SCHEDULE 13D/A: British American Tobacco Subsidiary Completes Strategic Investment in Organigram Holdings, Securing 30% Common Share Stake

BT DE Investments Inc., a subsidiary of British American Tobacco p.l.c., has finalized its multi-tranche private placement in Organigram Holdings Inc., increasing its beneficial ownership to 30% of common shares and 100% of preferred shares.

Summary

• BT DE Investments Inc. (the "Purchaser"), a wholly-owned subsidiary of British American Tobacco p.l.c. ("BAT"), completed the third and final tranche of its strategic private placement in Organigram Holdings Inc. (the "Issuer") on February 28, 2025.
• The Private Placement involved three tranches, with a total aggregate subscription price of C$124,559,674.36, funded by dividends from other U.S. subsidiaries of BAT.
• Following the completion of the Third Tranche, the Purchaser beneficially owns 40,134,389 Common Shares, representing 30% of the Issuer's 133,781,297 issued and outstanding Common Shares.
• The Purchaser also beneficially owns 13,794,163 Preferred Shares, representing 100% of the Issuer's Preferred Shares.
• The Preferred Shares are non-voting convertible preferred shares, convertible into Common Shares on a one-for-one basis, with the conversion rate increasing by 7.5% per annum until the Purchaser could beneficially own up to 49.0% of the Common Shares.
• One-half of the proceeds from the First and Second Tranches were allocated for general corporate purposes, while the remaining half from these tranches and all proceeds from the Third Tranche are designated to fund a segregated bank account, the "Jupiter Pool," for investment.
• The Purchaser holds significant governance rights through an Amended and Restated Investor Rights Agreement, including the right to nominate up to 30% of Organigram's board of directors, pre-emptive rights, top-up rights, and participation rights in future equity offerings.

Sentiment

Score: 7

Explanation: The document reports the successful completion of a significant strategic investment, which is a positive development for Organigram, providing capital and strengthening a key partnership. The terms of the investment and governance rights are clearly defined and appear favorable to the investor, implying stability and strategic alignment.

Positives

• Completion of the multi-tranche private placement signifies a strengthened strategic investment by British American Tobacco in Organigram Holdings Inc.
• The investment provides Organigram with substantial capital, totaling C$124,559,674.36, with a significant portion allocated to the "Jupiter Pool" for future investments.
• BT DE Investments Inc. now holds a 30% stake in Organigram's common shares and 100% of its preferred shares, indicating strong alignment and commitment.
• The investor has secured significant governance rights, including the ability to nominate up to 30% of the board and participate in future equity offerings, which can provide strategic guidance and stability.

Future Outlook

The Purchaser intends to continuously review its investment in Organigram and may, depending on market and other conditions, increase or decrease its beneficial ownership or economic exposure through various transactions, subject to the terms of the A&R Investor Rights Agreement. The proceeds from the investment are partly allocated to a segregated 'Jupiter Pool' for future investments by Organigram.

Management Comments

• "The Purchaser entered into the Subscription Agreement in furtherance of its strategic investment in the Issuer."
• "The Purchaser intends to review its investment in the Issuer on a continuing basis and may, subject to the terms of the A&R Investor Rights Agreement, and depending upon a number of factors, including market and other conditions, increase or decrease its beneficial ownership, control, direction or economic exposure over securities of the Issuer, through market transactions, private agreements, treasury issuances, exercise of options, convertible securities, derivatives, swaps or otherwise."

Industry Context

This filing highlights the continued strategic investment by a major global tobacco company, British American Tobacco, into the Canadian cannabis sector through Organigram Holdings Inc. This deepens the existing partnership and reflects a broader trend of established industries exploring and investing in the evolving cannabis market, potentially signaling long-term confidence in the sector's growth and regulatory developments.

Management Changes

Corporate Governance

Related Party Transactions

• The Private Placement involves the acquisition of Common Shares and Preferred Shares by BT DE Investments Inc., a wholly-owned subsidiary of British American Tobacco p.l.c., which is a significant strategic investor in Organigram Holdings Inc. This constitutes a related party transaction due to the substantial ownership and governance rights granted to the Purchaser.

Stakeholder Impact

• **Shareholders**: The completion of the private placement increases the ownership stake of a major strategic investor (BAT), potentially signaling long-term stability and strategic alignment. However, it also results in dilution for existing common shareholders due to the issuance of new shares.
• **Employees**: The funding from the private placement, particularly the portion allocated to the 'Jupiter Pool,' could support future growth initiatives, potentially leading to job stability or creation.
• **Creditors**: The capital injection strengthens Organigram's financial position, which could improve its creditworthiness.
• **Management**: The A&R Investor Rights Agreement grants the Purchaser significant governance rights, including board nomination rights, which will influence strategic decision-making and oversight.

Next Steps

• The Issuer is required to use one-half of the proceeds from the First and Second Tranches for general corporate purposes.
• The Issuer is required to use one-half of the proceeds from the First and Second Tranches, and all of the proceeds from the Third Tranche, to fund a segregated bank account (the "Jupiter Pool") for investment.
• The Purchaser intends to review its investment in the Issuer on a continuing basis and may increase or decrease its beneficial ownership, control, direction, or economic exposure over securities of the Issuer.

Key Dates

Keywords

Organigram Holdings Inc., British American Tobacco, BT DE Investments Inc., Private Placement, Strategic Investment, SEC Filing, Schedule 13D, Common Shares, Preferred Shares, Corporate Governance, Equity Investment, Cannabis Industry