Canadian cannabis producer Entourage Health Corp. (TSXV: ENTG) – formerly WeedMD – will be taken private by LiUNA Pension Fund of Central and Eastern Canada for C$0.005 per share, the companies announced Monday, following months of mounting losses and debt covenant breaches.
Entourage faces C$167.6 million in debt under credit agreements with the Laborers’ International Union of North America. The company received multiple forbearance extensions since breaching covenants in April 2024, with the latest waiver extending through Jan. 15.
“The proposed transaction offers the most favourable outcome for the company and its shareholders in light of the current challenges,” Jason Alexander, chair of Entourage’s special committee, said in a statement.
The release cited the company’s limited trading volume, financial constraints and looming debt obligations that “the Company does not foresee being able to meet” without amended terms.
Despite third-quarter revenue growth of 11% to C$13.6 million, Entourage continued to struggle with losses of C$8.3 million. Earlier quarters showed deeper issues, with second-quarter revenue falling to C$12.2 million on declines in medical sales (down 1%) and adult-use (down 29%).
The agreement requires two-thirds shareholder approval at a February meeting, with 27% already committed through insider support agreements. The deal includes settling about C$1 million in unsecured debentures for C$250,000.
As of Sept. 30, Entourage reported a working capital deficit of C$171.4 million and accumulated losses of C$390.5 million. Shares last traded at C$0.005 on the TSX Venture Exchange, where they will delist upon closing.
Entourage operates a 26,000-square-foot processing facility in Aylmer, Ontario, that produces medical cannabis through its Starseed brand, which has maintained an exclusive partnership with LiUNA.
[[{“value”:”The deal offers an exit for the struggling producer as it faces a C$167.6M debt load and an expiring forbearance agreement.
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