Vireo Growth Inc 8-K, filed Oct 14, 2022
Vireo Growth Inc. (VREOF)
About this 8-K
Vireo Growth Inc filed this 8-K on October 14, 2022, reporting on events of October 13, 2022.
Items reported
- Item 1.02: Ended a material agreement
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.02 | Termination of a Material Definitive Agreement |
On January 31, 2022, Goodness Growth Holdings, Inc. (“Goodness Growth”) entered into an arrangement agreement (the “Arrangement Agreement”) with Verano Holdings Corp. (“Verano”), pursuant to which, Verano agreed, subject to the terms and conditions thereof, to acquire all of the issued and outstanding subordinate voting shares of Goodness Growth, multiple voting shares of Goodness Growth and super voting shares of Goodness Growth, pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Arrangement”).
The Arrangement Agreement provides for the payment of a $14,875,000 termination fee (the “Termination Fee”) if the Arrangement Agreement is terminated in certain specified circumstances, including, among other things, in the event that the Arrangement Agreement is terminated due to certain specified breaches of the Arrangement Agreement by the breaching party. The Arrangement Agreement also provides for the payment of certain transaction expenses up to a maximum of $3,000,000 (the “Transaction Expenses”) in the event of (i) an uncured breach of representations, warranties, or covenants the remains uncured for a certain period of time after notice of such breach from the other party or (ii) a material adverse effect that is not capable of being cured by December 31, 2022.
On October 13, 2022, Goodness Growth received a notice of purported termination of the Arrangement Agreement (the “Notice”) from Verano. The Notice asserts certain breaches of the Arrangement Agreement, including claims that Goodness Growth’s public filings and communications with respect to its business and ongoing operations were misleading and that it breached its representations to Verano under the Arrangement Agreement. Verano also claims, as a result of such breaches, it is entitled to payment of the Termination Fee and its Transaction Expenses.
Goodness Growth denies all of Verano’s allegations and has complied with its obligations under the Arrangement Agreement in all material respects at all times. Verano has no factual or legal basis to justify or support its purported grounds for termination of the Arrangement Agreement. Goodness Growth will file suit promptly to recover all damages available to it under the Arrangement Agreement and at law and hold Verano responsible for its breaches and failure to consummate the transactions contemplated thereunder.
The foregoing summary of the terms of the Arrangement Agreement is qualified in its entirety by reference to the full text of the Arrangement Agreement, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) as Exhibit 2.1 to Goodness Growth’s Current Report on Form 8-K on February 3, 2022.
Notice Regarding Forward-Looking Statements
This document includes forward-looking information and statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding the timing and completion of the Arrangement, including all the required conditions thereto. Words such as “expects”, “continue”, “will”, “anticipates” and “intends” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on Goodness Growth’s current expectations about future events and financial trends that they believe might affect their financial condition, results of operations, prospects, business strategy and financial needs, and on certain assumptions and analysis made in light of the experience and perception of historical trends, current conditions and expected future developments and other factors that Goodness Growth believes are appropriate. Forward looking information and statements involve and are subject to assumptions and known and unknown risks, uncertainties, and other factors which may cause actual events, results, performance, or achievements to be materially different from future events, results, performance, and achievements expressed or implied by forward looking information and statements herein, including, without limitation, the risks discussed under the heading “Risk Factors” in Goodness Growth’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on EDGAR and with certain Canadian regulators on SEDAR at www.sedar.com and in other periodic reports and filings made by Goodness Growth with the SEC on EDGAR and with such Canadian securities regulators on SEDAR. Additional risks and uncertainties include those associated with: the possibility that the conditions to closing are not satisfied; required regulatory approvals to consummate the Arrangement are not obtained; potential litigation relating to the Arrangement; uncertainties as to the timing of the consummation of the Arrangement; possible disruption related to the Arrangement to Goodness Growth’s current plans and operations, including through the loss of customers or employees; and other risks and uncertainties detailed in the periodic reports that Goodness Growth files with the SEC. Although Goodness Growth believes that any forward-looking information and statements herein are reasonable, in light of the use of assumptions and the significant risks and uncertainties inherent in such information and statements, there can be no assurance that any such forward-looking information and statements will prove to be accurate, and accordingly readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance upon such forward-looking information and statements. Any forward-looking information and statements herein are made as of the date hereof and, except as required by applicable laws, Goodness Growth assumes no obligation and disclaims any intention to update or revise any forward-looking information and statements herein or to update the reasons that actual events or results could or do differ from those projected in any forward-looking information and statements herein, whether as a result of new information, future events or results, or otherwise.
| Item 8.01 | Other Events |
Goodness Growth issued a press release related to the Notice on October 14, 2022, a copy of which is attached hereto as Exhibit 99.1.
| Item 9.01. | Financial Statements and Exhibits |
(d) Exhibits.
| Exhibit No. | Description |
| 99.1 | Press Release of Goodness Growth, dated October 14, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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GOODNESS GROWTH HOLDINGS, INC.
