SNDL Inc. (SNDL) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Annual General and Special Meeting on Sundial Growers Inc. I'd now like to hand over to your Chairman, Mr. Greg Mills. I do apologize. I seem to have lost Mr. Greg Mills. Please give us one moment. I do apologize for that interruption. I'd now like to hand over to Greg Mills.

Thank you. Ladies and gentlemen, good afternoon. Welcome to the Annual General and Special Meeting of the Common Shareholders of Sundial Growers Inc. My name is Greg Mills. I'm the Nonexecutive Chairman of the Board and a director of Sundial. This year, in light of the concerns regarding the COVID-19 outbreak, Sundial has opted for a virtual-only annual meeting in order to reduce the risk of spread of infection to our employees, shareholders, directors and other stakeholders. This virtual-only format also permits us to comply with government directives restricting large gatherings. In the event of a technical disruption, Zach George, a director and Chief Executive Officer of Sundial, will act as the alternative chair for the meeting. Before we begin with the formal portion of the meeting, I will provide some comments on voting and questions at today's meeting. In making the decision to move to a virtual meeting, it was paramount to ensure that shareholders' rights were protected. We have ensured that this meeting offers shareholders the same opportunities to participate as in past in-person meetings. Voting during this meeting can only be done through our virtual voting platform on the webcast. Only registered shareholders who held shares in their name as of April 20, 2020, the record date for this meeting, or their validly appointed proxyholders are entitled to vote at the meeting. We will conduct votes -- the votes on the matters before us by a poll. On a poll, every shareholder entitled to vote on the matter has 1 vote in respect to each share entitled to be voted on held by that shareholder. Proxy votes received prior to the meeting will be displayed. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately, or wait until the conclusion of discussion on each resolution prior to casting your vote. I also welcome all the guests who are not registered shareholders or holding proxies for registered shareholders. As a reminder, as with an in-person meeting, only registered shareholders and duly appointed proxyholders are able to vote or ask questions. Shareholders can submit questions at any time during the meeting. There will be opportunities for shareholders to ask specific questions to each resolution on the webcast. If you have a question, click on the Ask a Question tab at the top right of the webcast page. Please read the instruction -- please read the instructions in the text box before submitting your question. In particular, we ask you identify whether your question relates to a motion being considered as part of the formal business of the meeting or whether it is of a more general nature. We will address questions that directly relate to a particular motion during the formal portion of the meeting. The secretary will receive the questions and, at the appropriate time, will read appropriate questions out in order for everyone to be aware of the question being dealt with. Questions of a general nature that are the same or very similar on a topic will be grouped and answered after the conclusion of the formal part of the meeting. If your question is not answered today or it's personal in nature, please contact us at [email protected]. Any proposed amendments or objections to a motion will need to be submitted as questions. All proposed amendments or objections will be addressed during the meeting, provided they are submitted during a period when the polls are open. The polls are now open on all resolutions. Voting can be completed at any time from now until the end of the formal business of the meeting. Thank you for those of you who have already voted. If you have already voted in advance of the meeting and do not wish to change your vote, you [indiscernible]. For those of you who have not yet voted, we encourage you to vote now. Once discussion on all items of business has concluded, I will give you some time to change your votes or enter them if you have not yet voted, and then we'll declare a voting closed on all resolutions. So at this time, the Annual General and Special Meeting will now come to order. Sundial's General Counsel, Kristine Dow, will act as secretary of the meeting, and representatives from Odyssey Trust Company will act as scrutineer of the meeting. In order that the meeting covers all of the business for which it was convened within a reasonable time period for each motion brought today, Charlotte Collett will be deemed to have made the motion, and Frank Luke Fallwell will deemed to have seconded the motion. The notice calling this meeting as well as the information circular of Sundial dated April 20, 2020, containing the details of the matters to be put before this meeting and the forms of proxy were sent to each shareholder of record and entitled to vote at this meeting as of April 20, 2020. I now ask the secretary to confirm this.

Mr. Chair, I have before me a true copy of the notice of meeting, together with the statutory declaration from Odyssey Trust Company as to the mailing of the notice of meeting, information circular and forms of proxy. The declaration indicates that all documents were mailed within the time periods required by the bylaws of Sundial and by applicable Canadian corporate and securities law.

