Equity Method Investments (Tables)
|9 Months Ended|
Nov. 30, 2022
|Equity Method Investments and Joint Ventures [Abstract]|
|Equity method investments||
Our equity method investments are as follows:
(1)The fair value based on the closing price of the underlying equity security as of November 30, 2022, and February 28, 2022, was $621.4 million and $1,014.8 million, respectively. The balance at November 30, 2022, is net of a $1,060.3 million impairment of our Canopy Equity Method Investment (see “Canopy Equity Method Investment” below).
(2)Includes the following:
Amounts included in our consolidated results of operations for each period are as follows:
(1)Includes a $461.4 million goodwill impairment related to Canopy’s cannabis operations for the nine months ended November 30, 2022.The amounts shown represent 100% of Canopy’s reported results of operations for the respective periods.
Plan to convert Canopy common stock ownership
In October 2022, we entered into a Consent Agreement with Canopy pursuant to which we have provided our consent, subject to certain conditions, to the Canopy Transaction. Canopy only holds non-voting and non-participating exchangeable shares of Canopy USA which are convertible into common shares of Canopy USA. Third-party investors will hold 100% of the common shares of Canopy USA.
In connection with the Canopy Transaction, Canopy has proposed to amend its share capital to (i) create Exchangeable Shares and (ii) restate the rights of Canopy common shares to provide for their conversion into Exchangeable Shares through the Canopy Amendment. Canopy has stated its intention to hold a special meeting of its shareholders to consider the Canopy Amendment. We have entered into a voting support agreement with Canopy to vote in favor of the Canopy Amendment.
If the Canopy Transaction is completed and the Canopy Amendment is authorized by Canopy’s shareholders and adopted by Canopy, we intend, subject to a final decision in our sole discretion, to exercise our right to convert our Canopy common shares into Exchangeable Shares. Additionally, if the Canopy Amendment is authorized by Canopy’s shareholders, we and Canopy intend to negotiate an exchange of up to C$100.0 million aggregate principal amount of our Canopy Debt Securities for Exchangeable Shares.
Assuming the completion of the Canopy Transaction and the transactions contemplated by the Consent Agreement and that we elect to convert our Canopy common shares into Exchangeable Shares:
•we intend to surrender our November 2018 Canopy Warrants to Canopy for cancellation;
•we will only have an interest in Exchangeable Shares, which are non-voting and non-participating securities, and our remaining Canopy Debt Securities;
•we intend to terminate all legacy agreements and commercial arrangements between ourselves and Canopy, including the investor rights agreement but excluding the Consent Agreement and certain termination agreements;
•we will have no further governance rights in relation to Canopy, including rights to nominate members to the board of directors of Canopy or approval rights related to certain transactions,
•all of our nominees will resign from the board of directors of Canopy; and
•as our investment in Canopy common shares makes up our Canopy Equity Method Investment, we expect to no longer:
◦apply the equity method to our investment in Canopy, which we expect will instead be accounted for at fair value with changes reported in income (loss) from unconsolidated investments within our consolidated results; and
◦have a stand-alone Canopy operating segment as Canopy’s financial results will no longer be provided to, or reviewed by, our CODM and will not be used to make strategic decisions, allocate resources, or assess performance.
If we do not convert our Canopy common shares into Exchangeable Shares:
•Canopy and its subsidiaries will not be permitted to exercise any rights to acquire shares and interests in entities carrying on cannabis-related business in the U.S.;
•Canopy USA will be required to exercise its repurchase rights to acquire the interests in Canopy USA held by its third-party investors; and
•we will continue to have all existing rights under our agreements with Canopy that predate the Consent Agreement, including governance rights in respect of Canopy (such as board nomination rights and approval rights in respect of certain transactions).
Tabular disclosure of equity method investments including, but not limited to, name of each investee or group of investments, percentage ownership, difference between recorded amount of an investment and the value of the underlying equity in the net assets, and summarized financial information.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef