CannTrust Provides Default Status Report
VAUGHAN, ON, April 9, 2020 /PRNewswire/ - CannTrust Holdings Inc. ("CannTrust" or the "Company", TSX: TRST, NYSE: CTST) today provided a status update in accordance with its obligations under the alternative information guidelines set out in National Policy 12-203 – Management Cease Trade Orders ("NP 12-203"), which require the Company to provide bi-weekly updates until such time as the Company is current with its filing obligations under Canadian securities laws. As previously announced:
- the Company is subject to a management cease trade order ("MCTO") issued by the Ontario Securities Commission;
- the MCTO prohibits the directors and executive officers of the Company from trading in or acquiring securities of the Company until two full business days after the Company files an interim financial report for the three and six month periods ended June 30, 2019, an interim management's discussion and analysis for the corresponding period and certifications of interim filings; and
- the Company does not intend to devote additional time or money towards curing its public disclosure defaults by completing and resuming the filing of required reports under Canadian and United States securities laws.
Initial Order under the CCAA
On March 31, 2020, CannTrust announced that the Company had obtained an order (as amended or amended and restated from time to time, the "Initial Order") from the Ontario Superior Court of Justice (Commercial List) (the "Court") granting protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA"). The Initial Order, provides for, among other things:
- a stay of proceedings against CannTrust and certain of its affiliates (collectively, the "Applicants") until and including April 9, 2020, or such later date as the Court may order;
- the appointment of Ernst & Young Inc. as monitor (the "Monitor");
- subject to certain limitations, the Company's continued payment of all reasonable expenses incurred by the Applicants in carrying on their business in the ordinary course;
- the appointment of FTI Consulting Canada Inc. to act as Chief Restructuring Officer and provide certain financial advisory and consulting services to the Applicants; and
- the authorization of the Applicants' decision to incur no further expenses in relation to any filings, disclosures, restatements, amendments to existing filings, press releases or any other actions that may be required by any law respecting securities or capital markets in Canada or the United States, or by the rules and regulations of any stock exchange, provided that the Initial Order does not prohibit any securities regulator or stock exchange from investigating or initiating any proceeding against the Applicants in respect of such decision.
A copy of the Initial Order and other information relating to the Company's CCAA filing is available on the Monitor's website at http://www.ey.com/ca/canntrust.
A comeback hearing was held today in respect of the relief granted by the Court pursuant to the Initial Order and certain broader relief requested by the Applicants, including an extension of the stay of proceedings to July 5, 2020. The Court granted the relief in the form of the draft Order requested by the Applicants.
Delisting of Common Shares
On March 31, 2020, CannTrust received notice from the New York Stock Exchange (the "NYSE") that trading of the Company's Common Shares was suspended on the NYSE and an application to the United States Securities and Exchange Commission to delist the common shares is pending, subject to the completion of applicable procedures.
On April 6, 2020, CannTrust received notice from the Toronto Stock Exchange (the "TSX") of the TSX's intention to delist the Company's Common Shares effective at the close of market on May 6, 2020.
In addition, staff of the Ontario Securities Commission (the "OSC") has advised CannTrust that, as a result of the Company's filing for protection under the CCAA, its pending delisting by the TSX and NYSE, and its continuing default of its disclosure obligations under applicable securities laws, staff will be seeking a cease trade order ("CTO") to prevent any trading in the Common Shares in Canada.
Relief of Partial License Suspension
CannTrust has received notice of relief from Health Canada regarding the Company's partial license suspension at its Niagara facility. The Company will now be permitted to propagate mother plants in accordance with agreed upon terms from Health Canada.
As of March 31, 2020, CannTrust had a cash balance of approximately $140 million.
CannTrust further noted that:
Other than as disclosed above, there have been no material changes to the information contained in the Company's August 16, 2019 news release, August 29, 2019 news release, September 12, 2019 news release, September 26, 2019 news release, October 10, 2019 news release, October 24, 2019 news release, November 7, 2019 news release, November 21, 2019 news release, December 5, 2019 news release, December 19, 2019 news release, January 2, 2020 news release, January 16, 2020 news release, January 30, 2020 news release, February 13, 2020 news release, February 27, 2020 news release, March 12, 2020 news release, and March 26, 2020 news release;
The Company intends to continue to comply with the alternative information guidelines of NP 12-203, at least until such time as the OSC issues a CTO; and,
Except as previously disclosed, there are no subsequent specified defaults (actual or anticipated) within the meaning of NP 12-203.
This press release contains "forward-looking information" within the meaning of Canadian Securities laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbor laws, and such statements are based upon CannTrust's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information and forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy.
The forward-looking information and statements in this news release include statements relating to the corrective actions being taken by the Company, and Health Canada's pending determinations. Forward-looking information and statements necessarily involve known and unknown risks, including, without limitation: actions taken in respect of the Company's products by its customers and regulators; results of Health Canada's investigation, including orders and compliance measures required by Health Canada and their impact on the operations, inventory, assets and financial condition of the Company; the Company's implementation of remediation plans and related actions; regulatory approval; the outcome of the Company's contingent liabilities; the impact of potential regulatory investigations; the Company's review of strategic alternatives; risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments in Canada, the United States and elsewhere; the cannabis industry in Canada generally; and, the ability of CannTrust to implement its business strategies.
Any forward-looking information and statements speak only as of the date on which they are made, and, except as required by law, CannTrust does not undertake any obligation to update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for CannTrust to predict all such factors. When considering these forward-looking information and statements, readers should keep in mind the risk factors and other cautionary statements in CannTrust's Annual Information Form dated March 28, 2019 (the "AIF") and filed with the applicable Canadian securities regulatory authorities on SEDAR at www.sedar.com and filed as an exhibit CannTrust's Form 40-F annual report under the United States Securities Exchange Act of 1934, as amended, with the United States Securities and Exchange Commission on EDGAR at www.sec.gov (the "March 2019 Form 40-F"). The risk factors and other factors noted in the AIF could cause actual events or results to differ materially from those described in any forward-looking information or statements. Readers are also reminded that CannTrust remains in default of its periodic disclosure requirements under applicable securities laws and stock exchange requirements, that its most recent AIF, Form 40-F and other disclosures do not reflect all risk factors that currently face the Company, and that the Company has not completed or filed the restatements of the financial statements included in the AIF or the March 2019 Form 40-F or otherwise filed an amendment to such Form 40-F, and that the Company has determined not to correct its prior filings or make any further filings in respect of periodic disclosure requirements under applicable securities laws and stock exchange requirements.
The TSX and NYSE do not accept responsibility for the adequacy or accuracy of this release.
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SOURCE CannTrust Holdings Inc.