VAUGHAN, ON

,

Feb. 25, 2022

/PRNewswire/ – CannTrust Holdings Inc. (“CannTrust” or the “Company”) (unlisted) today announced that it has secured new investment partners, led by Marshall Fields International B.V. (“Marshall Fields”), a subsidiary of Kenzoll B.V., a

Netherlands

-based private equity investment company.

“We are delighted to have found great partners who share our vision for the future of the Company. This is the culmination of two and a half years of hard work from the entire CannTrust team. We have remediated and improved our operations, restored our cannabis licenses, relaunched our business, settled all class action litigation against the Company and others, and now secured the right strategic partner.” said

Greg Guyatt

, Chief Executive Officer, CannTrust. “As we begin this new era, we look forward to exiting CCAA and to sharing our plans for the future in the coming weeks, beginning with our new company name.”

“CannTrust is a high-quality investment opportunity. We’ve been consistently impressed with the current business, its operations and management team and we’re excited to be working together,” said Corné Melissen, Owner, Kenzoll B.V. “Over the past few years, we have assembled business interests in the cannabis space in

Africa

and

the Netherlands

, with a world class management team dedicated to finding synergies where possible. We are confident that Canadian legalization will give rise to more jurisdictions following suit, and that CannTrust will provide us with the North American foundation and industry expertise to become a global leader.”

Today, the

Ontario

Court of Justice approved a proposed transaction pursuant to the

Companies Creditors’ Arrangement Act

(“CCAA”)

,

along with an extension of its stay order until the earlier of

March 25, 2022

or closing of the transaction, at which time the Company expects to exit from its CCAA proceedings. Under the proposed transaction:

• An investor group led by
  
  Marshall Fields
  
  (the “Investors”) has agreed to provide a
  
  $5.5 million
  
  debtor-in-possession loan (the “New DIP loan”) to CannTrust Equity Inc. (“CannTrust Equity”) and CannTrust Inc. (“CannTrust Opco”), which will rank behind the Company’s existing
  
  $22.5 million
  
  DIP loan (the “Cortland DIP loan”) from Cortland Credit Lending Corporation;
• The Investors, including two members of the Company’s management team (who are not lenders under the New DIP loan), will invest
  
  $11.2 million
  
  to acquire an approximately 90% equity interest in CannTrust Equity (the “Private Placement”), with CannTrust Holdings retaining the balance of the equity in CannTrust Equity;
• The Company’s existing approximately
  
  $336 million
  
  inter-company loan to CannTrust Opco and the Company’s 50% equity interest in Cannabis Coffee and Tea Pod Company will be assigned to CannTrust Equity; and
• Upon closing of the Private Placement, the Investors will enter into a unanimous shareholders agreement (the “USA”). The Company anticipates that the
  
  USA
  
  will provide for, among other things, an option (the “Exchange Option”), expiring 18 months after the closing date of the Private Placement, permitting the Investors to elect to exchange their CannTrust Equity shares for a like number of CannTrust Holdings shares. The Exchange Option will be exercisable by the Investors only if, among other things, CannTrust Holdings obtains an order from the Ontario Securities Commission (“OSC”) revoking the OSC’s “failure-to-file” Cease Trade Order dated
  
  April 13, 2020
  
  .

The Company anticipates that the

USA

will provide that, if the Investors elect to exercise the Exchange Option and acquire control of CannTrust Holdings, the Company will use its commercially reasonable best efforts to initiate a rights offering in accordance with National Instrument 45-106 –

Private Placements

, offering an opportunity for current CannTrust Holdings shareholders to subscribe for additional common shares of the Company at a price that will be determined by the Company’s board of directors at the time of the rights offering. The rights offering issue price would be lower than the then-existing market price (if the shares are then listed on a stock exchange) or their fair value (if the shares are not then listed).

The New DIP loan will permit the Investors to convert all or part of the principal and interest (accrued and unpaid) under the loan into additional fully paid common shares of CannTrust Equity at the same price per share payable at closing of the Private Placement.  If the New DIP loan is fully drawn and the lenders elect to convert the entire New DIP loan into equity, the expected combined ownership of the New Investors in CannTrust Equity will increase to approximately 93% before giving effect to any shares issuable under the rights offering.

CannTrust Equity intends to use the proceeds of the New DIP loan and the Private Placement for general working capital purposes to continue funding its growth strategy. Following closing of the Private Placement, in consultation with the New Investor, the Company intends to work towards applying to the OSC for an order revoking the Cease Trade Order. The Company anticipates that obtaining such an order will require, among other things, the filing and/or restating of audited financial statements and the preparation and filing of certain other public disclosures that are required by applicable securities laws.

The Company intends to convene an annual general meeting of its shareholders within four months of completing the Private Placement.

For more information about CannTrust’s CCAA proceedings, please visit:

www.ey.com/ca/canntrust

.

