Charlotte's Web Announces Transaction with BAT: Debenture Conversion and US$10M Equity Investment to Strengthen Balance Sheet

Rhea-AI Summary

Charlotte's Web (OTCQB: CWBHF / TSX: CWEB) announced a transaction with BAT (British American Tobacco) to convert C$75.3M principal plus C$14.2M accrued interest into equity at C$0.94 and for BAT to invest an additional US$10M via private placement.

The deal issues ~110M shares to BAT, eliminates ~US$65M debt, stops future interest accrual, and would leave BAT with ~40.8% ownership subject to shareholder and TSX approvals.

Positive

• Debt elimination of approximately US$65 million
• Interest savings of roughly US$12 million through maturity avoidance
• Immediate cash injection of US$10 million for operations
• Balance sheet simplification to no long-term debt

Negative

• Equity dilution via issuance of ~110 million shares
• BAT ownership concentration of about 40.8% post-transaction
• Transaction subject to shareholder and TSX approval, creating closing risk

News Market Reaction – BTI

+0.36%

1 alert

+0.36% News Effect

On the day this news was published, BTI gained 0.36%, reflecting a mild positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Convertible debenture principal: C$75.3 million (≈US$54 million) Conversion price: C$0.94 per share (≈US$0.67) Additional equity investment: US$10 million +5 more

8 metrics

Convertible debenture principal C$75.3 million (≈US$54 million) BAT’s outstanding debenture to be converted into equity

Conversion price C$0.94 per share (≈US$0.67) Price for converting debenture and accrued interest

Additional equity investment US$10 million Concurrent private placement by BAT

Total equity commitment ≈US$75 million Combined value of debenture conversion and new capital

Debt eliminated ≈US$65 million Total debt removed from Charlotte’s Web balance sheet

Interest savings ≈US$12 million Future interest avoided versus holding debenture to 2029

Interest rate 5.0% per annum Coupon on the original convertible debenture

New shares to BAT Up to ≈110 million shares Common shares issued via conversion and placement

Market Reality Check

Price: $58.73 Vol: Volume 5,422,408 is modes...

normal vol

$58.73 Last Close

Volume Volume 5,422,408 is modestly above the 5,153,051 share 20-day average. normal

Technical Trading above its 200-day MA at 55.49, while 7.85% below the 52-week high of 63.22.

Peers on Argus

Peers show a mixed tape: MO and RLX are slightly positive, while PM and TPB are ...

Peers show a mixed tape: MO and RLX are slightly positive, while PM and TPB are down and BUD is modestly higher. This pattern suggests stock-specific factors around BAT’s cannabis-related capital deployment rather than a broad Tobacco sector move.

Historical Context

1 past event · Latest: Feb 19 (Positive)

Pattern 1 events

Date	Event	Sentiment	Move	Catalyst
Feb 19	Private placement investment	Positive	+3.6%	BAT-funded C$65.2M private placement into Organigram for Sanity Group acquisition.

Pattern Detected

Limited history, but prior cannabis-related capital deployment by BAT coincided with a positive reaction in the target company’s stock.

Recent Company History

In the past six months, BAT featured in at least one notable cannabis-sector capital deployment: a C$65.2 million private placement into Organigram to support its acquisition of Sanity Group on Feb 19, 2026. Organigram’s shares moved 3.6% over 24 hours following that news. Today’s announcement similarly reflects BAT allocating capital into the cannabis/CBD ecosystem, this time via debenture conversion and equity investment in Charlotte’s Web.

Market Pulse Summary

This announcement highlights BAT’s continued strategic push into cannabis-adjacent and CBD assets, w...

Analysis

This announcement highlights BAT’s continued strategic push into cannabis-adjacent and CBD assets, with a roughly US$75 million commitment to Charlotte’s Web that removes about US$65 million of debt and adds new capital. Context from the earlier Organigram deal and its 3.6% move shows markets have reacted to similar ventures. Investors may watch execution in medical channels, regulatory milestones, and how these investments complement BAT’s core tobacco franchise.

