Neptune Wellness intends to spinout Sprout Organics

Neptune Wellness Solutions (NEPT) announced that after careful consideration and evaluation of potential strategic alternatives to enhance the Company’s value, the Board of Directors has approved a plan to proceed with a spinout to Neptune shareholders of a majority of its equity interest in Sprout Organics, an organic baby food and toddler brand. Upon completion of the spinout, which would follow the previously announced exchange by Neptune of existing Sprout debt for Sprout equity, pursuant to the term sheet entered into with Morgan Stanley (MS) as previously announced on August 17, 2023, it is anticipated that Neptune would spinout a majority of its equity interest in Sprout to current Neptune shareholders, and Neptune would keep a retained interest of approximately 10-15%. The Company believes there are many benefits in proceeding with the contemplated spinout transaction, including reducing Neptune’s operating costs and cash requirements and generally reducing Neptune’s debt exposure, such that Neptune’s overall financial position and cash flows would be improved. Neptune will provide updates when further details of the proposed spinout transaction are determined. Neptune continues to evaluate additional available strategic options for the Company to unlock and maximize shareholder value, including strategic business and financial alternatives, which may include, but is not limited to, the monetization of assets, strategic partnerships, etc. The completion of the proposed spinout transaction and contemplated distribution of Sprout shares to Neptune shareholders are subject to a number of conditions, including the completion of legal and tax structuring analyses, completion of financial analysis, determination of the structure of Sprout, determination of final details of the transaction, settlement of the board and management team for Sprout, required regulatory approvals, any required shareholder approval, Neptune’s compliance with its debt agreements, and the listing of the Sprout shares on a stock exchange. There is no certainty that the foregoing conditions will be satisfied or that the spinout transaction will be completed on the terms proposed or at all. The Board of Neptune may determine to not proceed with the transaction should there be a change in market conditions or investor interest or should another opportunity arise that would be deemed to better enhance value to Neptune stakeholders.