Mr. Luc Mongeau reports

CANOPY GROWTH ANNOUNCES STRATEGIC RECAPITALIZATION TRANSACTIONS SIGNIFICANTLY STRENGTHENING BALANCE SHEET TO SUPPORT GROWTH STRATEGY

Canopy Growth Corp. has entered into a series of transactions to recapitalize its balance sheet and extend the maturity dates of all outstanding indebtedness to January, 2031, at the earliest. At the conclusion of these transactions (as defined below), Canopy Growth is expected to have cash on hand of approximately $425-million, providing additional flexibility to support the company's long-term priorities.

"Today, Canopy Growth moves forward from a position of strength, supported by a robust balance sheet, enhanced liquidity, extended debt maturities and a clear strategic direction," said Tom Stewart, chief financial officer of Canopy Growth. "We have created a financial runway through 2031, giving us the ability to seize opportunities for growth, building on the momentum of our previously announced acquisition of MTL Cannabis Corp."

"As we continue to execute our strategy focused on disciplined growth, operational excellence and financial stewardship, these transactions enable the strategic scaling necessary to reinforce Canopy Growth's leadership position, support growing demand in the European medical market and advance our path to sustained adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] profitability," said Luc Mongeau, chief executive officer of Canopy Growth.

Term loan transaction

In accordance with the terms of a term loan agreement, the company will receive net proceeds of $150-million (U.S.) in connection with the loan agreement from a group of lenders led by JGB Management Inc., with the term loan maturing in January, 2031. Canopy Growth intends to use the net proceeds from the term loan: (i) to repay its existing senior secured debt in the principal amount of approximately $101-million (U.S.) due September, 2027; (ii) for working capital and general corporate purposes; and (iii) to finance any potential future acquisitions.

The term loan will bear interest at an annual rate equal to the applicable term SOFR (secured overnight financing rate) rate (subject to a minimum floor of 3.25 per cent) plus 6.25 per cent, representing a decrease in the company's cash interest rate compared with its current existing senior secured debt.

Convertible debenture exchange

Concurrently with the execution of the loan agreement, Canopy Growth also entered into an exchange agreement with a single institutional investor, pursuant to which Canopy Growth will exchange approximately $96.4-million (Canadian) of existing convertible debentures due May, 2029, for approximately $80-million (Canadian) comprising: (a) $55-million (Canadian) of new convertible debentures due July, 2031; (b) $10.5-million (Canadian) in cash; (c) 9,493,670 common shares of the company; and (d) 12,731,481 common share purchase warrants of the company. The debentures will bear interest at a rate of 7.50 per cent per annum, payable semi-annually in cash, and will be convertible into common shares at the option of the holder at a conversion price equal to $1.83 (Canadian) per common share.

The transactions are expected to close on or around Jan. 8, 2026, subject to customary closing conditions.

Additional transaction details

The aggregate principal amount of the term loan is approximately $162-million (U.S.), reflecting an original issue discount. Interest on the term loan will be paid monthly in arrears in cash. Following the first anniversary of the first interest payment date, each lender will have the option to require the borrowers to repay such lender its pro rata share of up to $3-million (U.S.) of principal per calendar month on each payment date thereafter. Prepayment and repayment of the term loan will be subject to: (i) an interest make-whole equal to 12 monthly interest payments less any payments made by the borrowers on account of interest prior to the date of such prepayment for any prepayments or repayments made during the first year of the term loan; and (ii) an exit fee equal to approximately $6.5-million (U.S.), provided that, with respect to any partial payment of the term loan, only the pro rata portion of such exit fee will be payable at the time of each such partial payment. The term loan and obligations under the loan agreement and other related loan documents will be secured by substantially all of the assets of the company and each of its material subsidiaries.

The loan agreement also includes certain prepayment fees, a minimum cash requirement of the lesser of $90-million (U.S.) or the principal amount of the term loan, and various other representations, warranties, covenants and events of default customary for a financing of this nature.

In connection with the loan agreement, on the closing date, the company will issue 18,705,577 common share purchase warrants of the company to the lenders. Each loan warrant will entitle the holder to acquire one common share at an exercise price equal to $1.30 (U.S.) per common share for a period of five years from the closing date. Pursuant to the exchange transaction, each investor warrant will entitle the holder to acquire one common share at an exercise price equal to $2.16 (Canadian) per common share for a period of five years from the closing date.

On the closing date, the company will enter into registration rights agreements with the investor and the lenders, as applicable, pursuant to which the company will agree to file registration statements with the U.S. Securities and Exchange Commission (SEC) covering the resale of the common shares issued to the investor in the exchange transaction and the common shares underlying the debentures and the investor warrants as well as the loan warrants, as applicable.

Canaccord Genuity Corp. acted as exclusive financial adviser and Cassels Brock & Blackwell LLP acted as Canadian counsel to Canopy Growth in connection with the transactions. Goodwin Procter LLP and Paul Hastings LLP acted as U.S. counsel to Canopy Growth in connection with the loan transaction and the exchange transaction, respectively. Haynes and Boone LLP and Stikeman Elliott LLP acted as counsel to JGB Management Inc. in connection with the loan transaction.

About Canopy Growth Corp.

Canopy Growth is a world-leading cannabis company dedicated to unleashing the power of cannabis to improve lives.

Through an unwavering commitment to consumers, Canopy Growth delivers innovative products from owned and licensed brands including Tweed, 7Acres, Doja, Deep Space and Claybourne, as well as category-defining vaporization devices by Storz & Bickel. In addition, Canopy Growth serves medical cannabis patients globally with principal operations in Canada, Europe and Australia.

Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC (tetrahydrocannabinol) market through an unconsolidated, non-controlling interest in Canopy USA LLC. Canopy USA's portfolio includes ownership of Acreage Holdings Inc., a vertically integrated multistate cannabis operator with operations throughout the U.S. Northeast and Midwest; ownership of Wana Wellness LLC, The Cima Group LLC and Mountain High Products LLC, a leading North American edibles brand; and majority ownership of Lemurian Inc., a California-based producer of high-quality cannabis extracts and clean vape technology.

At Canopy Growth, the company is shaping a future where cannabis is embraced for its potential to enhance well-being and improve lives. With high-quality products, a commitment to responsible use and a focus on enhancing communities, Canopy Growth is paving the way for a better understanding of all that cannabis can offer.

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