Key Terms

convertible debenture, private placement, volume weighted average price, non-brokered private placement, +4 more

8 terms

convertible debenture financial

"conversion of BAT's outstanding C$75.3 million principal amount ... of the convertible debenture"

A convertible debenture is a long-term loan a company issues that pays interest like a bond but can be turned into a set number of the company’s shares under pre-agreed terms. For investors it matters because it mixes safety and upside: you get regular interest and higher repayment priority like a lender, yet you also hold an option to become a shareholder if the stock rises, which can dilute existing owners and change risk and return profiles.

private placement financial

"a concurrent additional equity investment by BAT of US$10 million by way of a private placement"

A private placement is a way for companies to raise money by selling securities directly to a small group of investors instead of through a public offering. This process is often quicker and less regulated, making it similar to offering a special, exclusive investment opportunity to select individuals or institutions. For investors, it can provide access to unique investment options that are not available on public markets.

volume weighted average price technical

"applied to the 5-day volume weighted average price of the Company's common shares"

The volume weighted average price (VWAP) is a way to measure the average price of a security, such as a stock, over a specific period, taking into account how many units were traded at each price. It’s similar to calculating the average cost of items bought when some are more frequently purchased than others. Investors use VWAP to assess whether a security is being bought or sold at a fair price during trading.

non-brokered private placement financial

"an additional non-brokered private placement of up to 14,760,638 common shares"

A non-brokered private placement is when a company raises money by selling securities (such as shares or bonds) directly to a small group of chosen investors without using a broker or dealer as a middleman. For investors it matters because it can provide faster, lower-cost access to new investment opportunities but may bring higher risk, less liquidity and potential dilution of existing holdings compared with public offerings.

Schedule 14A regulatory

"a preliminary proxy statement and a definitive proxy statement, each on Schedule 14A"

Schedule 14A is a document that companies file with regulators to share important information with shareholders before a big vote, like approving a merger or election of directors. It matters because it helps investors understand what’s happening so they can make informed decisions about the company’s future.

Schedule 13D regulatory

"Standard Bank of South Africa Ltd filed a Schedule 13D reporting beneficial ownership"

A Schedule 13D is a legal document that investors file with regulators when they buy a large enough stake in a company to potentially influence its management or decisions. It provides details about the investor’s intention, ownership stake, and plans, helping other investors understand who is gaining control and what their motives might be.

Schedule 13G/A regulatory

"Capital Research Global Investors reports beneficial ownership ... in a Schedule 13G/A filing"

A Schedule 13G/A is an amended public filing with the U.S. securities regulator that updates a previous Schedule 13G, disclosing when an individual or group holds a substantial (typically over 5%) stake in a company and is claiming a passive, non‑controlling intent. Investors monitor these updates because rising or falling holdings can signal changing confidence, potential future moves, or shifts in voting power — like watching a public ledger where large shareholders quietly adjust their positions.

Form 10-K regulatory

"in its Annual Report for the year ended December 31, 2025, on Form 10-K filed with the SEC"

A Form 10-K is a comprehensive report that publicly traded companies are required to file annually with regulators. It provides a detailed overview of a company's financial health, operations, and risks, similar to a detailed health report. Investors use this information to assess the company's performance and make informed decisions about buying or selling its stock.

AI-generated analysis. Not financial advice.

Transaction Addresses Capital Structure and Supports Near-Term Operating Priorities, Including Anticipated CMMI Medicare Pilot Program Participation

LOUISVILLE, Colo., March 30, 2026 /PRNewswire/ - (TSX: CWEB) (OTCQB: CWBHF) Charlotte's Web Holdings, Inc., a botanical wellness innovation company and the market leader in cannabidiol ("CBD") hemp extract wellness products, today announced a transaction with BT DE Investments, Inc. ("BAT"), a subsidiary of British American Tobacco plc (LSE: BATS and NYSE: BTI), comprising two components: (i) amendment and conversion of BAT's outstanding C$75.3 million principal amount (approximately US$54 million) of the convertible debenture, as well as all accrued interest, into common shares of Charlotte's Web at a conversion price of C$0.94 (approximately US$0.67 at the Bank of Canada exchange rate on March 27, 2026 for estimation purposes); and (ii) a concurrent additional equity investment by BAT of US$10 million by way of a private placement at a price (the "Subscription Price") equal to the greater of (a) C$0.94, or (b) a dollar amount equal to the maximum discount available pursuant to section 607 of the TSX Company Manual applied to the 5-day volume weighted average price of the Company's common shares on the TSX prior to the closing date (collectively, the "Transaction"). Together, the Transaction results in the issuance of approximately 110 million common shares of Charlotte's Web to BAT and represents a total equity commitment of approximately US$75 million. 

Upon completion of the Transaction, approximately US$65 million of total debt will be eliminated from the Company's balance sheet, interest on the debenture will stop accruing, and liquidity will increase for near-term operations.  Charlotte's Web would operate with no long-term debt and with a simplified equity structure.

The Company is preparing for anticipated participation in the Centers for Medicare & Medicaid Innovation (CMMI) Medicare pilot program.  In parallel, DeFloria continues to advance its FDA Phase 2 clinical trial program led by Ajna BioSciences. These initiatives require internal investment to optimize execution.

