Red White & Bloom Brands (RWB) provided an update in connection with the ongoing insolvency proceedings of Ayurcann and its parent under the companies’ Creditors Arrangement Act (CCAA) and the previously announced sale transaction involving the company’s wholly-owned subsidiary, Emblem Cannabis.
Effective June 2, 2026, Emblem has completed the assignment and assumption of the debtor-in-possession facility previously provided by Auxly Cannabis Group to Ayurcann pursuant to a DIP facility commitment letter dated Feb. 8, 2026, as amended. The assignment was effected pursuant to an assignment of indebtedness and security agreement dated June 1, 2026 among Auxly as assignor, Emblem as assignee, Ayurcann as borrower, and Ayurcann Holdings as guarantor.
As consideration for the assignment, Emblem paid to Auxly the amount of CDN$1,603,964.00, representing the full amount of all indebtedness owing by Ayurcann to Auxly under the original DIP commitment letter as of June 2, 2026. The indebtedness, the DIP lender’s charge (as defined in the second amended and restated initial order of the Ontario Superior Court of Justice dated February 13, 2026 made in the CCAA Proceedings, as further amended and restated on June 1, 2026), and all related loan and security documents have been assigned absolutely and irrevocably to Emblem, effective as of the date of the assignment agreement.
In connection with the assignment, Emblem and the Ayurcann entities have entered into an amended and restated debtor-in-possession facility commitment letter dated June 1, 2026, which amends and restates the original DIP commitment letter in its entirety. Under the amended DIP commitment letter, Emblem, as lender, has committed to provide a non-revolving DIP facility to Ayurcann in the maximum principal amount of CDN$3,000,000. The continued availability of the DIP facility is conditional upon, among other things, certain conditions being satisfied, including the CCAA initial order remaining in effect and compliance by the Ayurcann entities with the terms of the amended DIP commitment letter.
Amounts drawn under the DIP facility bear interest at a rate of 12% per annum, capitalized monthly in arrears and payable on the DIP termination date. The proceeds of the DIP facility are to be used to fund the working capital and restructuring expenses of the Ayurcann entities during the CCAA proceedings, professional fees and disbursements associated with the CCAA proceedings, interest, fees, and other amounts payable under the amended DIP commitment letter.
The DIP facility will terminate upon the earliest to occur of, among other things: (i) the closing of the purchase and sale of all or substantially all of the assets or shares of Ayurcann; (ii) the effective date of any plan of arrangement; (iii) early termination by the lender upon an event of default; (iv) June 30, 2026, unless otherwise consented to by the lender; (v) the termination or conversion of the CCAA proceedings; or (vi) payment in full of all amounts owing under the DIP facility.
As previously announced on April 13, 2026, Emblem was selected as the successful bidder in the court-supervised sale and investment solicitation process approved by the court in connection with the CCAA Proceedings. The assumption of the DIP lending role by Emblem facilitates the continued operations of the Ayurcann business pending the closing of the previously announced transaction and is consistent with RWB’s strategic objective of acquiring Ayurcann’s comprehensive processing and manufacturing platform, established brand portfolio and national distribution capabilities.
The closing of the transaction is currently anticipated to take place on or about June 5, 2026, and in any event no later than June 30, 2026, subject to court approval and the satisfaction of customary closing conditions.
