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TerrAscend closes on second tranche of private placements for total aggregate proceeds of US$20.5 million

(Globe Newswire) Toronto — TerrAscend Corp., a leading North American cannabis operator, has closed the second tranche of private placements or total aggregate proceeds of US$20.5 million.

The closing of the second tranche of the private placements consists of an aggregate of 2,292,434 units of the company at a price of US$1.50 per Unit for aggregate gross proceeds of approximately US$3.4 million for total aggregate proceeds for both closings of approximately US$9.5 million, 100 senior unsecured convertible debentures of the company at a price of US$1,000 per debenture for aggregate gross proceeds of US$100,000 for total aggregate proceeds for both closings of US$10 million and Class A shares of TerrAscend Growth Corp. to a third-party investor for US$1,000,000. The net proceeds from the private placements will be used to qualify for the company’s proposed TSX listing, to fund Maryland dispensary acquisitions, and for working capital and general corporate purposes.

Equity offering

Each unit is comprised of one common share of the company and one-half of one common share purchase warrant. Each warrant will entitle the holder to acquire one common share at a price of US $1.95 per common share for a period of 24 months following the closing of the equity offering.

Debenture offering

Unless earlier repaid or converted, the outstanding principal and accrued and unpaid interest on the debentures will be due and payable 36 months following the closing of the debenture offering. Each Debenture will bear interest at a rate of 9.9 per cent per annum from the date of issuance, calculated and compounded semi-annually, and payable on the maturity date.

Each holder may, at the option of the holder upon signing of the subscription agreement, elect to receive up to 4.95 per cent per annum of such interest payable in cash on a semi-annual basis. Each debenture will be convertible into common shares, at the option of the holder, at any time or times prior to the close of business on the last business day immediately preceding the maturity date, at a conversion price of US $2.01. Holders converting their debentures will receive accrued and unpaid interest for the period from and including the date of the last interest payment date, to and including, the date of conversion.

Reorganization investment

The reorganization investment was completed following the approval by the shareholders of TerrAscend on June 22, 2023 of the reorganization in connection with TerrAscend’s application to list its common shares on the Toronto Stock Exchange. Following completion of the reorganization investment, TerrAscend now holds exchangeable shares of TerrAscend Growth, representing approximately 99.8 per cent of the economic ownership of TerrAscend Growth, on an as-converted basis. Aside from its interest in TerrAscend Growth, TerrAscend owns 95 per cent of Cookies Retail Canada Corp., an entity which owns and operates the Cookies-branded retail store located in Toronto.

The Private Placement constitutes a “related party transaction” within the meaning of multilateral instrument 61–101 Protection of Minority Security Holders in Special Transactions (MI 61–101) because insiders of the company, being Edward J. Schutter, Ziad Ghanem, Keith Stauffer and Jeroen De Beijer, as previously announced participated in the first tranche closing and Jason Wild, participated, directly and indirectly, in the second tranche closing of the equity offering and acquired 800,002 units for aggregate gross proceeds of $1,200,003.

In total, the insiders acquired, in the aggregate, 2,000 debentures and 825,734 units in connection with the private placements for aggregate gross proceeds of $3,238,601 (insider participation). The company has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61–101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61–101 in respect of the insider participation as the fair market value (as determined under MI 61-101) of the insider participation in the private placement is below 25 per cent of the company’s market capitalization (as determined in accordance with MI 61-101).

In connection with the terms of the debenture offering and the equity offering, the company has agreed to make certain cash commission payments equal to an average rate of approximately 2 per cent of the gross proceeds received by the company based on the source of funds.

The securities offered pursuant to the private placements have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or under any state securities laws, and may not be offered or sold, directly or indirectly, or delivered within the United States absent registration or an applicable exemption from the registration requirements.

This news release does not constitute an offer to sell or a solicitation to buy such securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which an offer, solicitation or sale would be unlawful. This news release is being issued pursuant to and in accordance with Rule 135c under the Securities Act of 1933.