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| By: | /s/ Kyle E. Kingsley | |
| Kyle E. Kingsley | ||
| Chief Executive Officer | ||
| Dated: October 14, 2022 | ||
Exhibit 99.1
Verano Repudiates Transaction to Acquire Goodness Growth Holdings
Goodness Growth Holdings, Inc. (CSE: GDNS) (OTCQX: GDNSF) (“Goodness” or the “Company”) announces today that on October 13th, 2022, Verano Holdings Corp. (“Verano”) delivered notice (the “Termination Notice”) to Goodness purporting to terminate the arrangement agreement between Verano and Goodness dated January 31, 2022, as amended (the “Arrangement Agreement”). Under the Arrangement Agreement, Verano agreed to acquire all of the issued and outstanding subordinate voting shares, multiple voting shares and super voting shares of Goodness (the “Transaction”). Goodness believes that Verano has no legal basis to terminate the Arrangement Agreement, and that Verano has committed various material breaches of the Arrangement Agreement. Verano’s repudiation of the Arrangement Agreement has been acknowledged by Goodness, and the Transaction will not proceed. Goodness intends to immediately commence legal proceedings against Verano to seek significant damages for, among other things, Verano’s material breaches of the Arrangement Agreement, Verano’s failure to discharge its obligations thereunder and Verano’s breach of the duties of good faith and honest contractual performance.
The Termination Notice claims that Verano has grounds to terminate the Arrangement Agreement on the basis of (i) alleged breaches of certain representations made by Goodness, (ii) Goodness’ alleged failure to give reasonable consideration to Verano’s comments on the draft Goodness proxy circular prepared by Goodness and reviewed and cleared by the United States Securities Exchange Commission (the “Proxy”), (iii) the refusal of the board of directors of Goodness to re-evaluate the terms of the transaction despite the fact that no material adverse changes had occurred to either Goodness or Verano, and (iv) Goodness’ alleged failure to reaffirm its recommendation to shareholders to vote for the Transaction, which recommendation had not yet been made and was planned to be made in the Proxy, which was anticipated to be mailed to the shareholders of Goodness next week.
Goodness vehemently denies all of Verano’s allegations and has complied with its obligations under the Arrangement Agreement in all material respects at all times. Verano has no factual or legal basis to justify or support its purported grounds for termination of the Arrangement Agreement. Goodness believes that Verano is repudiating the Arrangement Agreement to avoid fulfilling its obligations thereunder after Goodness refused Verano’s request to reduce the agreed-upon consideration payable by Verano under the Arrangement Agreement.
Goodness will file suit promptly to recover all damages available to it under the Arrangement Agreement and at law and hold Verano responsible for its breaches and failure to consummate the transactions contemplated thereunder.
The foregoing summary of certain provisions of the Arrangement Agreement is qualified in its entirety by the provisions of the Arrangement Agreement, a copy of which is available on SEDAR at www.sedar.com.
About Goodness Growth Holdings, Inc.
Goodness Growth Holdings, Inc., is a physician-led, science-focused holding company whose mission is to bring the power of plants to the world. The Company’s operations consist primarily of its multi-state cannabis company subsidiary, Vireo Health, Inc., and its science and intellectual property incubator, Resurgent Biosciences, Inc. The Company manufactures proprietary, branded cannabis products in environmentally friendly facilities and state-of-the-art cultivation sites and distributes its products through its growing network of Green Goods® and other retail locations and third-party dispensaries. Its team of more than 450 employees is focused on the development of differentiated products, driving scientific innovation of plant-based medicines, and developing meaningful intellectual property. Today, the Company is licensed to grow, process, and/or distribute cannabis in five markets and operates 18 dispensaries across the United States. For more information about Goodness Growth Holdings, please visit www.goodnessgrowth.com.
Contacts:
| Sam Gibbons | Amanda Hutcheson |
| Vice President, Investor Relations | Senior Manager, Corporate Communications |
| samgibbons@goodnessgrowth.com | amandahutcheson@vireohealth.com |
| (612) 314-8995 | (919) 815-1476 |
Forward-Looking Statement Disclosure
This press release contains "forward-looking information" and “forward-looking statements” within the meaning of applicable United States and Canadian securities legislation (collectively, “forward-looking information”). Forward-looking information contained in this press release may be identified by the use of words such as “should,” “may,” “continue,” “expect,” “outlook,” “will,” “believe,” “subject to,” “plans,” and “pending,” or variations of such words and phrases. These statements should not be read as guarantees of future performance or results. Forward-looking information includes both known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company or its subsidiaries to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements or information contained in this press release. Forward-looking information is based upon a number of estimates and assumptions of management, believed but not certain to be reasonable, in light of management's experience and perception of trends, current conditions, and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future litigation matters and award claims. Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these statements. Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to: Goodness’ intent to immediately commence legal proceedings against Verano; the timing, cost and outcome of the pending litigation with Verano; the termination of the Transaction; Goodness’ intent to enforce its rights under the Arrangement Agreement; Goodness’ intent to promptly file suit against Verano; the recovery of all damages available to Goodness under the Arrangement Agreement; the mailing of the Proxy to shareholders of Goodness; Goodness’ ability to hold Verano responsible for its breaches of the Arrangement Agreement and failure to consummate the transactions contemplated thereunder; the impact of the termination of the Transaction on Goodness; timing of adult-use legislation in markets where the Company currently operates; current and future market conditions, including the market price of the subordinate voting shares of the Company; risks related to the COVID-19 pandemic; federal, state, local, and foreign government laws, rules, and regulations, including federal and state laws in the United States relating to cannabis operations in the United States and any changes to such laws; operational, regulatory and other risks; execution of business strategy; management of growth; difficulty to forecast; conflicts of interest; risks inherent in an agricultural business; liquidity and additional financing; labor union relations; the timing of adult-use sales in New York; and the Company’s ability to meet the demand for smokable cannabis flower in Minnesota.
The statements in this press release are made as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements or forward-looking information to reflect events or circumstances after the date of such statements.