Full Press Release Details
SunStream USA Poised to Acquire Cannabis Assets
CALGARY, AB, May 2, 2024 /CNW/ - SNDL Inc. (Nasdaq:
SNDL) ("SNDL"), through its joint venture in SunStream Bancorp Inc. ("SunStream Bancorp"), today announced
the SunStream USA group of companies (collectively, "SunStream USA Group") intends to proceed with the acquisition of
equity positions in U.S. cannabis assets. This follows the completion of a review by SNDL's listing authority, Nasdaq. SNDL has
been in regular and active dialogue with Nasdaq, in respect of structuring and governance related to the SunStream USA Group. Based on
SNDL's opinion of counsel and Nasdaq's review, SNDL is satisfied that the SunStream USA Group structure conforms to applicable laws and
is not aware of any reason that would cause SNDL to not be compliant with Nasdaq listing rules ("Regulatory Compliance").
All financial information in this press release is reported in U.S. dollars unless otherwise indicated.
SunStream USA I, LLC ("SSU I") and
SunStream USA II, LLC ("SSU II", and with SSU I, "SunStream USA") are among the entities today that
comprise the SunStream USA Group. Each entity includes one or more third-party investors, which are independently managed and governed.
SNDL's affiliate, SunStream Opportunities II LP, is anticipated to own non-voting and non-participating exchangeable securities in the
SunStream USA entities ("SSU Exchangeable Securities"). SNDL will not consolidate the financial statements of any entity
within the SunStream USA Group until such time it is permissible to do so under applicable law and listing regulations. SNDL, as a capital
sponsor of the SunStream USA Group and through SunStream Opportunities II LP, would be afforded prospective economic interests in SunStream
USA, through the SSU Exchangeable Securities.
With SNDL having satisfied itself on Regulatory Compliance
matters, SunStream USA is now braced to acquire certain non-performing credit investments from SunStream Opportunities LP (an affiliate
of SunStream Bancorp), resulting in majority equity positions in select assets of Surterra Holdings, Inc. (d/b/a Parallel) and Greenpeak
Industries Inc. (d/b/a Skymint). Skymint operates in the state of Michigan, while Parallel is a multi-state cannabis operator ("MSO"),
currently operating in Florida, Massachusetts, Nevada and Texas. SSU I and SSU II are anticipated to acquire certain assets of Skymint
and Parallel, respectively, in each case subject to certain closing conditions and milestones. SNDL anticipates providing a further update
on the Parallel and Skymint transactions alongside its second quarter 2024 financial and operational results.
SunStream USA - Strategic Highlights
SNDL believes there are several benefits afforded
through the SunStream USA Group structure, including:
U.S. Equity Ownership: The SunStream USA Group structure
will allow SNDL to take a contingent indirect interest, on a pre-U.S. federal legalization basis, in certain U.S. assets, that may be
converted into common interests upon the U.S. federal legalization of the sale of cannabis products or enactment of other cannabis decriminalization
having the same effect (the "Legalization Trigger Event"). Previously, SNDL's joint venture in SunStream Bancorp was limited
to financing cannabis operators through credit investments specifically structured to comply with all appliable laws. The SunStream USA
Group will serve as a U.S. focused platform to acquire restructured assets of SunStream Opportunities LP, as well as additional structured
ownership positions in select cannabis operators.
Attractive Entry: The evolution from the deployment of
credit to structured contingent interests through the SunStream USA Group rebalances SNDL's risk-reward exposure, which upon a Legalization
Trigger Event, will afford SNDL the ability to obtain investment interests across the capital structures of numerous MSOs. SNDL currently
has no right or ability to control or to financially benefit from the SSU Exchangeable Securities. The repayment and redeployment of certain
existing senior credit investments into SSU Exchangeable Securities provides SNDL exposure to U.S. cannabis assets, with entry vectors
anticipated to be at attractive valuations.
Multi-State Operator: With the restructured Parallel and Skymint
transactions, which are subject to certain closing conditions and milestone events, SunStream USA is anticipated to be a majority owner
in U.S. cannabis companies having assets in five U.S. states, including Florida, Massachusetts, Nevada, Texas and Michigan. Several
of these states are currently medical-only cannabis markets that have the potential to legalize adult use sales in the coming years, with
Florida considering expansion into adult use market in November 2024.
