Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2024

VIREO GROWTH INC.

(Exact name of registrant as specified in its charter)

British Columbia

(State or other jurisdiction of Incorporation)

000-56225		82-3835655
(Commission File Number)		(IRS Employer Identification No.)

207 South 9th Street Minneapolis, Minnesota		55402
(Address of principal executive offices)		(Zip Code)

(612) 999-1606

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 1.01

Entry into a Material Definitive Agreement.

On July 31, 2024, Vireo Growth Inc. (the “Company”) entered into a Waiver and Ninth Amendment (the “Ninth Amendment”) to that certain Credit Agreement dated as of March 25, 2021 by and among the Company and certain of its subsidiaries, the persons from time-to-time party thereto as guarantors, the lenders party thereto, and Chicago Atlantic Admin, LLC, as administrative and collateral agent (“Agent”) (the Credit Agreement, as amended by the Ninth Amendment, the “Credit Agreement”).

Under the Ninth Amendment, the Agent and the lenders party thereto waive the event of default under the Credit Agreement resulting from the Company’s failure to complete the disposition of its New York operations on or prior to January 1, 2024, extended the maturity date on the Company’s loans under the Credit Agreement to January 29, 2027, adjusted and extended the deadline with respect to the Company’s ongoing disposition of its New York operations through July 31, 2025, and amended certain financial measure definitions and covenants within the Credit Agreement.

This summary of the Ninth Amendment is qualified in its entirety by reference to the full text of the Ninth Amendment, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2024.

Item 3.02

Unregistered Sales of Equity Securities.

On July 31, 2024 and in connection with entry into the Ninth Amendment, the Company agreed to issue 12,500,000 subordinate voting shares (the “Shares”) to the lenders party to the Credit Agreement in consideration for the lenders’ entry into the Ninth Amendment. No additional consideration will be received by the Company in exchange for the issuance of the Shares. The Shares will be issued in reliance on the private offering exemption of Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.

Item 7.01.

Regulation FD Disclosure.

On August 1, 2024, the Company issued a press release announcing the matters disclosed in this Current Report on Form 8-K, which is attached as Exhibit 99.1 hereto.

Item 8.01

Other Events.

On July 31, 2024, certain converting security holders, including Chicago Atlantic Opportunity Portfolio, LP and Chicago Atlantic Credit Company, LLC (the “Converting Shareholders”), notified the Company of their intent to voluntarily convert all of the outstanding convertible notes (“Notes”) issued in connection with a private offering pursuant to a Sixth Amendment to the Credit Agreement by and among the Company, certain of its subsidiaries, the persons from time-to-time party thereto as guarantors, the lenders party thereto, and Chicago Atlantic Admin, LLC, as administrative agent and as collateral agent, dated as of April 28, 2023 (the “Sixth Amendment”). The Notes had an outstanding balance of approximately $10.5 million, carried an interest rate of 12.0% per annum, and were convertible into subordinate vote shares of the Company at an exercise price of $0.145. As a result of the conversion, the Company will issue approximately 73.0 million subordinate voting shares to such Converting Shareholders.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
99.1		Press Release dated August 1, 2024
104		Cover Page Interactive Data File (embedded within Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VIREO GROWTH INC.
	(Registrant)

	By:	/s/ Joshua Rosen
		Joshua Rosen
		Chief Executive Officer and Interim Chief Financial Officer

Date: August 6, 2024

Exhibit 99.1

Vireo Growth Inc. Announces 30-Month Extension of Credit Agreement and Voluntary Conversion of All Outstanding Convertible Notes with Affiliates of Chicago Atlantic

– Maturity date on credit facility loans extended to January 29, 2027 –

– Early debt conversion to reduce cash and PIK interest expenses by $2.3 million –

MINNEAPOLIS – August 1, 2024 – Vireo Growth Inc. (formerly Goodness Growth Holdings, Inc.) ("Vireo" or the "Company") (CSE: VREO; OTCQX: VREOF), a cannabis company committed to providing safe access, quality products and great value to its customers, today announced that it has executed a ninth amendment to the Company’s Green Ivy credit agreement with Chicago Atlantic and affiliates and that Chicago Atlantic notified the Company of its intent to voluntarily convert its outstanding convertible notes.

30-Month Extension with Amended Credit Agreement

The ninth amendment to the Company’s credit agreement extends the maturity date on the credit facility loans to January 29, 2027, adjusts and extends the designated event of default with respect to the Company’s ongoing disposition of its New York operations through July 31, 2025, and amends certain financial measure definitions and covenants within the agreement. The Company will issue 12,500,000 Subordinate Voting Shares to the lenders in consideration for the credit facility amendment.

Managing Partner of Chicago Atlantic, Peter Sack commented, "With the substantial improvements in Vireo’s underlying operational and financial performance over the past eighteen months, as well as the upcoming implementation of adult-use sales in Minnesota, we are excited to support the Company’s ongoing initiatives to strengthen its business. "

Chief Executive Officer of Vireo, Josh Rosen said, "It's not been an easy path for us, but I'm incredibly pleased with our team and I'm appreciative of the collaborative approach Chicago Atlantic has taken to working with us to establish a more stable foundation from which to build. As our team knows, we have much work left to do and while this announcement feels good and represents a meaningful step forward, we're focused on realizing our potential to capitalize on the opportunities in front of us with prudent capital allocation, investing in and trusting our talent, and executing our CREAM and Fire strategy. This industry gets more competitive every day which means we must keep improving on a daily basis."

