Cresco Labs puts three restructuring resolutions to October 30 vote
Holders will weigh a new parent company, a Delaware move and a voting-share sunset extension as Cresco pursues a potential U.S. listing.
Theo Marchetti
A proposed move from British Columbia to Delaware went before shareholders in a management circular filed Sept. 24, with a vote set for Oct. 30. Cresco Labs Inc. CNSXCL OTCMKTSCRLBF is seeking three special resolutions at its Oct. 30 meeting, including one that would extend the sunset date for its multiple voting shares from the first to the third anniversary of a U.S. listing.
The vote is part of Cresco's preparations for a potential senior U.S. exchange listing, according to its Sept. 24 release. That release announced neither an exchange approval nor a listing date. Holders will decide on a share exchange, a later redomicile and the voting-share amendment at the same annual general and special meeting.
Cresco shares traded at C$1.05 on the Canadian Securities Exchange at 2:38 p.m. EDT on Sept. 25, according to the CNSXCL quote.
Cresco is a U.S. cannabis producer and retailer. Its investor page described operations in eight states as of Sept. 25, with branded products and dispensaries under the Sunnyside name.
The Share Exchange Would Preserve Relative Rights
Under the proposed share exchange, securities in Cresco would be exchanged for securities in a new parent company, called TopCo, that would become the publicly listed entity. The company's release says the exchange would apply equally to all share classes, leaving holders' relative voting and economic rights unchanged.
The board would also gain discretion to carry out a reverse share split if needed, Cresco said. Its release did not give a split ratio. Neither the exchange nor the split was described as complete.
A separate resolution asks holders to approve moving TopCo from British Columbia to Delaware after the share exchange. It also provides for a new long-term equity incentive plan for a U.S.-domiciled issuer. If shareholders approve the move, the board could implement it at any time through Dec. 31, 2027, according to the release; approval at the meeting would not itself set an implementation date.
"The proposals we are putting before shareholders are designed to position Cresco Labs for listing on a senior U.S. exchange," Cresco Labs chief executive Charles Bachtell said in the Sept. 24 release.
The Vote Has an October Deadline
The third special resolution would move the multiple voting shares' listing sunset date from the first to the third anniversary of a U.S. listing. Cresco says those shares would convert automatically after the amended sunset date, if the measure is approved and a listing occurs. Its board unanimously recommends a vote in favour of each resolution.
The release says the circular and related proxy materials are available under Cresco's profile on SEDAR+. The circular itself was not read for this report, so the account of its resolutions is attributed to Cresco's release. The release gives no vote threshold for the three special resolutions.
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Shareholders of record at the Sept. 15 close may vote at the virtual meeting, Cresco said. Proxies are due by noon CDT on Oct. 28, though intermediaries may set an earlier deadline for beneficial owners. The Oct. 30 meeting, scheduled for noon CDT, will decide the three restructuring resolutions.
