COLUMBUS, Ohio, May 20, 2020 (GLOBE NEWSWIRE) — Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) announced today that it and certain of its direct and indirect wholly owned subsidiaries (collectively “GGB“, the “Company” or the “Applicants”) have filed for insolvency protection under the Companies’ Creditors Arrangement Act (Canada) (“CCAA“) and obtained an order (the “Initial Order”) from the Ontario Superior Court of Justice (the “Court”) granting the Applicants protection under the CCAA. Ernst & Young Inc. (“E&Y”) has consented to act as the Court-appointed monitor (the “Monitor”) of the Applicants.  The Court has granted CCAA protection for an initial 10 day period (the “Initial Period”), subject to extension thereafter as the Court deems appropriate, which expires on May 29, 2020. While under CCAA protection, creditors and others are stayed from enforcing any rights against the Applicants.

As previously disclosed, the continuing operations of the Company are dependent upon its ability to continue to raise adequate financing, to commence profitable operations, and to repay its liabilities arising from normal business operations as they become due. The CCAA filing was necessitated due to a severe liquidity crisis in the face of material matured and maturing debt, which liquidity crisis was further exacerbated by the negative impact of the COVID-19 pandemic. The pandemic has forced the Company to indefinitely suspend its cannabidiol business, ultimately resulting in the appointment of a receiver for that business and to restrict operations at the Company’s The+Source dispensaries in the Las Vegas, Nevada region as a result of Nevada Governor Stephen Sisolak’s March 20, 2020 order limiting dispensary operations in the state. After careful consideration of all other available alternatives, GGB’s board of directors determined that it is in the best interests of the Company and all its stakeholders to seek protection under the CCAA.

All Js Greenspace LLC (“All Js” or the “Lender”), one of GGB’s existing secured lenders, has agreed to fund the CCAA proceedings through a debtor-in-possession loan facility (the “DIP Agreement”) in the initial amount (the “Initial Amount”) of up to US$1 million.  An additional $US6.2 million will be made available for borrowing under the DIP Agreement following the Initial Period upon Court approval (such approval, the “Amended and Restated Initial Order”) at a subsequent hearing (the “Comeback Hearing”) that would (i) extend the stay period; (ii) increase the amount of the DIP Lender’s Charge (as defined below); (iii) approve a sale and investment solicitation process (the “SISP”); and (iv) approve a stalking-horse agreement (the “Stalking Horse Agreement”) among the Company, All Js and Capital Transfer Agency in its capacity as the debentureholder trustee of the Company’s (A) US$45,500,000 aggregate principal amount of 15.00% secured convertible debentures that matured May 17, 2020 and (B) US$23,717,000 aggregate principal amount of 5.00% secured convertible debentures maturing in 2024 (the “Backstop Debentures”) (All Js and Capital Transfer Agency in its said capacity are collectively referred to as the “Secured Credit Bidders”) pursuant to which the Secured Credit Bidders would act as stalking-horse bidders under the SISP.  The Company intends to return to the Court within 10 days for the Comeback Hearing to seek the Amended and Restated Initial Order.

During the CCAA proceedings, it is expected that ordinary course obligations to employees and key suppliers of goods and services subsequent to the filing date will continue to be met. Management of the Company will remain responsible for the day-to-day operations under the general oversight of the Monitor.

A copy of the Initial Order and other Court materials and information related to the Company’s CCAA proceedings, all as may be updated or amended from time to time, are available on the website maintained by E&Y at www.ey.com/ca/ggbi.

The Company intends to provide further updates on the CCAA proceedings when there are significant developments.

The Company also announced today that its Florida-based subsidiaries entities (GGB Florida LLC, GGB Green Holdings LLC and Spring Oaks Greenhouses, Inc. (collectively, the “GGB Florida Subsidiaries”)) have entered into a forbearance agreement (the “Forbearance Agreement”) in respect of certain events of default under, among other things, the amended and restated security agreement (the “Florida Security Agreement”) dated as of April 29, 2020, among the GGB Florida Subsidiaries, the Company and Green Ops Group LLC ( “Green Ops”) as the secured creditor thereunder and certain loan documents originally entered in favour of Stanley W. Harris, as the representative of each seller under that certain share purchase agreement dated as of June 3, 2019, pursuant to which the Company acquired its Florida-based cannabis business.