Thank you, Kristine. Proof of service has been duly filed, and I direct the copies of the notice and statutory declaration be kept by the secretary with the minutes of the meeting. The current bylaws of Sundial provide that a quorum for any meeting is 2 persons present in person or by proxy holding or representing not less than 25% of the outstanding shares of Sundial entitled to vote at the meeting. I will now ask the secretary to read the scrutineers' report on attendance at the meeting.

Thank you. The scrutineers' interim report reflects that we have 9 shareholders in person, representing -- attending the meeting, representing 24,281,612 shares. We had 128 shareholders represented by proxy, also representing 9,616,043 shares; for totals of 137 total shareholders attending, representing 33,897,655 shares, which is 31.5% of the total issued and its outstanding shares at the record date. And so therefore, we do have a quorum to proceed with the meeting.

Thank you, Kristine. I declare that a quorum is present. I direct that a copy of the scrutineers' report be kept by the secretary with the minutes of the meeting. Due notice having been given and a quorum being present, I declare this meeting to be duly called and properly constituted for the transaction of business. Management would like to thank all shareholders that voted on the matters before us today. At this meeting, we will receive all the audited consolidated financial statements of the corporation for the year ended December 31, 2019, together with the auditors' report therein and related management discussion and analysis. No vote by the shareholders is required or proposed with respect to the financial statements. Following the receipt of the financial statements, we will move on to discussion of the ordinary resolution matters, those matters being: first, the fixing of the number of directors to be elected; second, the election of the directors; and finally, the appointment of the auditors. Shareholders will then discuss and vote on a special resolution by an online vote to authorize a share consolidation of all the issued and outstanding shares of Sundial at a ratio to be determined by the Board. When I refer to a share consolidation during this meeting, that means I'm referring to the abovementioned special resolution. We will now proceed with the formal business of the meeting. Details of the matter to be dealt with today have been given in the information circular dated April 20, 2020, a copy of which has been sent to each shareholder of record as of April 20, 2020, and any reference I make to the information circular means that information circular. The first item of business is the presentation of the audited consolidated financial statements of the corporation for the year ended December 31, 2019, together with the auditors' report therein and related management discussion and analysis. No vote is required with respect to this matter. But if you have any questions, I would be pleased to direct you to ask Sundial's financial team after the formal portion of this meeting. The next item of business is the election of directors of Sundial for the ensuing year. We will now prepare to discuss and vote on the motion that the number of directors to be elected at the meeting for the ensuing year or otherwise as authorized by the shareholders of the corporation be and is hereby fixed at 5. I will now ask the secretary to please advise if there are any questions specific to this motion were submitted.

Mr. Chairman, no specific questions to this motion have been submitted.

Okay. Thank you, Kristine. Unless we have any other objections, we will proceed with the vote. Please record your vote now, remembering that if you have already voted in advance, you do not -- and you do not wish to change your vote, no further action is required. I'll give you the next 5 or 10 seconds to take care of that. [Voting]

Okay. We'll now proceed with the election of directors. The corporation has nominated Bryan Pinney; Elizabeth Cannon; myself, Gregory Mills; Gregory Turnbull; and Zach George to serve as directors of Sundial. We will now prepare to discuss and vote on the motion to elect the nominees as directors of the corporation to hold office until the next election of directors or until their successors are appointed. I will now ask the secretary to please advise if there are any questions specific to this motion were submitted.

Mr. Chairman, no questions specific to this motion have been submitted.

Okay, Kristine. Thank you. And unless we receive any objections otherwise, we will proceed with the vote. Please record your vote now, remembering that if you have already voted in advance and you do not wish to change your vote, no further action is required. And I'll now give you another 5 to 10 seconds. [Voting]

Okay. The next item of business is the appointment of auditors for the ensuing year. The current auditors of Sundial are KPMG LLP, Chartered Professional Accountants. KPMG were the first appointed auditors of Sundial on November 27, 2018. We will now prepare to discuss and vote on the motion that KPMG LLP be appointed as the auditors of Sundial to serve until the close of the next annual meeting at the remuneration to be fixed by the directors. I will now ask the secretary to please advise if there are any questions specific to this motion were submitted.

