Charlotte's Web Holdings, Inc. 8-K

What Happened

• Charlotte’s Web Holdings, Inc. (CWBHF) filed an 8-K reporting a Subscription Agreement with BT DE Investments Inc. (a British American Tobacco subsidiary) dated March 30, 2026 and related amendments to a November 14, 2022 convertible debenture. The original debenture principal is C$75,341,080 (≈US$54M) and accrues interest at 5% (stepping to 1.5% upon federal CBD regulation). The Subscription Agreement provides for a US$10,000,000 (≈C$13.9M) Investment expected to close on or about May 28, 2026. Concurrently, the parties will amend the debenture conversion terms and BAT will convert the principal and accrued interest into Common Shares immediately after the amendment becomes effective.

Key Details

• Convertible debenture principal: C$75,341,080 (≈US$54M); original conversion price C$2.00/share, amended to C$0.94/share.
• Interest conversion price also amended to C$0.94/share; post-amendment conversion yields 95,281,277 Common Shares.
• BAT Investment: US$10,000,000 (≈C$13.9M), up to 14,760,638 Common Shares (max).
• Combined effect: issuance of ~110 million Common Shares to BAT and total BAT equity commitment of ≈C$103M (≈US$75M). Post-transaction ownership: the converted debenture equals ~40.8% of expected outstanding shares (269,725,868); the 95.3M conversion alone is ~68.9% of current outstanding (159,683,953).
• Governance and investor protections: amended & restated investor rights agreement gives BAT board nomination rights (pro rata, minimum two nominees while ≥10% ownership), pre-emptive and top-up rights while ≥10%, limited demand/piggyback registration rights, a two-year standstill (limits certain actions and acquisitions), 18-month transfer restrictions, and consent rights on specified major actions.
• Original debenture maturity: November 14, 2029. Subscription Agreement dated March 30, 2026; proxy materials to be filed and mailed to shareholders as of April 6, 2026.

Why It Matters

• The transaction provides Charlotte’s Web with immediate new capital (US$10M) and converts longstanding BAT debt into equity at a much lower conversion price, substantially increasing BAT’s equity stake and giving BAT significant governance and minority-protection rights. For investors, this is a material ownership and control change: BAT will become a major shareholder with board nomination rights and contractual protections while the company receives capital and debt relief. The amendment and conversion dilutes existing shareholders per the disclosed post-transaction share counts; shareholders should review the forthcoming proxy and related filings for full details.