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iAnthus Capital Holdings Inc
Symbol IAN
Shares Issued 171,643,192
Close 2020-04-03 C$ 0.67
Recent Sedar Documents

iAnthus defaults on debenture interest payments

2020-04-06 08:32 ET - News Release

Mr. Hadley Ford reports

IANTHUS ANNOUNCES DEFAULT OF INTEREST OBLIGATIONS TO DEBENTURE HOLDERS ON MARCH 31, 2020

iAnthus Capital Holdings Inc. did not make applicable interest payments due on its 13.0 per cent senior secured debentures and 13.0 per cent unsecured convertible debentures due on March 31, 2020. As of March 31, 2020, the aggregate principal amount outstanding on iAnthus's debt obligations total $159.2-million, including $97.5-million of secured debentures, $60.0-million of unsecured debentures and $1.7-million of other debt obligations. All references to currency in this news release are in U.S. dollars.

  • Forms special committee to oversee strategic alternatives review process and to investigate alleged related party transactions;
  • Appoints Canaccord Genuity as financial adviser;
  • Postpones filing of 2019 year-end financial statements and corresponding investor call.

The decline in the overall public equity cannabis markets, coupled with the extraordinary market conditions that began in Q1 2020 due to the novel coronavirus known as COVID-19 pandemic, have negatively impacted the financing markets and have caused liquidity constraints for the company. Despite its best efforts as of this date, the company has not been able to secure a further round of financing since Dec. 20, 2019, whether as part of the larger financing plan previously announced on Sept. 30, 2019, or from other sources.

iAnthus attempted in good faith to negotiate with the holders of the secured debentures for temporary relief of interest payments, but the parties were not able to reach a satisfactory agreement. As a result, iAnthus and its subsidiaries did not finance the March 31, 2020, interest payment totalling $4.4-million to the holders of the secured debentures and unsecured debentures, and the applicable cure period prior to triggering an event of default of the secured debentures has lapsed. The company is currently in default of the obligations to its secured debenture holders and the existence of such default triggers a cross-default of the obligation to its unsecured debenture holders.

"It was a difficult decision to not make the interest payment when it was due, but management and the board decided it was in the best interest of the company and our stakeholders to spend our cash to maintain the inherent value of our business operations," said Hadley Ford, chief executive officer of iAnthus. "We have moved aggressively over the past few months to reduce head count and overhead spend in addition to other cost savings. Our business has never been stronger, and iAnthus is on track to achieve positive adjusted EBITDA and operational cash flow in 2020 as previously planned."

Despite the challenging conditions, the company will continue to pursue expansion opportunities in retail, cultivation and manufacturing, as well as further development of its retail and product brands. Deploying these efforts with a ruthless focus on the customer experience and the patient journey, iAnthus remains committed to its mission to create the most valuable cannabis brands and network of cannabis operations and distribution nationally.

Formation of special committee to investigate alleged related party transactions and to oversee strategic alternatives review process

The board of directors has formed a special committee, comprising the five independent, non-management directors. The special committee was formed to:

  1. Investigate any potential conflicts of interest and/or required disclosures with respect to the company's chief executive officer and certain related parties;
  2. With a view to the best interests of the company, explore and consider strategic alternatives available to the company in light of the prospective liquidity requirements of the company, the condition of the capital markets affecting companies in the cannabis industry and the rapid change in the state of the economy and capital markets generally caused by COVID-19, including but not limited to:
    1. Renegotiation of existing financing arrangements and other material contracts, including any amendments, waivers, extensions or similar agreements with the lenders to and/or stakeholders of the company and/or its subsidiaries that the special committee determines are in the best interests of the company and/or its subsidiaries;
    2. Managing available sources of capital, including equity investments or debt financing or refinancing and the terms thereof;
    3. Implementing the operational and financial restructuring of the company and its subsidiaries and their respective businesses, assets and licensure and other rights;
    4. Implementing other potential strategic transactions.

Hiring of financial adviser

The special committee has engaged Canaccord Genuity Corp. as its financial adviser to assist the special committee in analyzing various strategic alternatives to address its capital structure and to position the company for further success. With the assistance of its financial adviser, iAnthus will continue to be actively engaged in discussions with holders of the secured debentures and unsecured debentures to maximize value for all stakeholders. Additionally, the company will continue to pursue financing options to infuse additional cash into the business, while also exploring other strategic and financial opportunities. At present, there can be no assurance as to what, if any, alternative might be pursued by the company and there can be no assurance that the company will reach any solution with the company's holders of the secured debentures and unsecured debentures, or as to the terms of any solution, if achieved.

Postponement of filing and release of fourth quarter and full year 2019 financial results

iAnthus will temporarily postpone the filing of its annual financial statements for the year ended Dec. 31, 2019, to incorporate subsequent event disclosures as they relate to the company's financial position. As a result of a change to the company's filing date, the company's earnings news release for the fourth quarter and full year 2019, as well as the conference call for financial analysts and investors previously scheduled for April 7, 2020, will also be rescheduled. As soon as possible, the company will issue a news release announcing a revised date for the fourth quarter and fiscal year ended Dec. 31, 2019, conference call and earnings news release.

About iAnthus Capital Holdings Inc.

iAnthus owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry. Founded by entrepreneurs with decades of experience in operations, investment banking, corporate finance, law and health care services, iAnthus provides a unique combination of capital and hands-on operating and management expertise.

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