"In addition to this being an important balance sheet event, it also reflects support for Charlotte's Web and its strategic direction," said Bill Morachnick, Chief Executive Officer of Charlotte's Web. "BAT's decision to convert its debenture to equity and invest additional capital removes our largest remaining liability and strengthens our shareholders' equity. The additional US$10 million in new capital reinforces our financial position and provides greater flexibility to participate in the upcoming CMMI Medicare pilot program, subject to receipt of all regulatory approvals. We look forward to seeking shareholder approval to complete this Transaction."

"Removing the debenture simplifies our capital structure and avoids approximately US$12 million in future interest, in addition to repayment of the principal," Erika Lind, Chief Financial Officer, stated. "We have worked aggressively over the last two years to reduce and optimize our cost structure. With these changes to our balance sheet and new infusion of capital, we are better positioned to fund near-term priorities."

Transaction Rationale

The Board of Directors evaluated the Transaction in the context of the Company's current financial position, capital structure, and strategic priorities.

Subsequent trading levels have rendered voluntary conversion at the original conversion price unlikely in the near term, which risks leaving a US$67 million liability on the balance sheet and the resulting impact on shareholders' equity value. In the interim, the debenture continues to accrue interest at 5.0% per annum, amounting to approximately US$3 million annually to the Company and up to approximately US$12 million in aggregate interest from June 2026 to the November 2029 debenture maturity date. The Company believes a conversion at C$0.94 is consistent with current market values, and successfully eliminates the Company's largest outstanding liability, removes ongoing interest obligations, and strengthens the balance sheet. Moreover, BAT's concurrent equity investment provides immediate liquidity to support long-term strategic execution. This investment further reinforces the Company's strategic plans to expand its existing medical channel and participate in the CMMI program, subject to regulatory approvals, and underscores BAT's continued support of Charlotte's Web's strategy and leadership.

Charlotte's Web shareholders will be asked to approve the Transaction at the annual general and special meeting of the shareholders to be held on or about May 28, 2026. The Company plans to deliver an information circular and proxy statement in connection with the Meeting and will provide additional updates with respect to the Transaction at that time.

Transaction Overview

Conversion of Outstanding Debenture

Subject to shareholder and regulatory approvals, the convertible debenture issued by Charlotte's Web to BAT on November 14, 2022, in the original amount of C$75,341,080 (approximately US$54 million), with an original maturity date of November 14, 2029, will be converted in full into common shares of Charlotte's Web at a conversion price of C$0.94 . The converted amount will include the full principal of C$75,341,080 together with C$14,223,321 (approximately US$10 million) in accrued interest at 5.0% per annum from the original issuance date of November 14, 2022 through the conversion date, for a total converted amount of C$89,564,401 (approximately US$65 million), resulting in the issuance of up to 95,281,277 common shares to BAT. All accrued and unpaid interest will be settled through the issuance of common shares at the C$0.94 conversion price. .

US$10 Million Concurrent Private Placement

Concurrently with the debenture conversion, BAT will subscribe for an additional non-brokered private placement of up to 14,760,638 common shares of Charlotte's Web at the Subscription Price, for gross proceeds of US$10 million (approximately C$13.9 million). The net proceeds of the cash will be used to support the Company's participation in the anticipated CMMI Medicare pilot program and other permitted purposes if the CMMI program does not proceed.

Combined Transaction Summary

In aggregate, the Transaction results in the issuance of up to approximately 110 million common shares to BAT at the Subscription Price, representing a total equity commitment of approximately C$103.4 million (approximately US$75 million). Following completion, BAT will hold up to approximately 110 million common shares of Charlotte's Web, representing approximately 40% of the Company's then-issued and outstanding common shares on a non-diluted basis, based on 159,683,953 shares currently outstanding and expected to be issued prior to the closing of the Transaction, and up to approximately 270 million shares outstanding immediately following the Transaction.

The C$0.94 per share price represents a discount of approximately 5% to the 5-day volume-weighted average price of the Company's common shares on the TSX as of March 27, 2026, for estimation purposes.

Investor Rights Agreement

On closing of the Transaction, the Company and BAT will enter into an amended and restated investor rights agreement (the "A&R Investor Rights Agreement"), amending and restating the investor rights agreement entered into on November 14, 2022, in connection with the original debenture agreement. The A&R Investor Rights Agreement will provide, among other things, (i) that BAT will have the right to nominate directors in line with its pro rata equity ownership (provided BAT will in any case have the right to nominate at least two directors) for so long as they hold at least 10% of the Company's equity, (ii) for certain restrictions on equity issuances and indebtedness, and (iii) for certain changes to BAT's existing customary top-up rights. Neither the A&R Investor Rights Agreement nor BAT's director nomination rights confer on BAT or any BAT‑nominated director any right to direct or control the management or day‑to‑day operations of the Company, which will continue to be managed by its board and executive management in the ordinary course.

