Form 4: Chicago Atlantic Entities Increase Stake in Vireo Growth Inc. Through Convertible Note Conversions

Chicago Atlantic Credit Opportunities, LLC and affiliated entities report significant changes in beneficial ownership of Vireo Growth Inc. subordinate voting shares following the conversion of convertible notes.

Summary

• On July 31, 2024, Chicago Atlantic Credit Opportunities, LLC (CACO) and related entities reported transactions involving Vireo Growth Inc. subordinate voting shares.
• These transactions primarily involve the acquisition of shares through the conversion of convertible notes.
• CACO directly acquired 57,181,068 shares at a price of $0.145 per share and indirectly acquired 15,834,993 shares at the same price.
• Following these transactions, CACO directly owns 78,122,379 subordinate voting shares and indirectly owns 15,845,889 shares.
• Additionally, CACO acquired 8,981,727 shares and 9,758 shares, disposing of 20,941,311 shares and 10,896 shares respectively.
• The convertible notes, with an exercise price of $0.145, were converted, resulting in the acquisition of subordinate voting shares.
• The reporting entities include Chicago Atlantic Credit Opportunities, LLC, Chicago Atlantic Advisers, LLC, Chicago Atlantic Group GP, LLC, Chicago Atlantic Group, LP, Chicago Atlantic GP Holdings, LLC, Chicago Atlantic Manager, LLC, Chicago Atlantic Opportunity GP, LLC, and Chicago Atlantic Opportunity Portfolio, LP.
• The filings indicate that these entities may be considered 10% owners and have a director relationship with the issuer.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The document primarily reports transactions related to convertible note conversions, which are a common financial activity. The impact on the company's valuation and future performance requires further analysis.

Positives

• The conversion of convertible notes into equity may strengthen Vireo Growth Inc.'s balance sheet by reducing debt.
• Increased ownership by Chicago Atlantic entities could signal confidence in the company's future prospects.

Risks

• The conversion of convertible notes dilutes existing shareholders' equity.
• The increased ownership by Chicago Atlantic entities could potentially lead to greater influence over the company's decisions.

Industry Context

This announcement reflects ongoing investment activity within the cannabis industry, where Vireo Growth Inc. operates. Convertible notes are a common financing tool in this sector, and their conversion can significantly impact a company's capital structure and ownership.

Comparison to Industry Standards

• Comparable companies in the cannabis industry, such as Curaleaf, Trulieve, and Green Thumb Industries, also utilize convertible notes as part of their financing strategies.
• The conversion price of $0.145 per share would need to be assessed against the prevailing market conditions and the company's valuation at the time the notes were issued.
• The level of ownership concentration following the conversion should be compared to industry averages to assess potential governance implications.

Stakeholder Impact

• Shareholders will experience dilution due to the issuance of new shares upon conversion.
• The increased ownership by Chicago Atlantic entities may influence future strategic decisions.

Key Dates