Charlotte's Web Holdings, Inc. 8-K

What Happened

• Charlotte’s Web Holdings, Inc. announced the closing on May 28, 2026 of transactions with BT DE Investments Inc. (BAT). Under a March 30, 2026 subscription agreement, BAT purchased 14,662,765 common shares at C$0.94 per share (C$13,873,000 aggregate).
• Concurrently, the parties amended the company’s November 14, 2022 convertible debenture (original principal C$75,341,080, maturity Nov. 14, 2029). The conversion and amendment reduced the conversion and interest-conversion prices to C$0.94 per share and raised the conversion cap threshold to 40.8%. BAT converted the principal and accrued interest into 95,281,277 common shares. After the purchase and conversion, BAT holds 109,944,042 shares, about 40.6% of the 270,549,931 shares outstanding as of May 28, 2026.

Key Details

• Convertible debenture original principal: C$75,341,080 (≈US$54M); maturity date Nov. 14, 2029; original interest 5% (drops to 1.5% upon certain federal regulation change).
• Subscription: 14,662,765 shares at C$0.94 each; total C$13,873,000 (derived from US$10M consideration).
• Conversion: 95,281,277 shares issued on conversion; BAT aggregate holdings = 109,944,042 shares (~40.6%).
• Governance & protections: Amended & Restated Investor Rights Agreement grants BAT board nomination rights (minimum two nominees while BAT owns ≥10%, one nominee already appointed — Jeffery Raborn), pre-emptive and top‑up rights, demand/piggyback registration rights, standstill until May 28, 2028, transfer limits until Nov. 28, 2027, and certain minority-approval rights (e.g., over liquidation, senior securities, voluntary delisting, indebtedness > US$10M).

Why It Matters

• BAT is now the company’s largest shareholder with substantial governance influence (board seats, veto/approval rights and anti-dilution protections). That changes Charlotte’s Web’s shareholder structure and decision-making dynamics.
• The conversion materially increased share count and diluted existing holders — BAT owns ~40.6% post-transaction. Investors should note the new ownership concentration, transfer restrictions, and BAT’s ongoing rights (pre-emptive/top-up and registration) when assessing future dilution, corporate actions, or governance votes.