iAnthus Capital Holdings, Inc. (IAN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the special meeting of shareholders, option holders and warrant holders of iAnthus Capital Holdings. My name is Randy Maslow. I am the Interim CEO, President and a director of the company. I will act as Chairman of the meeting, and I will take conduct of and attend to the formalities of the meeting. And speaking to you today from Stowe, Vermont, although we are disappointed that we can't see each of you in person, our thoughts are with you, your families and the communities you serve. We want to thank you for your patience as we navigate through this unprecedented pandemic and hope you agree we did the right thing by moving to a fully virtual meeting in light of the circumstances. Instructions on how to ask questions and the voting procedure will appear on your screens. As with any new technology, unexpected glitches may occur, but our service providers for this platform at Lumi are very experienced at running this type of meeting. Please note that there is a broadcast delay of approximately 30 seconds on the Lumi platform. Accordingly, I may pause in silence for a length of time when there are calls for discussion. Okay. As to procedural matters. I now call the meeting to order, and we'll commence the formal part of this meeting by appointing a recording Secretary and a Scrutineer for the meeting. I appoint Craig Zwerling, Vice President of Finance, to act as recording Secretary for the meeting. And I also appoint Billy Chau of Computershare Investor Services as Scrutineer for this meeting. In addition, James Munro of McMillan LLP, legal counsel to the company, will act as moderator in regards to any discussion. The notice calling this meeting and all proxy-related material were mailed or electronically delivered to the shareholders, option holders and warrant holders in accordance with the requirements of the company's articles; the Business Corporations Act British Columbia; national instrument 54-101, captioned Communication with Beneficial Owners of Securities of a Reporting Issuer; and the order of the Supreme Court of British Columbia granted on August 6, 2020. I have an affidavit as to such mailing, which is available for inspection by any shareholder, option holder or warrant holder on the iAnthus website. In view of this, I will dispense with calling for a reading of the notice, and I will ask the recording Secretary to file the affidavit as to mailing with the minutes of the meeting. Does the recording Secretary have the Scrutineer's report on attendance?

Yes, I do. The report on proxies provided by Computershare and the virtual attendance record provided by Lumi confirms as follows: 1 shareholder present virtually, representing 385,200 common shares; 126 shareholders present by proxy, representing 71,026,315 common shares; 127 total shareholders holding 71,411,515 common shares; total common shares issued and outstanding at record date 171,718,192; percentage of outstanding common shares represented at the meeting 41.59%. In addition, there are 74 option holders and warrant holders present virtually or by proxy, representing 39,006,303 options and warrants. This attendance meets the quorum requirement for the [ meeting ] [Audio Gap] I declare this meeting to be duly called and constituted for the transaction of business. The item of business to be conducted at this meeting is the matter set forth in the notice of special meeting of equity holders dated August 14, 2020, and included in the management information circular of the company prepared for this meeting. We will conduct the vote on the matter before us by a poll. Many shareholders, option holders and warrant holders have already submitted a proxy, which will be counted in the vote. If you have not previously submitted a proxy, you may vote by poll [Audio Gap] will be entitled to vote today. If you have already voted, your vote has been received by the Scrutineer and there is no need to vote again during the meeting. In that case, you should only vote again if you wish to change your vote. On a poll, every shareholder entitled to vote on the matter has 1 vote in respect of each share held by that shareholder; or in respect of option holders and warrant holders, 1 vote in respect of each share [ eligible and received ] upon exercise of the options or warrants held as [ equitable ]. The poll is currently open and will continue to be open until the final call for voting on the resolution. This will allow you to choose to vote on the resolution immediately or wait until the conclusion of the discussion on the resolution prior to casting your vote. Shareholders, option holders and warrant holders may address the Chairman when there is a call to discuss a motion before the meeting. Please note that as is customary, those attendees who have registered as a guest will not be able to vote or submit questions. Should you like to address the Chairman on any motion, please type in your question or comment in the message section. If there is any discussion or question, the moderator will read the question aloud. The Chairman may address questions directly or I may invite Julius Kalcevich, Chief Financial Officer of iAnthus; or Bob Whelan, Chair of the Special Committee, to respond. In an effort to address as many questions as possible during the meeting, questions submitted by multiple persons on similar topics may be grouped, summarized and answered together. The company will not address any questions or comment that include remarks that are, among other things, disorderly, repetitious, not a matter of interest to equity holders generally, unduly prolonged, related to personal grievances or related to material nonpublic information of the company. If there are any matters of individual concern to an equity holder and not of general concern to all equity holders or if a question posed is not otherwise addressed, such matters may be raised separately after the meeting by contacting the company's investor relations department at [email protected]. Are there any questions at this point about the procedure for this meeting, or technical questions on submitting a vote on the Lumi platform? If so, please type in your question or comment in the message section now. Please hold any questions or comments related to the recapitalization transaction or the equity holders' arrangement resolution until I call for a discussion regarding such business. Okay. As outlined in the management information circular of the company prepared for this meeting, in order to implement the recapitalization transaction by way of plan of arrangement with iAnthus' creditors, the company is seeking the approval of equity holders as well as "minority approval" as required by multilateral instrument 61-101, captioned Protection of Minority Security Holders in Special Transactions. To be effective, the equity holders' arrangement resolution must be approved by a simple majority of the votes cast by shareholders, option holders and warrant holders, voting together as a single class, present virtually or by proxy at this meeting and entitled to vote on the equity holders' arrangement resolution. In addition, pursuant to multilateral instrument 61-101, Protection of Minority Security Holders in Special Transactions, the resolution must be approved by a simple majority of the votes cast by shareholders present virtually or by proxy at this meeting and entitled to vote on the equity holders' arrangement resolution but excluding the votes of certain related-party shareholders, being Gotham Green Partners, LLC and each of its affiliates and subsidiaries and their directors and officers. The full text of the equity holders' arrangement resolution is set out in appendix C of the management information circular, and I don't propose to read it in full at this time. The completion of the arrangement is also subject to the final approval of the Supreme Court of British Columbia, regulatory approvals, including certain U.S. state regulatory approvals, and the satisfaction of certain other closing conditions. Assuming that these conditions are satisfied, it is expected that the closing of the arrangement would be completed in the fourth quarter of 2020. Are there any questions or discussion about the recapitalization transaction or the equity holders' arrangement resolution? If so, please type in your question or comment in the message section now.

