financial position. We look forward to continuing to work with the company to ensure a successful outcome for all stakeholders," said a spokesperson on behalf of lenders under the credit facility.

Transaction details

Pursuant to the terms of the redemption agreements, approximately $193-million of the $225-million aggregate principal amount under the outstanding existing notes and due July 15, 2023, will be redeemed on the closing date for (i) an aggregate cash payment of approximately $101-million; (ii) the issuance of approximately 90.4 million common shares; and (iii) the issuance of approximately $40.4-million aggregate principal amount of debentures. The debentures will be convertible into common shares at the option of the holder at any time or times following the shareholder approval at a conversion price equal to 55 cents, subject to adjustment in certain events.

Following the completion of the redemption, there will be approximately $31.9-million aggregate principal amount owing under the outstanding existing notes.

In addition, under the terms of the amended credit agreement, the company will make a payment of $93-million in cash to reduce $100-million of principal indebtedness under the credit facility. The company has also agreed to direct proceeds from certain completed and contemplated asset sales to reduce indebtedness under the credit facility and receive principal reductions at, in certain circumstances,95 cents on the dollar toward such repayments and the removal of certain onerous financial covenants.

Since the beginning of fiscal 2023, Canopy Growth has completed numerous balance sheet actions to strengthen its financial position, while implementing a business transformation plan with the goal of improving profitability. The balance sheet actions completed by the company to date include:

• Equitization of approximately $366-million of the existing notes;
• Paydown of approximately $350-million (or 35 per cent of the principal) of the credit facility at 93 cents per dollar of debt;
• Refinanced $100-million of the existing notes held by Greenstar in order to extend the maturity date to Dec. 31, 2024;
• Generated approximately $81-million in cash proceeds during the most recent fiscal quarter from the disposition of five facilities with additional agreements in place to generate up to $150-million in total proceeds by Sept. 30, 2023.

Annual general and special meeting update

Canopy Growth intends to file its preliminary proxy statement in connection with the company's annual general and special meeting to be held on Sept. 25, 2023, on July 14, 2023. In addition to the normal course business brought before the meeting, the company intends to seek shareholder approval for, among other things, (i) the issuance of all of the debenture shares in excess of 19.99 per cent and 25 per cent, as applicable, of the issued and outstanding common shares in accordance with the applicable rules and regulations of the Nasdaq Stock Market and the Toronto Stock Exchange in connection with the redemption and (ii) the adoption of a new simplified equity plan. The company received a notice from Nasdaq Stock Market on July 11, 2023, of its non-compliance with the Nasdaq's minimum listing requirements relating to the closing bid price being below $1 per common share for 30 consecutive business days.

On July 13, 2023, the company entered into a voting support agreement with Greenstar Canada Investment LP and CBG Holdings LLC, its largest shareholders, pursuant to which the CBG group has agreed to vote their common shares in favour of the shareholder approval. As of the date hereof, the CBG group held 171,499,258 of common shares.

The redemption is being conducted as a private placement and any common shares and debentures to be issued in the redemption will be issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a)(2) of the Securities Act in transactions not involving any public offering.

Advisers

The company has engaged Greenhill & Co. Canada Ltd. as its financial adviser and is advised by its legal counsel, Cassels Brock & Blackwell LLP and Goodwin Procter LLP. HudsonWest acted as financial adviser to the company in connection with the redemption of the existing notes.

About Canopy Growth Corp.

Canopy Growth is a leading North American cannabis and CPG company dedicated to unleashing the power of cannabis to improve lives.

Through an unwavering commitment to its consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands, including Doja, 7Acres, Tweed and Deep Space.

We seek Safe Harbor.