About CannTrust

CannTrust is a federally regulated licensed cannabis producer. We are proudly Canadian, operating a portfolio of brands including estora, Liiv, Synr.g and XSCAPE, specifically designed to surprise and delight patients and consumers.

At CannTrust, we are committed to providing an exceptional customer experience, as well as consistent and quality products through standardized processes. Our greenhouse produces Grade A cannabis flower, with products currently being sold in dried flower, pre-roll, vape, oil drops and capsule formats. Founded in 2013, our continued success in the medical cannabis market and subsequent expansion into the recreational business, led to us being named Licensed Producer of the Year at the Canadian Cannabis Awards 2018.

CannTrust is committed to research and innovation, investing in developing technologies for new products in the medical, recreational, and wellness markets, while contributing to the growing body of evidence-based research regarding the use and efficacy of cannabis.

Learn more at

www.canntrust.com

.

About Marshall Fields International B.V. and Kenzoll B.V.

Marshall Fields International B.V. is a subsidiary of Kenzoll B.V., a

Netherlands

-based private equity investment company. Kenzoll B.V. is based in

Amsterdam, the Netherlands

and controlled by Corné Melissen. Kenzoll B.V.’s portfolio comprises investments in energy, technology and cannabis.

Learn more at

Forward-Looking Statements

This press release contains “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable

United States

safe harbor laws, and such statements are based upon CannTrust’s current internal expectations, estimates, projections, assumptions and beliefs and views of future events.

Forward-looking information and forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expect”, “likely”, “may”, “will”, “should”, “intend”, “anticipate”, “potential”, “proposed”, “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may”, “would” or “will” happen, or by discussions of strategy.

The forward-looking information and statements in this news release include statements relating to CannTrust’s ongoing CCAA proceedings, its efforts to obtain new debt and equity financing and to settle related contractual and governance items, some of which have not been finalized and remain subject to reaching agreement with persons who are not controlled by the Company. Forward-looking information and statements necessarily involve known and unknown risks, including, without limitation: the Company’s limited cash and other liquidity; the risk that the Company or CannTrust Equity will be unable to raise further liquidity; the risk that, if CannTrust Equity requires additional equity, the Company’s investment in CannTrust Equity could be diluted further; the risk that the Company will be unable to complete the Private Placement or agree on satisfactory terms for the

USA

or the New Investor DIP loan; the risk that CannTrust Equity or its affiliates could default under the Cortland DIP loan or the New DIP loan, which are secured against substantially all of the Company’s assets; the risk that the Company will not be able to cure its disclosure defaults under securities laws and obtain an order from the OSC to revoke the CTO, on commercially reasonable terms, or at all; the impact of any regulatory and other investigations or proceedings; the risks associated with general economic conditions and/or adverse industry events; the risk of loss of markets; the risk of future legislative and regulatory developments in

Canada

,

the United States

and elsewhere; the state of the cannabis industry in

Canada

generally; the ability of the Company to attract and retain suitable directors, officers and employees; the risks that, even if the CTO can be revoked, the Company will be unable to obtain a stock exchange listing for the Company’s common shares; the risk that CannTrust will be unable to satisfy the requirements of such exchange; and the ability of CannTrust to successfully implement its business strategies.

Any forward-looking information and statements speak only as of the date on which they are made, and, except as required by law, CannTrust does not undertake any obligation to update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for CannTrust to predict all such factors. When considering these forward-looking information and statements, readers should keep in mind the risk factors and other cautionary statements in CannTrust’s Annual Information Form dated

March 28, 2019

(the ”

AIF

“) and filed with the applicable Canadian securities regulatory authorities on SEDAR at

www.sedar.com

and filed as an exhibit CannTrust’s Form 40-F annual report under the United States Securities Exchange Act of 1934, as amended, with the United States Securities and Exchange Commission on EDGAR at

www.sec.gov

(the ”

March 2019

Form 40-F”). The risk factors and other factors noted in the AIF could cause actual events or results to differ materially from those described in any forward-looking information or statements. Readers are also reminded that CannTrust remains in default of its periodic disclosure requirements under applicable securities laws and stock exchange requirements, that its most recent AIF, Form 40-F and other disclosures do not reflect all risk factors that currently face the Company, and that the Company has not completed or filed the restatements of the financial statements included in the AIF or the

March 2019

Form 40-F or otherwise filed an amendment to such Form 40-F, and that the Company is permitted by the Initial Order of the Superior Court of Justice to not to correct its prior filings or make any further filings in respect of periodic disclosure requirements under applicable securities laws and stock exchange requirements. None of the Company’s securities is listed for trading on any stock exchange in any jurisdiction and, in

Canada

, trading in the Company’s securities is subject to a cease-trade order issued on

April 13, 2020

by the Ontario Securities Commission for CannTrust’s failure to comply with its disclosure obligations under applicable securities laws.

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SOURCE CannTrust Holdings Inc.