There are no questions specific to this mission -- my apologies, motion have been submitted.

Thank you, Kristine. And unless we receive any other objections otherwise, we will proceed with the vote. Similar to before, please record your vote now, remembering that if you have already voted in advance and do not wish to change your vote, no further action is required. I'll give you a few seconds. [Voting]

Okay. The next item for discussion, business to consider and, if thought fit, to pass the special resolution in the form set out on Page 12 of the information circular authorizing an amendment to the articles of Sundial pursuant to subsection 173-1 (sic) [ 173(1) ] of the Business Corporations Act, Alberta to authorize the Board to effect at such time as the Board deems appropriate, but in any event, no later than 1 year after the meeting, a share consolidation of all of the issued and outstanding shares of Sundial. The share consolidation shall be at a ratio to be determined by the Board in its sole discretion, provided it is within the range of 1 post-consolidation common share for every 3 to 20 pre-consolidation common shares. It will also be subject to the discretion of the Board to decide not to proceed with the share consolidation. The Board believes that a range of share consolidation ratios will provide it with the flexibilities to implement share consolidation in a manner designed to optimize the anticipated benefits to the share consolidation to the corporation and shareholders. The Board is also of the opinion that it may be in the best interest of the corporation and shareholders to consolidate the common shares in order to both: one, maintain Sundial's NASDAQ listing; and two, enhance the marketability of common shares, given that an increase in the price per common share could increase the interest of institutional and other investors with policies that prohibit them from purchasing stock below a minimum price. In order to be adopted, the special resolution must be approved by not less than 66 2/3 of the votes cast at the meeting by shareholders present virtually at the meeting or represented by proxy. The Board has determined the share consolidation is in the best interest of the corporation and recommends that shareholders vote for this resolution. We will now prepare to discuss and vote on the motion that the special resolution of the share consolidation be approved, as more particularly described on Page 12 of the information circular. I will now ask the secretary to please advise if any questions specific to this motion were submitted.

Mr. Chairman, I can advise that no questions specific to this motion have been submitted.

Okay. Thank you, Kristine. And unless we receive any objections otherwise, we will proceed with the vote. Please record your vote now, remembering that if you have already voted in advance and do not wish to change your vote, no further action is required. I'll give you a few seconds. [Voting]

Okay. There being no other business, we will proceed to close the polls. For those of you who have not voted on all of the resolutions, please do so now. It is now 3:21, and I will close the polls on all resolutions in 1 minute. [Voting]

Today, it is now 3:22. I think that's the full minute. I will now declare the polls to be formally closed. The exact number of votes cast in respect to each matter will be filed on EDGAR and SEDAR and made available today on our website. As there is no further business to be brought before the meeting, I declare the formal portion of the meeting concluded. Thank you again to all shareholders and proxyholders for your attendance today. At this point, I will turn it over to Zach George, who will proceed with final closing remarks.

Thank you, Greg. Thanks to everyone for taking the time to join our first Annual General Meeting of Shareholders since Sundial went public. None of us contemplated the need to host this important meeting virtually, and we look forward to meeting with you in person at future meetings. Your management team is focused and working hard to delight consumers and deliver value to shareholders and is making great progress on a number of fronts. Last week, we released information detailing our plans to restructure our business and balance sheet to position Sundial for success. While we cannot comment further on that plan today, we look forward to updating you in the near future. Please don't hesitate to reach out to us directly if you have any other questions. We can receive inquiries at [email protected].

We would like to take this time to address any questions that we've received online. And at this time, we have received one question. It is rather unclear, but we are going to try to address it. The question is related to the benefits that were provided to original investors and what the plan to improve these benefits are. This question is somewhat unclear in nature, and I would ask that you contact us directly, and we will be happy to speak directly with you at a later date and appreciate its asking. As there are no other further questions at this time, I would like to thank everyone for joining and turn the floor back to Greg Mills.

Thank you, Zach. Ladies and gentlemen, at this point in time, we will thank you again for attending. And that concludes the meeting.

Thank you for joining. That concludes today's meeting. You may now disconnect.