Canopy Growth lands creditor protection for BioSteel business, intends to sell brand

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Tired of its sports drink business weighing on its books, Canopy Growth Corp. is making moves to shed the division. The Smiths Falls, Ont., cannabis company announced Thursday that it had obtained creditor protection from the Ontario Superior Court of Justice for BioSteel Sports Nutrition Inc. and intends to seek permission to sell the business. Canopy sought creditor protection because it said it no longer has access to funding. It described BioSteel as a 'significant drag' on its profitability

Tired of its sports drink business weighing on its books, Canopy Growth Corp. is making moves to shed the division.

"We have repeatedly demonstrated that we will take decisive action to enhance our profitability and ensure we are focused and positioned to be a leader in the North American cannabis sector." And in recent months, Canopy and one of its subsidiaries advanced about $15 million per month and more than $366 million to date to BioSteel to keep the company going, BioSteel said in court documents.Canopy promised in May to refile three of its past quarterly financial statements because of misstatements linked to BioSteel it warned "should no longer be relied upon." It parted ways with some BioSteel staff and made management changes by June.

A special committee then tried to solicit interest and six parties came forward, but they sought “lengthy due diligence periods and/or financing conditions, and no party offered committed financing to fund the operations of the BioSteel business during its diligence period.” Investors appeared pleased with the news, pushing the company's share price up by 26 cents, or almost 17 per cent, to $1.82 in mid-morning trading, but by the market's close, it was up 14 cents, or 8.97 per cent, to $1.70.

 

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