June 2022
Case Study

Canopy
Growth

A world-leading diversified cannabis and cannabinoid-based consumer product company.

Transaction Terms
Security
4.25% convertible senior notes due July 2023
Equitization
C$262MM (~44% of notes)
Pricing
Discount to par + floor price
Interest Saved
Over C$11MM annually
Shareholder Support
Constellation Brands participation
C$262MM
44% of notes equitized
before going current
C$11MM+
In annual interest expense
savings achieved
Net cash
Balance sheet moved from
net debt to net cash
Situation Overview

Strategic de-levering
to support the balance sheet

In June 2018, during a period of strong growth in the cannabis sector, Canopy issued C$600MM of convertible notes with a conversion price of C$48.18. However, by late 2021, its stock price had declined significantly amid a challenging landscape.

Canopy looked to de-lever a portion of its balance sheet before the notes went current in July 2022 but faced several key regulatory and execution constraints.

HudsonWest’s Role

Navigating regulatory
and execution constraints

01
Analysis of Options

Working closely with management, HudsonWest proposed several different options available to Canopy and helped evaluate the merits and impacts of each, given certain regulatory, legal and contractual constraints.

02
Equitization Design

HudsonWest helped Canopy design an equitization of approximately 44% of the outstanding notes at a discount to par, with a floor price to protect the company from stock price fluctuations during execution.

03
Balance Sheet Strengthening

In the equitization, Canopy was able to save over C$11MM in annual interest expense, move from a net debt position to a net cash position and strengthen its balance sheet.

04
Constellation Brands Participation

The transaction also reiterated to the market the support of its largest shareholder, Constellation Brands, who participated in the transaction meaningfully — an important signal of confidence during a difficult period.

Other Canopy Growth Transactions
June & July 2023
~C$205.5MM Equitization & Maturity Refinancing
View Case Study →
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