The owner of sports drink company BioSteel says it has filed for creditor protection in the U.S. and Canada and is trying to find a buyer for the business.
Ontario-based Canopy Growth, the largest cannabis company in North America, said in a press release Thursday that it has ceased funding BioSteel Sports Nutrition Inc. and that BioSteel has commenced proceedings under the Companies Creditors Arrangement Act.
Companies undergo CCAA when they seek a court’s help to protect them from their creditors. That’s to ensure orderly proceedings while they either restructure or wind down operations. Alongside the Canadian CCAA proceedings, the company will also undergo creditor protection under Chapter 15 of the U.S. bankruptcy code.
BioSteel was founded in Toronto in 2009 by entrepreneur John Celenza and then-NHLer Mike Cammalleri. The company has a marketing partnerships with several dozen NHL, NBA and NFL teams, and notable athletes including Connor McDavid, Mathan MacKinnon, John Tavares and recent No. 1 overall pick Connor Bedard — all of whom attended a recent training camp together.
Can you handle more Connor Bedard content? Of course you can!<br><br>A day with Bedard at the BioSteel Camp<br><br>(🎥<a href=”https://twitter.com/BioSteelSports?ref_src=twsrc%5Etfw”>@BioSteelSports</a>)<a href=”https://twitter.com/hashtag/Blackhawks?src=hash&ref_src=twsrc%5Etfw”>#Blackhawks</a> <a href=”https://t.co/G5IyPtF2CZ”>pic.twitter.com/G5IyPtF2CZ</a>
Canopy Growth bought a majority interest in BioSteel in 2019, in the hopes of diversifying its business into drinks, but the deal hasn’t worked out as planned. Canopy says BioSteel was responsible for about 60 per cent of its financial losses this fiscal year.
Canopy Growth’s earnings show BioSteel racked up more than $32 million in sales in the first quarter of this year, more than twice as much as it did in the same time last year. But it spent more than $40 million to book those sales, including about $12 million in advertising and promotional costs related to the National Hockey League sponsorship.
So the company was losing money on every unit sold.
While companies do often shut down completely as a result of CCAA proceedings, they don’t always. For BioSteel, it seems like the plan is to find a buyer who wants to run it as an independent company.
The CCAA filing was undertaken because the company “no longer has access to funding for the brand which continued to generate negative operating cash flow,” BioSteel said.
“BioSteel made the decision to conserve cash and put the business into hibernation to preserve its assets. BioSteel sought creditor protection under the CCAA to conduct a court-supervised sale process for its business and property for the benefit of its stakeholders.”
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