Canopy Rivers Provides Update on PharmHouse Sale and Investment Solicitation Process, Debtor-in-Possession Financing

TORONTO, Dec. 18, 2020 /PRNewswire/ - Canopy Rivers Inc. ("Canopy Rivers'' or the "Company") (TSX: RIV) (OTC: CNPOF) today provided an update on its 49%-owned joint venture, PharmHouse Inc. ("PharmHouse").

On October 29, 2020, PharmHouse received a court order from the Ontario Superior Court of Justice (the "Court") to initiate a sale and investment solicitation process ("SISP") to identify interest in, and opportunities for, a sale of, or investment in, all or part of PharmHouse's assets or business. This may include a restructuring, recapitalization, or other form of reorganization of PharmHouse's business and affairs. Phase one of the SISP concluded on November 30, 2020, and a number of non-binding offers were received. PharmHouse, with the assistance of the monitor and the SISP advisor, have selected a number of parties to bring forward to the next phase of the SISP, and binding offers for phase two of the SISP are due on or about February 16, 2021.

The Company also announced an amendment to the debtor-in-possession financing arrangement (the "DIP Financing") entered into between the Company and PharmHouse on September 15, 2020. As a result of this amendment, the maximum principal amount available to be drawn by PharmHouse pursuant to the DIP Financing has increased by approximately $2.5 million from approximately $7.2 million to $9.7 million, and the maturity date has been extended from December 29, 2020 to February 28, 2021. It is expected that this amendment will provide PharmHouse with sufficient funding to continue its day-to-day operations throughout phase two of the SISP and up to the revised maturity date. In the event that the restructuring proceedings have not concluded by the revised maturity date, PharmHouse may require additional capital. On December 18, 2020, the Court approved the DIP Financing amendment and extended the stay of proceedings in respect of PharmHouse until February 28, 2021, inclusively.

"We remain committed to resolving the PharmHouse matter in the best interests of our shareholders," said Narbé Alexandrian, President and CEO of Canopy Rivers. "We believe that the DIP Financing provides PharmHouse with the capital needed to maintain full operations in the short term, and we believe that this will also ensure the best outcome for our shareholders in the long term."

PharmHouse commenced formal proceedings under the Companies' Creditors Arrangement Act ("CCAA") on September 15, 2020, and has continued its regular operations throughout its restructuring process. This includes growing and harvesting cannabis, and working towards finalizing new commercial agreements in the Canadian cannabis sector. Canopy Rivers currently anticipates that PharmHouse's CCAA proceedings will conclude before the end of the Company's current fiscal year and the Company continues to work collaboratively with PharmHouse's bank lending syndicate throughout this process.

About Canopy Rivers

Canopy Rivers is a venture capital firm specializing in cannabis with a portfolio of 18 companies across various segments of the cannabis value chain. We believe that bringing together people, capital, and ideas raises the potential of the entire cannabis industry. By leveraging our industry insights, in-house expertise, and thesis-driven approach to investing, we aim to provide shareholders with exposure to specialized and disruptive cannabis companies. Our mission is to invest in innovators across the cannabis value chain, help them grow, and ultimately create value by guiding these companies towards a monetization event. Together with our portfolio, we are helping build the cannabis industry of tomorrow, today.

Forward-Looking Statements

This news release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. To the extent any forward-looking information in this news release constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and forward-looking information in this news release includes, but is not limited to, information and statements regarding: the potential outcome of the SISP, including the possible restructuring, recapitalization, or other form of reorganization of PharmHouse's business and affairs; the potential participation by, and receipt of any binding offers from, those parties selected to be brought forward to the next phase of the SISP and the indicated deadline for when binding offers for this phase two are due; the expectation that the amendment to the DIP Financing will provide PharmHouse with sufficient funding to continue its day-to-day operations throughout phase two of the SISP and up to the revised maturity date of the DIP Financing; the possibility that PharmHouse may require additional capital in the event that the restructuring proceedings have not been concluded by the revised maturity date of the DIP Financing; the belief that the DIP Financing will provide PharmHouse with the capital needed to maintain full operations in the short term and the belief that this will also ensure the best outcome for the Company's shareholders in the long term; the ability of PharmHouse to continue its regular operations throughout its restructuring process; the anticipated completion of PharmHouse's CCAA proceedings before the end of the Company's current fiscal year; the Company's intention to continue to work collaboratively with PharmHouse's bank lending syndicate during this process; and expectations for other economic, business, and/or competitive factors.

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. Our actual financial position and results of operations may differ materially from management's current expectations. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: risks associated with the SISP, including participation by and the receipt of binding offers from parties selected to participate in phase two and the outcome of such process; risks associated with the DIP Financing and the amendments thereto; risks associated with PharmHouse and its ability to continue its day-to-day operations throughout the SISP; risks associated with the potential need for additional capital by PharmHouse; risks associated with PharmHouse's CCAA proceedings generally; risks associated with the termination, renegotiation and enforcement of material contracts; credit, liquidity and additional financing risks for the Company and its investees; stock market volatility; regulatory and licensing risks; cannabis pricing risks; changes in cannabis industry growth and trends; changes in the business activities, focus and plans of the Company and its investees and the timing associated therewith; the Company's actual financial results and ability to manage its cash resources; changes in general economic, business and political conditions, including challenging global financial conditions and the impact of the novel coronavirus pandemic; competition risks; potential conflicts of interest; the regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; changes in the Company's relationship with Canopy Growth and its investees; changes in applicable laws; compliance with extensive government regulation, including the Company's interpretation of such regulation; changes in the global sentiment towards, and public opinion of, the cannabis industry; divestiture risks; and the risk factors set out in the Company's AIF, filed with the Canadian securities regulators and available on the Company's profile on SEDAR at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

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SOURCE Canopy Rivers Inc.