Shareholder Approval and Special Meeting

Completion of the Transaction is subject to, among other conditions, TSX approval and shareholder approval. Charlotte's Web shareholders will be asked to approve the Transaction at an annual general and special meeting of the shareholders to be held on or about May 28, 2026.

Subject to the receipt of shareholder and TSX approval, the Transaction is expected to close on or about May 28, 2026. 

Additional Information and Where to Find It

In connection with the Transaction, Charlotte's Web will file with the SEC a preliminary proxy statement and a definitive proxy statement, each on Schedule 14A and may file other documents with the SEC regarding the Transaction. This release is not a substitute for the proxy statement or any other document that Charlotte's Web may file with the SEC. INVESTORS IN, AND SECURITY HOLDERS OF, CHARLOTTE'S WEB ARE URGED TO READ, WHEN AVAILABLE, THE PRELIMINARY PROXY STATEMENT, THE DEFINITIVE PROXY STATEMENT AND DOCUMENTS INCORPORATED BY REFERENCE THEREIN AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT CHARLOTTE'S WEB AND THE PROPOSED TRANSACTION AND RELATED MATTERS.  When available, the definitive proxy statement and other relevant materials for the Transaction will be mailed or otherwise made available to stockholders of Charlotte's Web as of April 6, 2026.  Investors and security holders may obtain free copies of the proxy statement (when available) and other documents filed with the SEC by Charlotte's Web through the website maintained by the SEC at www.sec.gov or by contacting Charlotte's Web at 700 Tech Court, Louisville, CO 80027 or by telephone at (720) 484-8930.

Participants in the Solicitation

Charlotte's Web and its directors and executive officers, and other members of management and employees, may be deemed to be participants in the solicitation of proxies in connection with the Transaction under the rules of the SEC. Information regarding the persons who may be deemed participants in the solicitation of proxies in connection with the Transaction will be set forth in the proxy statement when it is filed with the SEC.  You can find more information about Charlotte's Web's directors and executive officers in its Annual Report for the year ended December 31, 2025, on Form 10-K filed with the SEC on [March 31, 2026] and Charlotte's Web's Definitive Annual Meeting Proxy Statement filed with the SEC on April 29, 2025. You may obtain a free copy of these documents as indicated above.

Required Early Warning Disclosure

Immediately prior to completion of the Transaction, assuming the Convertible Debenture had been converted in full (including all accrued but unpaid interest thereon as of the date hereof) at C$2.00, BAT had the right to acquire beneficial ownership of up to 44,782,800 common shares, subject to a cap of 19.9% of the issued and outstanding common shares (calculated on a non-diluted basis).

Immediately after the Transaction, BAT will have beneficial ownership of up to approximately 110 million common shares, representing approximately 40.8% of the issued and outstanding common shares (calculated on a non-diluted basis) based on 269,725,868 common shares that are expected to be issued and outstanding on completion of the Transaction.

BAT undertook the Transaction as part of a strategic investment in Charlotte's Web. BAT intends to review its investment in the Company on a continuing basis and may, subject to the terms of the A&R Investor Rights Agreement, depending upon a number of factors, including market and other conditions, increase or decrease its beneficial ownership, control, direction or economic exposure over securities of the Company.

An early warning report will be electronically filed with the applicable securities commission in each jurisdiction where the Company is reporting and will be available under the Company's profile on SEDAR+ at www.sedarplus.ca. For further information or to obtain a copy of the early warning report, please contact the Company's representative at the end of this press release.

The Company is a corporation existing under the laws of the province of British Columbia with its head office located at 700 Tech Court, Louisville, Colorado 80027, USA. BAT is a corporation existing under the laws of the state of Delaware with its head office located at 401 North Main Street, Winston-Salem, North Carolina 27010, USA.

No Offer or Solicitation

This press release shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Transaction. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

About Charlotte's Web Holdings, Inc.

Charlotte's Web Holdings, Inc., a Certified B Corporation headquartered in Louisville, Colorado, is a botanical wellness innovation company and market leader in hemp extract wellness. The Company's product categories include CBD oil tinctures (liquid products), CBD gummies (sleep, calming, exercise recovery), CBN gummies, CBG gummies, hemp-derived THC microdose gummies, functional mushroom gummies, CBD capsules, CBD topical creams and lotions, as well as CBD pet products for dogs. Through its substantially vertically integrated business model, Charlotte's Web maintains stringent control over product quality and consistency with analytic testing for quality assurance. Charlotte's Web products are distributed to retailers and healthcare practitioners throughout the U.S.A. and are available online at www.charlottesweb.com.

