Adam JacksonOntario-based Indiva Limited (TSX: NDVA) received creditor protection in Canada in the face of mounting debt pressures and other market challenges, the company announced Thursday.
The Ontario Superior Court of Justice granted Indiva an Initial Order under the Companies’ Creditors Arrangement Act, which allows the company to restructure its business and financial affairs while continuing operations.
The Canadian cannabis edibles producer has been grappling with strains that have weighed on its performance. In the first quarter of 2024, Indiva reported a slight increase in gross revenue to C$10.6 million, but its net revenue slipped to C$9.3 million due to higher excise taxes.
The matter is compounded by a C$19.2 million loan from cannabis financier SNDL Inc. (NASDAQ: SNDL) and C$2.5 million in outstanding convertible debentures, according to a June 3 update. Indiva said at the time that it had reached an agreement with SNDL to extend the date to June 13, by which time the company was required to reduce certain current liabilities.
As part of the CCAA proceedings, Indiva said it plans to launch a sale and investment solicitation process. SNDL, which is a significant stakeholder, is expected to make a “stalking horse bid” for the acquisition of essentially all of Indiva’s business and assets. That will set a floor price for the auction process.
Indiva’s financial troubles come despite its 28% to 32% cannabis edibles market share in Alberta, British Columbia, and Ontario, propped by its bestselling Pearls gummies brand, according to GMR.
Another major shareholder, Tweed, which is a subsidiary of Canopy Growth Corp. (TSX: WEED) (NASDAQ: CGC), disclosed in an early warning report that it sold 848,500 shares of Indiva, reducing its ownership stake from approximately 18.30% to 17.87%.
The CCAA protection and financing are expected to provide Indiva with the time and stability to consider additional restructuring options. However, trading of Indiva’s shares on the TSX Venture Exchange may be halted or suspended due to the CCAA proceedings, the company said Thursday.