Voluntary Conversion of All Outstanding Convertible Notes

Vireo also announced that Chicago Atlantic has notified the Company of its intent to voluntarily convert all of the outstanding convertible notes issued in connection with its April 2023 convertible loan financing. The convertible loan had an outstanding balance of approximately $10.5 million, carried an interest rate of 12.0 percent, and was convertible into equity shares of the Company at a strike price of US $0.145. As a result of the conversion, Vireo will issue approximately 73.0 million Subordinate Voting Shares to Chicago Atlantic and its affiliates. The early, voluntary conversion of all outstanding convertible notes is expected to result in interest expense savings of approximately $1.2 million and PIK interest savings of approximately $1.1 million which would have resulted in the issuance of an additional approximately 7.7 million Subordinate Voting Shares if the debt had been converted at maturity.

Chicago Atlantic Partner, John Mazarakis commented, "We articulated to Vireo's leadership that if they made meaningful progress on their improvement plans that we'd convert this note early and it's a privilege to make good on our word. We're pleased with the efforts of the Vireo team to rebuild, and in our opinion, they have put themselves on a viable path to thrive in the cannabis industry."

Executive Chairman of Vireo, Kyle Kingsley, M.D. concluded, "When Verano wrongfully terminated our merger agreement, I wasn't sure we'd survive, and while the harms from that transaction continue to be part of our day-to-day existence, I'm proud of our team and can feel the optimism within our organization building. I'd like to thank Josh and John in particular for their roles in getting us in a better position to grow our business."

Vireo relied on exemptions from formal valuation and minority shareholder approval requirements provided under sections 5.5(b) and 5.7(1)(e) of MI 61-101 on the basis of shares trading on the Canadian Securities Exchange and financial hardship. It did not file a material change report in respect of the related party transaction 21 days prior to the closing of the ninth amendment as the details of the amendment had not been confirmed at that time. The Company deemed this circumstance reasonable to complete the ninth amendment, which was considered and approved by the Board, in an expeditious manner.

About Vireo Growth Inc.

Vireo was founded as a pioneer in medical cannabis in 2014 and we are fueled by an entrepreneurial drive that sustains our ongoing commitment to serve and delight our key stakeholders, most notably our customers, our employees, our shareholders, our industry collaborators, and the communities in which we live and operate. We work every day to get better and our team prioritizes 1) empowering and supporting strong local market leaders and 2) strategic, prudent capital and human resource allocation. For more information, please visit www.vireogrowth.com.

Contact Information

Investor Inquiries:

Sam Gibbons

Investor Relations

investor@vireogrowth.com

(612) 314-8995

Media Inquiries:

Amanda Hutcheson

Senior Manager, Communications

amandahutcheson@vireogrowth.com
(919) 815-1476

Forward-Looking Statement Disclosure

This press release contains “forward-looking information” within the meaning of applicable United States and Canadian securities legislation. To the extent any forward-looking information in this press release constitutes “financial outlooks” within the meaning of applicable United States or Canadian securities laws, this information is being provided as preliminary financial results; the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information contained in this press release may be identified by the use of words such as “should,” “believe,” “estimate,” “would,” “looking forward,” “may,” “continue,” “expect,” “expected,” “will,” “likely,” “subject to,” “transformation,” and “pending,” variations of such words and phrases, or any statements or clauses containing verbs in any future tense. These statements should not be read as guarantees of future performance or results. Forward-looking information includes both known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company or its subsidiaries to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements or information contained in this press release. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein and in our Annual Report on Form 10-K filed with the Securities Exchange Commission. Our actual financial position and results of operations may differ materially from management’s current expectations and, as a result, our revenue, EBITDA, and cash on hand may differ materially from the values provided in this press release. Forward-looking information is based upon a number of estimates and assumptions of management, believed but not certain to be reasonable, in light of management’s experience and perception of trends, current conditions, and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.

Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, the reader should not place undue reliance on the forward-looking information because the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these statements. Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to: risks related to the timing and content of adult-use legislation in markets where the Company currently operates; current and future market conditions, including the market price of the subordinate voting shares of the Company; risks related to epidemics and pandemics; federal, state, local, and foreign government laws, rules, and regulations, including federal and state laws and regulations in the United States relating to cannabis operations in the United States and any changes to such laws or regulations; operational, regulatory and other risks; execution of business strategy; management of growth; difficulties inherent in forecasting future events; conflicts of interest; risks inherent in an agricultural business; risks inherent in a manufacturing business; liquidity and the ability of the Company to raise additional financing to continue as a going concern; the Company’s ability to meet the demand for flower in Minnesota; risk of failure in the lawsuit with Verano and the cost of that litigation; our ability to dispose of our assets held for sale at an acceptable price or at all; and risk factors set out in the Company's Form 10-K for the year ended December 31, 2023, which is available on EDGAR with the U.S. Securities and Exchange Commission and filed with the Canadian securities regulators and available under the Company's profile on SEDAR at www.sedar.com.

The statements in this press release are made as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements or forward-looking information to reflect events or circumstances after the date of such statements.

Cover	Jul. 31, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jul. 31, 2024
Entity File Number	000-56225
Entity Registrant Name	VIREO GROWTH INC.
Entity Central Index Key	0001771706
Entity Tax Identification Number	82-3835655
Entity Incorporation, State or Country Code	A1
Entity Address, Address Line One	207 South 9th Street
Entity Address, City or Town	Minneapolis
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55402
City Area Code	612
Local Phone Number	999-1606
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false