- This allows FLUENT to increase its retail count to 42 doors, to add its first division of wholesale as well as to continue expanding its house brands.
- The transaction is one of the largest U.S. marijuana transactions in 2024 and will add approximately US$33million to FLUENT’s balance sheet.1,2 in cash just weeks after securing industry-attractive refinancing that positions the company to consider additional M&A and growth opportunities
- Hawthorne Collective acquires RIV Capital’s assets and cash in a debt free, all stock transaction. The Hawthorne Collective has completed the exchange of convertible notes it held in RIV Capital with a new class non-voting exchangeable Cansortium shares, eliminating US$160 millions.3 The debt
[PRESS RELEASE] – TAMPA, Fla., Dec. 19, 2024 – Cansortium Inc., a vertically integrated, multistate cannabis company operating under the FLUENT brand, and RIV Capital Inc., a vertically integrated cannabis company operating the Etain brand in New York, are pleased to announce the completion of the previously announced arrangement with RIV Capital (the “transaction”), whereby FLUENT acquired all of the issued and outstanding Class A common shares (the “RIV capital shares”) of RIV Capital in exchange for FLUENT shares (as defined below) pursuant to the terms of an arrangement agreement dated May 30, 2024 (as amended, the “arrangement agreement”).
According to the terms of this arrangement agreement, each RIV share was exchanged for 1.245 shares of FLUENT. The shareholders of FLUENT (“FLUENT shareholders”) now hold 51.25% of FLUENT’s combined business with RIV Capital, and The Hawthorne Collective Inc. together hold 48.75%. The combined company will operate under the name FLUENT, and the shares of FLUENT will continue trading on the Canadian Securities Exchange(CSE) under symbol “TIUM.U”, and on OTCQB Venture Market (CNTMF).
Robert Beasley, CEO of the combined business, has been appointed as CEO under the terms of arrangement agreement. RIV’s shares will likely be delisted at CSE market close on December 19, 2020. The Ccompany will request that RIV Capital apply to the Canadian securities regulators to cease being a reporting entity under applicable Canadian securities law.
Management Commentary
Beasley stated, “I am delighted to have completed this transaction and would like to thank all the teams involved for their hard work in recent months as well as our shareholders for their support.” Together, we’ve created one of cannabis’ most well-positioned operators, with strategic footprints in four key markets, and a solid balance sheet that will enable us to take advantage of growth opportunities. Our teams, with integration activities in full swing, have discovered synergies which, when combined with our long history of operational excellence will allow us to build a profitable, efficient organization.
Beasley also added that “New York retail sales will surpass $1 Billion in the next year”.4Our recent successful launch in New York of MOODS underscores the immense potencial of the combined company. We have introduced FLUENT’s brands in order to scale wholesale operations and gain more shelf space in dispensaries throughout the state. Our retail and cultivation expertise will allow us to continue optimizing and building on the strong foundation in the attractive markets that we operate. “We remain committed to sustainable, long-term business growth. We’ll continue to drive efficiencies in all areas of our company to achieve our profit and cash generation targets for our shareholders.”
David Vautrin is the former Chief Revenue Officer and Interim CEO at RIV. He will be appointed as chief commercial officer by FLUENT upon its closing. “As demonstrated by past performance we believe that FLUENT is a fundamentally sound multistate operator in the United States. I am excited to unleash the full potential of our combined team in order to maximize shareholder value.
Hawthorne Notes Exchange
According to the May 30, 2024 press release of the company, The Hawthorne Collective and the company entered into a protection and exchange agreement on December 18, 2024 (“the exchange and protection contract”) pursuant to which The Hawthorne Collective traded its existing unsecured convertible notes with a principal amount of US$160,000,000, including all accrued interest and unpaid by RIV capital, for 153 069 395 non-voting exchangeable share (the exchangeable shares) in the capital (the Ha
The exchange and protection agreement also contains provisions that prevent The Hawthorne Collective converting its exchangeable share into FLUENT shares if such conversion would lead to The Hawthorne Collective and any other person or company acting in concert or jointly with The Hawthorne Collective having a combined beneficial ownership, control, or direction, directly or indirect, of over 19,99% of the issued and outstanding voting shares of the company immediately after such conversion.
For more information on the exchange and protection agreement and the Hawthorne notes exchange, see the company’s news release dated May 30, 2024, and the management information circular of the company dated July 12, 2024, filed under the company’s profile on SEDAR+ at www.sedarplus.ca.
The foregoing description of the exchange and protection agreement is not complete and is qualified in its entirety by reference to the full text of the exchange and protection agreement, a copy of which will be filed on the company’s profile on SEDAR+ at www.sedarplus.ca.
Investor Rights Agreements
The Hawthorne Collective, in connection with the Hawthorne Notes Exchange, entered into a shareholder rights agreement (“Hawthorne Investor Rights Agreement”) that provided, among other rights, for The Hawthorne Collective, to nominate two members of the board of directors (the “FLUENT Board”) of the company, as long as The Hawthorne Collective, and its affiliates, maintain certain specified beneficial owner requirements, as set out in the Hawthorne Investor Rights agreement
The Hawthorne Collective, as long as it meets the requirement of beneficial ownership, is entitled to certain rights that allow them to maintain their pro-rata equity position in the company when the company offers FLUENT or other securities convertible, exchangeable or exercisable for FLUENT, along with certain other rights such demand registration rights, piggyback and information rights.
Further to the company’s press release from Nov. 26 2024, certain of its affiliated companies, William Smith who is the director and executive chair of FLUENT, as well as certain companies controlled and owned by Smith (collectively, “the Smith group”) have entered into an Investor Rights Agreement (the “Smith Investor Rights agreement”) to accompany that certain amended termination agreement of Nov. 26 2024. The agreement stipulates, among other provisions, that the Smith Group will retain the right to nominate 2 members to FLUENT Board so long as The Smith investor right agreement has many of the same terms as Hawthorne’s investor rights agreement. This includes certain piggyback and participating registration rights.
The foregoing descriptions of the Hawthorne investor rights agreement and the Smith investor rights agreement are not complete and are qualified in their entirety by reference to the full texts of the Hawthorne investor rights agreement and the Smith investor rights agreement, copies of which will be filed on the company’s profile on SEDAR+ at www.sedarplus.ca.
Additional information for RIV capital shareholders
Former RIV shareholders will receive 1.245 shares of FLUENT for every RIV share they held. To receive FLUENT share in exchange for RIV capital shares, former RIV registered shareholders must complete, date, sign and return the letter transmittal that they received prior to the close of the transaction. The letter of transmittal has been filed by RIV Capital under RIV Capital’s profile on SEDAR+ at www.sedarplus.ca and on RIV Capital’s website at www.rivcapital.com. You can also obtain the letter of transmittal by contacting Odyssey Trust Company (the depositary for the transaction) by phone at (587) 885-9680 or by email: [email protected].