Cannabis producer Canopy gets court approval for sale of BioSteel businesses

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Canadian cannabis producer Canopy Growth said an Ontario court has greenlit the sale of its BioSteel Canada subsidiary and U.S. affiliate, BioSteel Manufacturing, in two separate deals.

BioSteel Canada, which makes sports nutrition beverages, obtained an initial order for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) from a Canadian court in September as Canopy prepared the insolvent business for a sale.

Then, on Nov. 17, the Ontario Superior Court of Justice approved Canopy’s transactions to sell BioSteel Canada and BioSteel Manufacturing.

The company didn’t disclose the buyers or financial arrangements.

Canopy did say it expects to realize financial proceeds – which the Smiths Falls, Ontario-based company expects to improve its balance sheet – pending the closing of the transactions.

Canopy also said the pending transactions are consistent with its cannabis focus and transformation to an asset-light operating model after the elimination of funding obligations for BioSteel.

Pursuant to the sale and investment solicitation process (SISP), Canopy said the court approved two respective successful bids, including:

  • A sale of BioSteel Canada per an asset purchase agreement dated Nov. 9, 2023.
  • A sale of BioSteel Manufacturing by an asset purchase agreement dated Nov. 9, 2023.

“We are pleased that this process has identified two qualified buyers for the BioSteel brand and assets,” Canopy Chief Financial Officer Judy Hong said in a statement.

“The elimination of the operating loss and cash burn as a result of ceasing to fund BioSteel has already significantly enhanced Canopy Growth’s financial position, and the anticipated proceeds of the Sale Transactions are expected to improve Canopy Growth’s balance sheet upon completion.”

When Canopy pulled the plug on BioSteel, the Canadian beverage company said it had been “significantly” cash-flow negative and had required continued support from Canopy in the estimated amount of CA$15 million per month, according to court documents.

Canopy shares trade as CGC on the Nasdaq and WEED on the Toronto Stock Exchange.