Canadian cannabis operator Entourage inks deal to go private
Canadian cannabis company Entourage Health Corp. plans to go private in a deal with its primary investor and lender, a major pension fund.
According to a purchasing agreement with 1001007762 Ontario Inc., the affiliate of LiUNA Pension Fund of Central and Eastern Canada (LPFCEC) will acquire all of Entourage’s issued and outstanding common shares for 0.005 Canadian dollars per common share.
“After thorough evaluation, the Special Committee is confident that the proposed Transaction offers the most favourable outcome for the Company and its shareholders in light of the current challenges and the upcoming expiration of the current forbearance agreement,” Jason Alexander, director and chair of the special committee of independent directors for Entourage, said in a statement.
“The Transaction ensures shareholders receive immediate, tangible value while positioning the Company for future growth and flexibility.”
A maximum of $250,000 will be paid to certain convertible debt holders under the same terms, according to a news release.
In connection with the transaction, Entourage reached a debt settlement agreement with holders of CA$1,013,050 in unsecured debt issued through a subsidiary.
The cash offer is guaranteed by 2437653 Ontario Inc., another affiliate of LPFCEC, an employer-based pension fund with a portfolio eclipsing $12 billion in assets.
Entourage directors, executives and other shareholders controlling 27% of issued and outstanding common stock agreed to approve the deal, according to the company.
The transaction still must be approved by two-thirds of shareholders and a majority of non-purchaser affiliated shareholders at a meeting next month.
If approved, the transaction is expected to close shortly after, subject to court approval and customary closing conditions.
Upon finalizing the transaction, Entourage common shares traded under ENTG.V are expected to delist from the TSX Venture Exchange.
The company also is expected to submit an application to the Ontario Securities Commission to cease as a publicly traded company.
In October, Entourage announced an LPFCEC affiliate increased its credit line by an additional CA$2.5 million as it negotiated prior credit breaches with the pension fund affiliates.
At the time, LPF owned over 10% of Entourage common shares.
Entourage did not immediately respond to inquires from MJBizDaily regarding the transaction.
