Nabis announces creditor approval of recapitalization proposal

By Cady Vishniac

Detroit, Dec. 15 – Nabis Holdings Inc.’s creditors approved a support agreement with some holders of its outstanding C$35 million of 8% convertible debentures at a meeting on Dec. 14, according to a press release issued Tuesday.

Holders of the notes attended the meeting and were in support of the proposal, which in order to pass required approval from creditors who were present and entitled to vote representing a majority in number and two-thirds in value of all proven claims.

Under the support agreement, holders have agreed to a recapitalization plan for Nabis that will, subject to required approval of the Ontario Superior Court of Justice, result in the recapitalization of the convertibles and all other debt of the company.

A hearing with the Ontario Superior Court of Justice is scheduled for 10 a.m. ET on Dec. 21. If the court approves the proposal, the company plans to implement it on or before Dec. 31.

The proposal calls for the cancellation of all of the common shares, preferred shares, warrants, stock options and any other similar equity-type securities in the capital of the company.

All equity claims will be irrevocably and finally extinguished upon implementation of the proposal.

Nabis will issue and pay to each creditor its pro rata share of 3.7 million new common shares in the capital of the company, and C$23 million of new 5.3% first-lien notes due 2022.

The recapitalization will be implemented through a proposal under the Bankruptcy and Insolvency Act of Canada.

KSV Restructuring Inc. will act as proposal trustee.

Background

The company previously announced that it did not make the interest payments due on June 30 and Sept. 30 under the convertibles.

Odyssey Trust Co. Ltd. started legal action against the company alleging a breach of the terms of the convertibles as a result of the missed June 30 interest payment, and Odyssey had planned to accelerate the convertibles and demand immediate payment.

In light of the company’s liquidity constraints, the board of directors of the company formed a special committee on Aug. 17. On Sept. 30, the committee was given an expanded mandate, including to review and oversee the company’s engagement with the convertible holders and other strategic alternatives available to the company.

Following the review process, and given the company’s current circumstances, including in connection with legal proceedings involving the company and its subsidiaries in Ontario and Arizona, the committee and board determined that the recapitalization and support agreement are in the best interests of the company and its stakeholders.

Nabis invests in cash-flowing assets across multiple industries, including real property and all aspects of the U.S. and international cannabis sector, and is based in Vancouver, B.C.

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