Pursuant to the terms of the Forbearance Agreement, Green Ops has agreed, among other things, not to commence a foreclosure sale of the collateral (“Collateral”) under the Florida Security Agreement or accelerate amounts due under the related loan documents (the “Forbearance Covenant”) until June 15, 2020 (the “Forbearance Period”) as such period may be extended in accordance with the terms of the Forbearance Agreement.  In addition, Green Ops has agreed to advance US$500,000 to the GGB Florida Subsidiaries, representing the balance payable under a US$1 million principal amount 15% secured note dated April 29, 2020.  In consideration of the Forbearance Covenant, the Company and Florida Subsidiaries have agreed to conduct a sales process in respect of the business, assets and undertaking of the Florida Subsidiaries with the intention of entering into a binding agreement of purchase and sale prior to the expiry of the Forbearance Period.

The Company and the GGB Florida Subsidiaries have agreed that, upon expiry of the Forbearance Period, the Forbearance Covenant shall terminate and Green Ops shall be entitled to exercise any and all of its rights under the applicable loan documents and applicable law against the Collateral, and the Company and the GGB Florida Subsidiaries will not contest any such enforcement action pursuant to the terms of a Voluntary Surrender of Collateral in Satisfaction of Debt and Release Agreement among the parties.

The DIP Agreement

Subject to certain conditions, All Js will make available to the Company a secured non-revolving credit facility up to a maximum principal amount of US$7,200,000.  GGB Canada Inc., GGB Holdco Inc., GGB Green Holdings LLC, GGB Nevada LLC, GGB Nevada Pahrump LLC, GGB Nevada Land LLC, Wellness Orchards of Nevada LLC, Henderson Organic Remedies LLC, Nevada Organic Remedies LLC, Sahara Merchants LLC, GGB Massachusetts LLC, GGB Massachusetts Land LLC, Just Healthy, LLC, Xanthic Biopharma Limited, Xanthic Biopharma US Hold Co., and Xanthic Colorado LLC (collectively, the “Guarantors”) will be guarantors of the Company’s obligations under the DIP Agreement.

The proceeds of the DIP Agreement shall be used during the CCAA proceedings to fund (i) financial advisory fees and professional fees; (ii) the payment of interest and other amounts payable under the DIP Agreement; and (iii) the ongoing requirements of the Company and the Guarantors (including for working capital and other general corporate purposes), in each case in accordance with a budget agreed to with the Lender (the “DIP Budget”). The Company may not use the proceeds of the DIP Agreement to pay any pre-filing obligations of the Borrower or the Guarantors without the prior written consent of the Lender or as contemplated by the DIP Budget.

The DIP Agreement shall be repayable in full on the earliest of: (i) the date a demand for repayment in writing has been made by the Lender following the occurrence of any Event of Default (as defined therein) which is continuing and has not been cured; (ii) the completion of the Stalking Horse Agreement or any successful bid through the SISP, in which case the amounts owing under the DIP Agreement shall be repaid in full; (iii) the date on which the Initial Order expires without being extended or on which the CCAA proceedings are dismissed or converted into a proceeding under the Bankruptcy and Insolvency Act (Canada); (iv) the sale of all or substantially all of the property and assets of each of the Company and Guarantors;  and (v) the date which is 120 days following the date that all conditions to the advance of the Initial Amount have been satisfied.  Advances under the DIP Agreement are subject to certain customary conditions precedent, covenants and representations.