Scale: Based on pro forma first quarter 2024 revenue
(including the Parallel and Skymint businesses, which are subject to certain closing conditions and milestone events), SunStream USA's
majority equity interests would rank it among the top 10 MSOs. In the states in which operations are conducted, SunStream USA, through
its equity ownership position, is anticipated to reach more than 60 million consumers, with aggregate market sales of $5 billion.
Optionality: SunStream USA, as a private and independently
managed and governed prospective equity holder in cannabis operators, will have increased optionality for the acquisition and divesture
of assets, access to capital in a potential go-public event, and/or opportunity to consolidate with SNDL, upon a Legalization Trigger
US Federal Legalization: Upon a Legalization Trigger Event,
should SNDL exercise its conversion rights, and based on first quarter 2024 revenue, SNDL's North American operations, on a SunStream
USA pro-forma inclusive outlook, would potentially rank SNDL as a top five MSO on a North American basis. Today, 24 states and
D.C. have legalized recreational cannabis, and 39 states have legalized cannabis for medical use.
"The establishment and Regulatory Compliance
of the SunStream USA Group has unlocked a remarkable opportunity for SNDL, and we are now poised to restructure non-performing credit
investments in SunStream Opportunities LP," said Zach George, Chief Executive Officer of SNDL. "This initiative creates attractive
optionality for SNDL upon federal legalization to deploy additional investment capital into the SunStream USA Group structure, improving
the return potential of attractive U.S. cannabis assets in growing markets."
Dentons US LLP is advising SNDL with respect to U.S.
state regulatory and listing matters. For SunStream USA, DLA Piper is acting as transactional legal counsel.
SNDL is a public company whose shares are traded on
the Nasdaq under the symbol "SNDL."SNDL is the largest private-sector liquor and cannabis retailer in Canada with retail banners
that include Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, Spiritleaf, and Firesale Cannabis. SNDL is a licensed cannabis producer
and one of the largest vertically integrated cannabis companies in Canada specializing in low-cost biomass sourcing, indoor cultivation,
product innovation, low-cost manufacturing facilities, and a cannabis brand portfolio that includes Top Leaf, Contraband, Palmetto,
Bon Jak, Versus, Value Buds, and Vacay. SNDL's investment portfolio seeks to deploy strategic capital through direct and indirect investments
and partnerships throughout the North American cannabis industry. For more information on SNDL, please go to https://sndl.com/.
ABOUT SUNSTREAM BANCORP
SunStream is a joint venture sponsored by SNDL Inc.
that leverages a strategic financial and operational partnership to target attractive risk-return opportunities in the cannabis industry
in order to provide exposure to a broad portfolio of investments. As of December 31, 2023, investments made by SunStream had a carrying
value of $404 million. In the period from inception until December 31, 2023, SunStream has deployed approximately $492 million to seven
companies, of which two investments have been monetized, returning approximately $42 million of capital.
Forward-Looking Statements
This news release includes statements containing certain
"forward-looking information" within the meaning of applicable securities law ("forward-looking statements"). Forward-looking
statements in this release include, but are not limited to, the acquisition of certain non-performing credit investments from SunStream
Opportunities LP by SunStream USA, the proposed acquisition by SSU I and SSU II, respectively, of certain assets of Skymint and Parallel,
SunStream USA's expected leverage, the occurrence of a Legalization Trigger Event and/or the potential of certain U.S. states to legalize
adult use sales in the coming years, and statements regarding the future performance and/or market share of any entity part of the SunStream
USA Group. Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain events or conditions "may" or
"will" occur. These statements are only predictions. Various assumptions were used in drawing conclusions or making the projections
contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates
of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those projected in the forward-looking statements. Neither SNDL nor SunStream
USA is under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
For more information on SNDL, please go to www.sndl.com.
Sunstream logo (CNW Group/SNDL Inc.)
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For further information: Sophie Pilon, SNDL Inc., O: 1.587.327.2017,
CNW 07:00e 02-MAY-24