/NOT FOR DISSEMINATION IN THE UNITED STATES OR
FOR DISTRIBUTION TO UNITED STATES
WIRE SERVICES/
Proposed $52
million conversion will significantly
improve balance sheet, reduce interest costs and
bring Circle K owner, Alimentation Couche-Tard, up to 19.9%
equity stake
TORONTO, March 2, 2021 /CNW/ - Fire & Flower
Holdings Corp. ("Fire & Flower" or the
"Company") (TSX: FAF) (OTCQX: FFLWF), today
announced plans to convert all of the Company's approximately
$28.5 million outstanding principal
amount of 8.0% secured convertible debentures issued in
April 2020 (the "April 2020 Debentures") as well as the
conversion of approximately $23.6
million principal amount of 8.0% unsecured convertible
debentures issued to 2707031 Ontario Inc., as a wholly-owned
indirect subsidiary of Alimentation Couche-Tard Inc. (collectively
"ACT"), the owners of Circle K, in July 2019 (the "ACT Debentures").
Post conversion, the Company will have converted a total of
approximately $52 million principal
amount of debt (plus the accrued and unpaid interest thereon) to
equity and ACT will hold 19.9% of the issued and outstanding shares
of Fire & Flower.
Shawn Dym, Director and Founder
of Green Acre Capital LP, commented, "We, along with other holders
of the April 2020 Debentures,
voluntarily agreed to amend the debentures to allow for the
conversion well in advance of their maturity as we felt it was
consistent with our support of the Company as shareholders rather
than creditors. As management continues to execute on its growth
plans and build shareholder value, we are supportive of de-levering
the balance sheet to aid the Company's expansion into new
high-growth markets. The Company has sufficient resources to
grow its store count in Canada and
expand its leading position in Canadian cannabis retail.
Furthermore, we believe it is important to show the strength in its
financial position as it pursues a listing on the Nasdaq and sets
out for US brand expansion through its recently announced licensing
deal with American Acres."
"These conversions will significantly improve our balance sheet,
reduce interest costs and support enhanced access to non-dilutive
financing with our banking partner, ATB Financial," remarked
Trevor Fencott, Chief Executive
Officer of Fire & Flower. "We are very pleased with the
support of our partners and welcome ACTs increased 19.9% ownership
stake. We look forward to continuing to aggressively pursue our
growth strategy in both Canada and
the United States," concluded
Fencott.
Transaction Details:
The Company and Computershare Trust Company of Canada (the "Trustee") entered into a
supplemental indenture (the "Supplemental Indenture") to the
debenture indenture entered into between the Company and the
Trustee dated April 28, 2020, as
supplemented on July 23, 2020
(collectively, the "Indenture"), which governs the
April 2020 Debentures. A copy of the
Supplemental Indenture will be made available on the Company's
SEDAR profile at www.sedar.com.
The Supplemental Indenture amends the Indenture such that the
Company may elect to force the conversion of all, but not less than
all, of the April 2020 Debentures at
any time provided that there is no event of default under the
Indenture and the ten (10) day volume weighted average daily
trading price ("VWAP") per common share of the Company
(the "Common Shares") on the Toronto Stock Exchange (the
"Exchange") is greater than $1.25 (the "Forced Conversion"). If
the Forced Conversion occurs prior to July
1, 2021, an amount equal to the interest that would have
accrued on the principal amount of such outstanding April 2020 Debentures from the date of the Forced
Conversion (the "Conversion Date") up to June 30, 2021 (the "Accelerated Interest")
shall accrue and be converted into Common Shares on the Conversion
Date.
Upon entering into of the Supplemental Indenture, the Company
exercised the Forced Conversion with a Conversion Date of
March 3, 2021. On the
Conversion Date, the Company will issue an aggregate of
approximately 59,231,328 Common Shares in respect of
the conversion of the remaining $28.5
million principal amount of April
2020 Debentures and all accrued and unpaid interest thereon
(including the Accelerated Interest).
Following completion of the Forced Conversion, the Company
intends to convert approximately $23.6 million principal amount (plus the
accrued and unpaid interest thereon) of the ACT Debentures.