Amounts owing under the DIP Agreement will bear interest at a rate of 5% per annum (with overdue amounts bearing interest at the applicable interest rate plus 2% per annum payable on demand) and have the benefit of a Court-ordered charge on the assets, property and undertakings  (the “Property”) of the Applicants (the “DIP Lender’s Charge”), ranking behind (i) a charge on their Property in the maximum amount of US$1,000,000 to secure the fees and disbursements incurred in connection with services rendered to the Applicants, both before and after the commencement of the CCAA proceedings by the Monitor and its counsel and Applicants’ counsel; (ii) a charge to secure payment under the indemnity granted by the Initial Order in favour of the Applicants’ directors and officers; and (iii) a charge in respect of the Company’s obligations under that certain promissory note in the principal amount of $39,000,000 dated May 15, 2019 as amended and restated on November 15, 2019.

Early Warning Disclosure

This press release is also issued pursuant to National Instrument 62‐103 ‐ The Early Warning System and Related TakeOver Bid and Insider Reporting Issues, which requires a report to be filed by All Js on SEDAR (www.sedar.com) containing additional information with respect to certain of the foregoing matters. To receive a copy of the early warning report filed in respect of the above matters, please contact Michael Broidy at 614‐449‐4200 or michael.broidy@vcf.com. GGB’s head office is located at 4300 E. Fifth Avenue, Columbus, Ohio 43219.

All Js beneficially owns an aggregate of 63,931 proportionate voting shares of the Company (“PV Shares”) on a non‐diluted basis and 192,459 PV Shares on a partially‐diluted basis (representing 100% and 100%, respectively, of the Company’s issued and outstanding PV Shares) and an aggregate of 38,178,086 common shares of the Company (“Common Shares”) on a non‐diluted basis and 135,311,386 Common Shares on a partially‐diluted basis (representing approximately 18.5% and 39.6%, respectively, of the Company’s issued and outstanding Common Shares).

All Js may in the future, depending on various factors and subject to the provisions of the SISP, the DIP Agreement, orders of the Court under the CCAA proceedings, the Stalking Horse Agreement and applicable securities laws, increase or decrease its beneficial ownership, control or direction over securities of GGB through market transactions, private agreements, treasury issuances, exercise of warrants or otherwise. All Js may also engage in discussions or negotiations with other debtholders, shareholders and other stakeholders of GGB in connection with various matters depending on how the CCAA proceedings unfold, including regarding possible changes to the capitalization, constating documents, corporate structure or the board of directors or management of the Company as may be appropriate in the circumstances.

About Green Growth Brands Inc.

Green Growth Brands creates remarkable experiences in cannabis. The company’s brands include CAMP, The+Source, and 8 Fold. GGB is expanding its cannabis operations throughout the U.S., via dispensaries in Nevada, Massachusetts and Florida. Learn more about the vision at  GreenGrowthBrands.com.

Cautionary Statements

Forward Looking Information

Certain information in this news release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “intend”, “forecast” and similar expressions.  Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future legislative and regulatory developments involving medical and recreational marijuana; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favorable terms; the marijuana industry in the United States, income tax and regulatory matters; the ability of the Company to implement its business strategies; competition; currency and interest rate fluctuations and other risks, including those factors described under the heading “Risks Factors” in (i) the Company’s Annual Information Form dated November 26, 2018 which is available on the Company’s issuer profile on SEDAR and (ii) the Company’s Short Form Prospectus dated August 15, 2019.

Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. The forward-looking statements contained in this release, including the ability of the Company to operate in the ordinary course during the CCAA proceedings, including with respect to satisfying obligations to employees and key suppliers of goods and services; the ability of the Company to successfully restructure its finances and operations; and the availability of financing to be provided under the DIP Agreement, are made as of the date hereof and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Information Relating to All Js

All information in this press release under the heading “Early Warning Disclosure”, including but not limited to All Js’ intentions with respect to the securities of the Company over which it has direction or control, was provided by All Js and has not been independently verified by the Company.

US Securities Law Disclaimer

This announcement does not constitute an offer, invitation or recommendation to subscribe for or purchase any securities and neither this announcement nor anything contained in it shall form the basis of any contract or commitment. In particular, this announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States, or in any other jurisdiction in which such an offer would be illegal.

The securities referred to herein have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act“) or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, within the United States, unless the securities have been registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available.