DLTNF - Delta 9 Obtains Amended and Restated Initial Order for CCAA Protection
(TheNewswire)
WINNIPEG, MB – July 26, 2024 – TheNewswire – DELTA 9 CANNABIS INC.(TSX: DN) (OTC: DLTNF) (“ Delta 9 ” or the “ Company ”) announces that, further to the initial order forcreditor protection obtained and announced by the Company on July 15 , 2024, the Company hasobtained an amended and restated initial order for creditor protection(the “AR Initial Order”), an order approving the sale andinvestment solicitation process (the “SISP Order”), a claimsprocedure order (the “CP Order”) and a sealing order from theCourt of King’s Bench of Alberta (the “ Court ”)under the Companies’Creditors Arrangement Act (Canada) (the“CCAA”).
Acquisition Transaction
As previously announced by the Company on July 15, 2024, the Company entered into a term sheet with2759054 Ontario Inc. o/a The FIKA Company (the “FIKA”) asplan sponsor to the CCAA proceedings whereby FIKA proposes to acquirethe cannabis retail store business and the logistics and distributionbusiness of the Company ,while facilitating a sale and investment solicitation process (the“SISP”) for the assets of the licensed cannabis productionbusiness of the Company (the“LP Business”), in exchange for equity of FIKA and thesatisfaction of certain secured debt of the Company (the “AcquisitionTransaction”).
AR Initial Order
The AR Initial Order provides for: (i) an extension ofa stay until September 15, 2024 of creditor claims and proceedings inrespect of the Company and its subsidiaries, Delta 9 LogisticsInc. , Delta 9 Bio-Tech Inc. (“Delta 9Bio-Tech”), Delta 9 Lifestyle Cannabis Clinic Inc. and Delta 9 Cannabis Store Inc. (collectively, the “ Subsidiaries ”); (ii) the approvalof an interimfinancing cr edit facility provided by FIKA of upto $16 million pursuant to the interim financing term sheet betweenthe Company andFIKA dated July 18, 2024 (the “Interim Financing Term Sheet”) andthe financing charge related thereto; (iii) authorization of a paymentof up to $13,000,000 to SDNL Inc. with respect to the mezzanine debtprovided by SNDL Inc. to the Company pursuant to the Interim FinancingTerm Sheet; (iv) an increase in the directors’ charge from $300,000to $900,000; (v) an increase in the administration charge from$350,000 to $750,000; (vi) a key employee retention plan in the amount of $650,000and a charge to secure the amounts payable thereunder; (vii) theappointment of Mark Townsend as Chief RestructuringOfficer (the “CRO”) and approval of theengagement letter between the Company and 1198184 B.C. Ltd., a corporation controlled by the CRO,dated July 18, 2024; and (viii) the approval of a break fee of$1,500,000 that is payable to FIKA upon the occurrence of certainevents that would result in the Acquisition Transaction not proceedingand a charge to secure the amount of the break fee .
SISP Order
The SISP Order authorizes and directs Alvarez &Marsal Canada Inc., as the court -appointed monitor (the“Monitor”) to, among other things, proceed with implementing a SISP in respect of the LPBusiness, which is owned and operated by Delta 9 Bio-Tech. The SISP isintended to solicit interest in, and opportunities for, a sale of, orinvestment in, all or part of the LP Business. This may include one ormore of a restructuring, recapitalization or other form ofreorganization of the business and affairs of all or part of the Delta9 Bio-Tech or a sale of all, substantially all, or a portion of its assets and business operations as a going concern orotherwise. In order to participate in the SISP and obtain access to avirtual data room and other information, interested parties must comply with the terms and conditionsset forth in the SISP Order and other related documents, which areavailable on the Monitor’s website at: www.alvarezandmarsal.com/Delta9 .
Parties interested in participating in the SISP shouldcontact David Williams of Alvarez & Marsal Canada Inc. at david.williams@alvarezandmarsal.com .
Interested parties who wish to submit a bid mustdeliver a binding offer (a “Binding Bid”) to the Monitor inaccordance with the SISP by no later than 5:00 p.m. (Calgary time) onOctober 28, 2024 (the “Bid Deadline”). The Monitor, FIKA, the Company and sales advisor, if any, willassess the Binding Bids received on or before the Bid Deadline and mayselect certain bidders to proceed to the next phase of the process.Any transaction that may ultimately be consummated by the Company and or its Subsidiaries will be subject to theapproval of the Court in the CCAA proceedings.
CP Order
The CP Order provides for establishes a claim processto identify and determine claims against the Company andits Subsidiaries , including the directorsand officers.
Scheduled Delisting form the T oronto StockExchange
The Toronto Stock Exchange (the “ TSX ”) hasscheduled the delisting of the Company’s common shares (the“Common Shares”) on the TSX for August 22, 2024 for failure tomeet the continued listing requirements of the TSX. Trading in theCommon Shares is currently halted on the TSX.
MLT Aikins LLP is acting as legal counsel to the Company and its Subsidiaries in connection with the CCAA proceedings and the AcquisitionTransaction.
Any stakeholders that are interested in informationwith respect to the CCAA proceedings should visit the Monitor’s website at: www.alvarezandmarsal.com/Delta9 .
About Delta 9 Cannabis Inc.
Delta 9 Cannabis Inc. is a vertically integratedcannabis company focused on bringing the highest
quality cannabis products to market. The Company sells cannabis products through its wholesale
and retail sales channels and sells its cannabis growpods to other businesses. Delta 9 ’s wholly-owned subsidiary , Delta 9 Bio-Tech Inc., is a licensed producer of medicaland recreational cannabis and operates a 95,000 square foot productionfacility in Winnipeg, Manitoba, Canada. Delta 9 ownsand operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9 ’s shares trade on the TorontoStock Exchange under the symbol “DN” and on the OTC under thesymbol “DLTNF”. For more information, please visit www.delta9.ca .
Disclaimer forForward-Looking Information
Certain statements in this release are forward-lookingstatements, which reflect the expectations of management regarding the Company’s future business plans andother matters. Forward- looking statementsconsist of statements that are not purely historical, including anystatements regarding beliefs, plans, expectations or intentionsregarding the future. Such statements are subject to risks anduncertainties that may cause actual results, performance ordevelopments to differ materially from those contained in thestatements, including with respect to the outcome of the AcquisitionTransaction and the SISP, the delisting of the Common Shares, anyfuture decisions by the Court, the results of the CCAA proceedings andany future operations of the Company , as well as all risk factors set forth in the annualinformation form of Delta 9 dated March 28, 2024 which hasbeen filed on SEDAR+. No assurance can be given that any of the eventsanticipated by the forward-looking statements will occur or, if theydo occur, what benefits the Company willobtain from them. Readers are urged to consider these factorscarefully in evaluating the forward-looking statements contained inthis news release and are cautioned not to place undue reliance onsuch forward-looking statements, which are qualified in their entiretyby these cautionary statements. These forward-looking statements aremade as of the date hereof and the Company disclaims any intent or obligation to update publicly anyforward-looking statements, whether as a result of new information,future events or results or otherwise, except as required byapplicable securities laws.
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