Marijuana multistate operator TerrAscend Corp. revealed its plans to reorganize in a way that will allow the U.S. plant-touching company to list on the Toronto Stock Exchange (TSX).
If 66 2/3% of votes cast by shareholders agree to the proposal in a meeting scheduled for June 22, trading on the TSX could begin shortly after, according to a news release.
The proposal, detailed in a proxy filed April 20, also requires final approval from the TSX.
TerrAscend also increased its ownership of Cookies Retail Canada Corp. to 95% of issued and outstanding shares.
The company in March announced its plans to list on the TSX in March.
A successful move to the TSX could blaze a trail for other U.S. plant-touching operators to tap into a wider investor pool on the larger exchange.
Both Ontario, Canada-based Canopy Growth, which is accelerating its plans to acquire U.S. operators, and New York-headquartered Curaleaf Holdings, have expressed interest in listing on the exchange.
Because cannabis is still federally illegal in the United States, listing on the Toronto Stock Exchange requires a creative structure.
TerrAscend, which has offices in Ontario, California and Pennsylvania, plans to create a subscription agreement with an investor who has subscribed for $1 million of Class A shares in its U.S. subsidiary, TerrAscend Growth Corp. (formerly Gage Growth Corp.).
TerrAscend holds Class B shares of TerrAscend Growth, which represents 100% of all issued and outstanding shares of the subsidiary.
Those Class B shares would automatically be exchanged for nonvoting, nonparticipating exchangeable shares of TerrAscend Growth once the Class A shares are issued to the investor.
That would segregate TerrAscend’s Canadian operations and interests from its U.S. operations held by TerrAscend Growth.
The subscription agreement will allow TerrAscend Growth to repurchase all Class A shares issuable to the investor.
The investor has the right to appoint a director to the TerrAscend Growth board of directors as well as a put right exercisable after five years of the investment closing.
When the deal closes, the investor will hold all issued and outstanding Class A Shares and voting rights.
TerrAscend will hold all the issued and outstanding exchangeable shares, which will represent approximately 99.8% of the economic ownership of TerrAscend Growth, on an as-converted basis.
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