Canadian recreational cannabis retailer Tokyo Smoke is undergoing a significant restructuring, seeking a buyer for its operations. The company’s parent company, TS Investments Corp., has already made a bid, offering to acquire all of Tokyo Smoke’s outstanding shares for approximately $56.7 million (CA$77 million).
This move comes after Tokyo Smoke announced in August that it was restructuring its business and obtained an initial order under the Companies Creditors Arrangement Act (CCAA) from the Ontario Superior Court of Justice in Canada. As part of this process, the company agreed to close 29 of its stores, leaving approximately 167 locations operational across Ontario, Manitoba, Saskatchewan, and Newfoundland and Labrador.
Tokyo Smoke entered into a stalking horse agreement, a type of agreement that sets a baseline for future bids, to facilitate the sale process. This agreement allowed the company to receive court approval to start seeking potential buyers or investors who might offer a higher price than TS Investments’ current proposal.
The company is actively exploring all available options to improve its financial situation, emphasizing its commitment to providing premium products and services to its customers while maintaining employment opportunities for its employees across Canada.
The two-phase sale process is scheduled to commence on Friday, September 20th, with the following timeline:
Phase I:
Solicitation of non-binding letters of interest. Deadline for submission of letters of interest is October 21, 2024.Phase II:
Solicitation of binding agreements from compliant parties with bids due by November 11, 2024.This restructuring marks a pivotal moment for Tokyo Smoke as it seeks to adapt to the evolving cannabis market and regulatory landscape. The company’s aim is to emerge from the CCAA protection as a stronger and more resilient entity, poised to continue delivering high-quality products and services to its customers in the long term.
