SMITHS FALLS, Ont. - Canopy Growth Corp. says an Ontario court has approved the sale of its BioSteel sports drink business in a pair of deals.
READ: Canopy lands creditor protection for BioSteel business
Financial terms of the agreements were not immediately available.
Canopy Growth chief financial officer Judy Hong says the sales process identified two qualified buyers for the BioSteel brand and assets.
Hong added that the anticipated proceeds from the sales are expected to improve Canopy Growth's balance sheet.
The first deal covers the sale of BioSteel Canada to DC Holdings Ltd., while a second agreement includes the sale of the BioSteel Manufacturing business to Gregory Packaging Inc.
Canopy put BioSteel up for sale when the sports drink business was placed under court protection from creditors under the Companies' Creditors Arrangement Act in September.
At the time, Canopy chief executive David Klein said: “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.”
BioSteel's creditor protection status marks another blow for the beverage company Canopy scooped up a 72% stake in back in October 2019 in a bid to diversify. The deal came with a pathway to 100% ownership.
BioSteel was started by entrepreneur John Celenza and hockey star Michael Cammalleri in Toronto in 2009 and quickly became ubiquitous on arena and sports field benches through partnerships with the Toronto Raptors, the Toronto Blue Jays, the National Hockey League and the U.S. Soccer Federation.
But those relationships were costly.
Canopy reports that advertising and promotional investments in BioSteel, including costs related to its NHL sponsorship, had increased by about $12 million in its most recent quarter. And in recent months, BioSteel had also encountered accounting problems. Canopy promised in May to refile three of its past quarterly financial statements because of misstatements linked to BioSteel it warned “should no longer be relied upon.”
By June, Canopy had made management changes and parted ways with some BioSteel staff.
-with files from CSNC staff