After three troubled years, cannabis grower CannTrust Holdings Inc. CNTTQ is finally turning over a new leaf.
A new investment of $16.7-million from Marshall Fields International, a subsidiary of Netherlands-based private equity investment firm Kenzoll BV, means CannTrust will be able to begin rebuilding production and distribution of cannabis for the Canadian market as it emerges from creditor protection.
Marshall Fields and several individual investors, including CannTrust chief executive officer Greg Guyatt, will take a combined 90-per-cent stake in the company, with the remaining 10 per cent held by shareholders.
“It has certainly been a long journey to get to this point,” Mr. Guyatt said in an interview with The Globe and Mail.
When Mr. Guyatt stepped into the role of CEO in 2020, CannTrust was in a state of disarray.
The year before, regulators were tipped off that the company had been growing cannabis in unlicensed facilities, a discovery which sent the company’s stock plummeting and led to its cannabis sales and growing licences being suspended for almost a year.
In 2020, a class-action lawsuit was launched by investors who had lost money after the value of their shares collapsed. This January, CannTrust settled the suit for $50-million.
With the help of the new investment, the company will be able to pay off debt and emerge from Companies Creditors’ Arrangement Act protection in a few weeks.
Among the first items in the company’s agenda are plans for a name change as part of it rebranding, Mr. Guyatt said.
Then, Mr. Guyatt said his team will restart production at its 450,000-square-foot greenhouse in Fenwick, Ont., using what he calls a proprietary process to grow cannabis at a low cost. “We’ve got the liquidity that we need to operate our business into the foreseeable future and execute on our growth plans.”
In the next six months, the company will be determining where to relist – previously the company traded on the TSX and NYSE. This could come alongside a rights offering, he said, which would allow the company’s current shareholders to participate in the future growth of the business.
Despite new opportunity for growth, CannTrust is re-emerging into a difficult landscape for the sector. During 2021, cannabis markets continued their steady decline, with the value of some of the industry’s biggest players, including Canopy Growth Corp. WEED-T, Aurora Cannabis Inc. ACB-T and Tilray Inc. TLRY-T down more than 60 per cent over the past year.
Many cannabis companies have yet to become profitable in the face of vigorous competition between producers, a continuing battle with the illegal market and regulation considered too arduous by many in the industry.
“I think this process took a lot longer than anybody expected. But there’s a lot that we achieved. To be able to exit CCAA, and turn the page on that is something that we’re really proud of,” he said.
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