VAUGHAN, ON, Oct. 19, 2022 /CNW/ – CannTrust Holdings Inc. (the “Company” or “CTH”), a minority investor in Phoena Holdings Inc. (“Phoena”, formerly CannTrust Equity Inc.) today announced that it has made a Division I Proposal pursuant to the Bankruptcy and Insolvency Act (Canada) (the “Proposal”). Phoena’s operations are not impacted by the restructuring of CTH.
Further to its press release dated July 7, 2022CTH had intended to hold its annual general meeting on or before November 30, 2022. However, in order to hold such annual meeting, CTH would be required to, among other things, prepare audited financial statements. CTH has determined that it is not feasible to complete the audit and other work necessary to hold an annual general meeting before November 30, 2022. In these circumstances, CTH believes it is in the best interests of its stakeholders to make a proposal to its creditors under the BIA.
The Proposal is being funded by Phoena, with the support of Phoena’s largest shareholder, Marshall Fields Holdings, a wholly-owned subsidiary of Kenzoll BV, a Netherlands based private-equity company. Phoena’s operations are not impacted by the restructuring of CTH. The Proposal is also being supported by CTH’s lenders.
Subject to satisfying certain conditions, including approval from creditors and obtaining an approval order for the Proposal from the Court, CTH intends to address its remaining liabilities, dispose of its residual assets, distribute its shares in Phoena and dissolve in advance of advance November 30, 2022 or as soon as practicable after that date.
CTH intends to distribute the shares it holds in Phoena to its existing shareholders, provided that, (i) shareholders are required to hold at least 10,000 common shares of CTH in order to qualify for a distribution of Phoena common shares; and (ii) any distribution of Phoena shares to a holder of CTH shares who is a person that is not Canadian or a US person will be subject to CTH obtaining an opinion from qualified and independent securities counsel that such distribution is exempt from any requirement to prepare, file or deliver a prospectus or similar document. The Company is limiting the distribution of its Phoena Holdings shares to holders or owners of at least 10,000 CTH common shares so that the costs of distribution will not significantly exceed the value of the Phoena shares being distributed. When Phoena completed its private placement with Marshall Fields Holdings and the other strategic investors in March, 2022, they were issued common shares at a price of approximate $0.009 …