SNDL acquires Delta 9 Cannabis debt for CA$28.1 million, agrees to buy Indiva

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Canadian marijuana and alcohol company SNDL has acquired the debt of Delta 9 Cannabis for 28.1 Canadian dollars ($20.6 million) and entered a stalking-horse agreement to purchase distressed edibles maker Indiva.

Alberta-based SNDL acquired the debt position from Connect First and Servus Credit Union, according to a news release.

SNDL now senior secured creditor

As a result of that transaction, SNDL is now Delta 9’s senior secured creditor with a first priority security interest in all the company’s assets and certain subsidiaries.

Under SNDL’s deal with Delta 9, the Winnipeg, Manitoba-based marijuana cultivator and retailer’s indebtedness to SNDL increases to CA$40.6 million.

Delta 9 has struggled for profitability, invoking layoffs and other cost-cutting measures the past few years.

Indiva valued at CA$25M-CA$28M

In the Indiva acquisition, SNDL agreed to buy “all of the issued and outstanding shares of Indiva and the business and assets of the Indiva Group” for an estimated price of CA$25 million-CA$28 million, according to a separate release.

The value of what SNDL will pay in credit and cash for Indiva was estimated by PricewaterhouseCoopers, which was chosen as the London, Ontario-headquartered company’s monitor under Companies’ Creditors Arrangement Act (CCAA) guidelines.

Indiva, Canada’s leading producer of cannabis edibles, is seeking to sell assets to repay creditors under bankruptcy protection laws granted by the Ontario Superior Court of Justice under the CCAA.

The release notes that if the monitor “determines that there is another bid that offers superior terms to the Bid Agreement, SNDL will also have the opportunity to participate in an auction process for the Indiva Assets. The Sale Process is currently expected to conclude by September 30, 2024.”

SNDL, meanwhile, cut its annual loss in half in fiscal 2023 – to CA$176.6 million – on strong sales growth.

The company entered the year as Canada’s largest private-sector liquor retailer with 170 locations, most of which are in Alberta, and the largest private-sector cannabis retailer with 187 locations across the country through its 63% ownership interest in Nova Cannabis.

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