Pursuant to the terms of the ACT Debentures, the Company may elect
to force the conversion of all or part of the ACT Debentures (plus
any accrued and unpaid interest thereon) at a price of $0.75 per Common Share, in the event that certain
conditions precedent are satisfied, including: (a) the Common
Shares having a 20-day VWAP of at least $1.00 at the time the Company gives its
conversion notice to ACT and on the date of conversion; and (b) not
less than $20 million principal
amount of April 2020 Debentures have
been converted into Common Shares. The conversion date of the
ACT Debentures is expected to be on or around March 10, 2021 and the Company expects to issue
an aggregate of approximately 31,932,547 Common Shares to ACT in
connection with such conversion.
About Fire & Flower
Fire & Flower is a leading purpose-built, independent adult-use
cannabis retailer focused on the Canadian market and international
expansion opportunities. The Company guides consumers through the
complex world of cannabis through education-focused, best-in-class
retailing while the HifyreTM digital platform connects
consumers with cannabis products. The Company's leadership team
combines extensive experience in the cannabis industry with strong
capabilities in retail operations.
Fire & Flower is a multi-banner cannabis retail operator
that owns and operates the Fire & Flower, Friendly Stranger,
Happy Dayz and Hotbox brands.
Fire & Flower Holdings Corp. owns all issued and outstanding
shares in Fire & Flower Inc. and Friendly Stranger Holdings
Corp., licensed cannabis retailers that own and operate cannabis
retail stores in the provinces of Alberta, Saskatchewan, Manitoba and Ontario, and the Yukon territory.
Through the strategic investment of Alimentation Couche-Tard
Inc. (owner of Circle K convenience stores), the Company has set
its sights on the global expansion as new cannabis markets
emerge.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This news release contains certain forward-looking
information within the meaning of applicable Canadian securities
laws ("forward-looking statements"). All statements other than
statements of present or historical fact are forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "achieve",
"could", "believe", "plan", "intend", "objective", "continuous",
"ongoing", "estimate", "outlook", "expect", "project" and similar
words, including negatives thereof, suggesting future outcomes or
that certain events or conditions "may" or "will" occur. These
statements are only predictions. Forward-looking statements in this
news release include, but are not limited to, statements in respect
of the timing of the conversion of the April
2020 Debentures, the conversion of the ACT Debentures and
potential listing on the Nasdaq.
Forward-looking statements are based on the opinions and
estimates of management of Fire & Flower at the date the
statements are made based on information then available to the Fire
& Flower. Various factors and assumptions are applied in
drawing conclusions or making the forecasts or projections set out
in forward-looking statements, including with respect to the
conversion of the April 2020
Debentures and ACT Debentures. Forward-looking statements are
subject to and involve a number of known and unknown, variables,
risks and uncertainties, many of which are beyond the control of
Fire & Flower, which may cause Fire & Flower's actual
performance and results to differ materially from any projections
of future performance or results expressed or implied by such
forward-looking statements. Such factors, among other things,
include: final regulatory and other approvals or consents;
fluctuations in general macroeconomic conditions; fluctuations in
securities markets; the trading price of the Common Shares, the
impact of the COVID-19 pandemic; the ability of the Company to
successfully achieve its business objectives and political and
social uncertainties.
No assurance can be given that the expectations reflected in
forward-looking statements will prove to be correct. Although the
forward-looking statements contained in this news release are based
upon what management of the Company believes, or believed at the
time, to be reasonable assumptions, the Company cannot assure
shareholders that actual results will be consistent with such
forward-looking statements, as there may be other factors that
cause results not to be as anticipated, estimated or intended.
Readers should not place undue reliance on the forward-looking
statements and information contained in this news release.
Additional information regarding risks and uncertainties relating
to the Company's business are contained under the heading "Risk
Factors" in the Company's annual information form dated
April 29, 2020 and the heading "Risks
and Uncertainties" in the management discussion and analysis for
the thirteen and thirty-nine weeks ended October 31, 2020 filed on its issuer profile on
SEDAR at www.sedar.com.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein.
SOURCE Fire & Flower Holdings Corp.