Mr. Chair, this is the moderator speaking. We do have one question. The question is posed by [ Andrew George ]. Our understanding is that a special resolution is required to pass, as it requires 2/3 of the company. Why is it a simple majority? End of question.

Okay. I'll answer that directly. The applicable corporate and securities laws does not require approval of 2/3 of the shareholders. iAnthus has sought approval of the majority of minority under the applicable securities laws.

Mr. Chair, this is the moderator again. At this time, we have no further questions. If there are any further questions, please submit them now.

Okay...

Mr. Chair, it's the moderator, I do have a follow-up question from [ Mr. Andrew George ]. Can you kindly repeat that? Because our understanding under the BCBCA is that a special resolution is 2/3.

Yes. So [ Andrew ], let me expound on it just a little bit. So under the British Columbia corporate legislation, the company is not required to obtain the approval of shareholders for the proposed arrangement because shareholders are not being arranged. Only secured noteholders and unsecured debenture holders are being arranged. However, as the claims of option holders and warrant holders are being compromised under the proposed arrangement and to ensure compliance with multilateral instrument 61-101, captioned Protection of Minority Security Holders in Special Transactions, the company is required to obtain majority approval of equity holders as well as a majority of the minority approval with shareholders.

Thank you, Mr. Chair. This is the moderator again. I did have one follow-up question you've just answered. A follow-up question from [ Mr. Andrew George ] is what is the applicable statue that you're referring to. The chair already answered that. It's the British Columbia Business Corporations Act.

Yes. I'll give it another 30 seconds. I want to make sure that everybody has a chance to ask questions or follow up on the questions that were asked. Okay. Thank you. We have now concluded discussion regarding the recapitalization transaction and the equity holders arrangement resolution. If you have not yet cast your vote in respect to the arrangement, I ask that you do so now. Voting on Lumi continues to be open, please make sure to enter your votes. Is there any other matter an equity holder wishes to raise?

Mr. Chair, this is the moderator speaking. I see no more questions at this time.

Okay. Thank you. Please be advised that voting in Lumi will be open for another 30 seconds. If you have not already voted in respect to the arrangement, we ask that you please do so now. [Voting]

All right, could you read the question also, James?

Absolutely, Mr. Chair. It's not a question. It's a statement. It's not relevant to the portion of the meeting, but I will read it out nonetheless, and we can respond to it. The statement is from [ Andrew George ]. We can confirm that we've received offerings that are substantially higher than what is currently being offered. That's not a question, but I'd leave it to you to respond.

Well, that's simply not true. We have not received any proposals for any alternative transactions before or now that would result in a superior outcome for shareholders and for the company's other stakeholders. While the special committee, supported by its financial advisers, did identify and evaluate a range of strategic alternatives, none surfaced that offered more value for shareholders than the recapitalization transaction.

Mr. Chair, this is the moderator. I can confirm at this time there are no more questions.

Okay. Thank you. The polls are now closed. And as such, there will be -- take a short break while we wait for the Scrutineer to tabulate voting results. Please note that it may take several minutes for the Scrutineer to tabulate final voting results on both levels of approval necessary to pass the equity holders arrangement resolution. We'll resume as soon as we are able. Thanks. [Break]

Okay. We're back. Thank you, everyone, for your votes. Based on the Scrutineer's tabulation report provided by Computershare, we confirm that the equity holders' arrangement resolution has been passed by an overwhelming 78.95% majority of shareholders, option holders and warrant holders, voting together as a single class; and 68.08% majority of shareholders, excluding the votes of the previously noted related-party shareholders. Further details of the votes will be published on SEDAR. As the business for this meeting has been concluded, I now declare the special meeting terminated. Thank you for joining us today. We wish you and yours good health and, hopefully, a return to some kind of normality in the coming weeks and months.