Forward-Looking Information

Certain information provided herein constitutes forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities laws. Forward-looking statements are typically identified by words such as "may," "will," "should," "could," "anticipate," "expect," "project," "estimate," "forecast," "plan," "intend," "target," "believe" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. Specifically, this press release contains forward-looking statements relating to, but not limited to: completion of the Transaction with BAT, including obtaining the necessary TSX approval and shareholder approval of the Transaction; benefits to the Company of completing the Transaction with BAT; use of proceeds of the Transaction; timing of completion of the Transaction; the Company's participation in the CMMI pilot program; financial impacts to the Company of completing the Transaction; and scheduled timing of the annual general and special meeting of shareholders.

By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties, and other factors which may cause actual results, levels of activity, and achievements to differ materially from those expressed or implied by such statements. The forward-looking statements contained in this press release are based on certain assumptions and analysis by management of the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors that management believes are appropriate and reasonable. The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to: the receipt of TSX approval and shareholder approval at the special meeting and the satisfaction of all other conditions to completion of the Transaction; the anticipated timing of the special meeting and Transaction closing; the anticipated impact of the debenture conversion and private placement on the Company's balance sheet, shareholders' equity, and financial position; the intended use of private placement proceeds; expectations around hemp wellness distribution through the CMMI Medicare pilot program; the progress and potential outcomes of DeFloria's Phase 2 clinical trials for AJA001; anticipated cost reductions and their impact on the Company's improving cash flow outlook; regulatory regime changes and federal hemp policy developments; anticipated product development and sales; the success of sales and marketing activities; availability of adequate liquidity and capital to support operations and business plans; and expectations around consumer product demand. In addition, the forward-looking statements are subject to risks and uncertainties pertaining to, among other things: the risk that the Transaction does not receive required shareholder or regulatory approvals or that closing conditions are not satisfied; supply and distribution chains; the market for the Company's products; revenue fluctuations; regulatory changes; loss of customers and retail partners; retention and availability of talent; competing products; share price volatility; loss of proprietary information; product acceptance; internet and system infrastructure functionality; information technology security; available capital to fund operations and business plans; crop risk; economic and political considerations; and including but not limited to those risks and uncertainties discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ending December 31, 2024, and other risk factors contained in other filings with the Securities and Exchange Commission available at http://www.sec.gov and filings with Canadian securities regulatory authorities available at www.sedarplus.ca. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent, and the Company's future course of action depends on management's assessment of all information available at the relevant time.

Any forward-looking statement in this press release is based only on information currently available to the Company and speaks only as of the date on which it is made. Except as required by applicable law, the Company assumes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. All forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements.

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SOURCE Charlotte's Web Holdings, Inc.

FAQ

What does the BAT conversion mean for Charlotte's Web (CWEB) shareholders?

The conversion retires C$89.6M of debenture principal and interest into equity, issuing ~95.3M shares. According to the company, this removes ~US$65M debt and stops ongoing interest accrual, but will dilute existing holders as BAT would hold about 40.8% post-transaction.

How much additional capital is BAT investing in Charlotte's Web (CWEB) and for what purpose?

BAT is investing US$10 million through a private placement concurrently with the conversion. According to the company, net cash proceeds support anticipated participation in the CMMI Medicare pilot program and other permitted uses if the program does not proceed.

How many shares will BAT receive and what ownership stake will it hold in CWEB?

BAT will receive up to approximately 110 million common shares in total from conversion and private placement. According to the company, that represents roughly a 40.8% beneficial ownership on a non-diluted basis after closing.

What are the expected financial benefits to Charlotte's Web from the BTI transaction?

The company expects elimination of ~US$65M debt and avoidance of about US$12M in future interest expense. According to the company, this strengthens liquidity and simplifies the capital structure for near-term strategic priorities.

When will the Charlotte's Web (CWEB) and BAT transaction close and what approvals are required?

The transaction is expected to close on or about May 28, 2026, subject to shareholder and TSX approvals. According to the company, closing also requires satisfaction of customary conditions and regulatory approvals.

Will BAT gain control of Charlotte's Web after the conversion and private placement?

BAT will have significant influence but not an automatic right to control daily operations through this agreement. According to the company, BAT may nominate directors proportional to ownership but management will continue in the ordinary course.