BioSteel obtains creditor protection

Canopy Growth ceases funding BioSteel Sports Nutrition. Consequently, BioSteel commences proceedings under the Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.

As part of its efforts to simplify its business and reduce cash burn, Canopy Growth was reviewing strategic options for its BioSteel business unit, including a potential sale of the business unit. BioSteel’s business was a significant drag on Canopy Growth’s profitability and cash flow, representing approximately 60 per cent of the company’s Q1 FY2024 Adjusted EBITDA loss. The decision by BioSteel to seek creditor protection means that Canopy Growth will limit the further funding obligations in respect of the BioSteel business unit.

Canopy Growth’s financial position is expected to be further strengthened through the immediate removal of the cash expenditures associated with funding the BioSteel business unit and the potential cash proceeds from the orderly sale of BioSteel’s assets.

“Canopy Growth has marked yet another major milestone in our transformation plan, as while BioSteel’s business has shown significant year-over-year revenue growth, and we believe the brand remains an attractive asset, it does not align with Canopy Growth’s cannabis focused asset-light strategy. 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,” said David Klein, CEO.

BioSteel has obtained an initial order from the CCAA Court which provides for, among other things: (i) a stay of proceedings in favour of BioSteel and its two U.S. affiliates, BioSteel Sports Nutrition USA LLC and BioSteel Manufacturing LLC; and (ii) the appointment of KSV Restructuring as monitor of BioSteel.

The CCAA process will allow the BioSteel business to maximize the value of its assets through a court supervised sales process.