Ontario-based cannabis edibles producer Indiva Limited announced on June 13 that it had been granted an order from the Ontario Superior Court of Justice under the Companies Creditors Arrangement Act (CCAA) in order to restructure its business and financial affairs.
The CCAA filing follows an update from Indiva in early June announcing that its liabilities under an amending agreement with Alberta-based SNDL had been extended to June 13, 2024. In April 2024, Indiva repaid $2 million of the principal amount outstanding from a strategic investment of $22 million provided by SNDL in 2021.
SNDL is a major investor in Indiva and stands to take over the business through a stalking horse transaction. In their most recent quarterly report, Indiva announced a net loss of $1.8 million.
Indiva says the decision to file for creditor protection provides the company with a stay of proceedings in favour of the Indiva Group, the approval of debtor-in-possession financing, and the appointment of PricewaterhouseCoopers Inc. as monitor of the Indiva Group. The initial order also relieves Indiva of some reporting obligations under securities legislation and stock exchange rules.
The stay of proceedings and DIP Financing will provide the Indiva Group with a chance to consider potential restructuring transactions and maximize the value of its assets for the benefit of its creditors and other stakeholders, which could include the sale of all or substantially all of Indiva’s business or assets through a court-supervised sales process.
The Indiva Group says it also plans to seek approval to launch a sale and investment solicitation process (SISP) for its business and assets in the near term. Indiva also intends to enter into a transaction for SNDL Inc. to acquire the business and assets of the Indiva Group through the stalking horse transaction.
Located in London, Ontario, Indiva is a cannabis producer with an array of edibles and extracts in the Canadian market, including Pearls by Grön, No Future Gummies and Vapes, Bhang Chocolate, Indiva Blips Tablets, Indiva Doppio Sandwich Cookies, and Indiva 1432 Chocolate.
Earlier this year, SNDL reported its first profitable quarter for cannabis production and increased losses for its retail cannabis holdings.
SNDL has invested in several cannabis companies in the industry’s production and retail sectors. In May, SNDL alleged that Mantioba-based Delta9 Cannabis was in default of its financing agreement with SNDL and demanded immediate payment of a $10 million convertible debenture financing. Delta 9 CEO John Arbuthnot denied the claim.
