The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF)
(“
Flowr” or the “
Company”) today
announces that the Company will release its third quarter 2020
results after the close of the financial markets on Tuesday
November 24th, which will be followed by a conference call and
webcast to review these results on Tuesday November 24th, at 5:30pm
Eastern Time.
Conference call and
live webcast details are as
follows:
Webcast:
flowrcorp.com/investors/events-and-presentations/Online
registration:
http://www.directeventreg.com/registration/event/7384863
Conference call and webcast
replay details are as follows:
Toll Free: 1-800-585-8367Toll/International:
1-416-621-4642Passcode: 7384863 Webcast Replay:
flowrcorp.com/investors/events-and-presentations/The telephone
replay of the conference call will be available through midnight on
January 12, 2021.
Amendments to Convertible Debentures and
Early Conversion
The Company also announces today that it is
proposing to amend the terms of its 10.0% subordinated secured
convertible debentures due April 27, 2024 in the aggregate
principal amount of $21,579,000 (the
“Debentures”).
Pursuant to the terms of the arrangement
agreement between the Company and Terrace Global Inc.
(“Terrace Global”) dated October 19, 2020 (the
“Arrangement Agreement”), Flowr and Terrace Global
agreed that as a condition precedent to closing to the arrangement
(the “Arrangement”) certain insiders of Flowr will
convert at least $11.9 million aggregate principal amount of the
Debentures. Assuming that all of the Debentures are exchanged, it
would result in the issuance of 62,311,399 common shares in the
capital of Flowr (“Common Shares”).
Subject to the approval by the TSX Venture
Exchange (“TSXV”), the proposed amendments
(collectively, the “Debenture Amendments”) will
entitle holders of Debentures (each a
“Debentureholder”) who elect to convert Debentures
held during the period (the “Early Conversion
Period”) commencing on the effective date of the Debenture
Amendments and expiring at 5:00 p.m. (Toronto time) on the business
immediately preceding the effective date (the “Early
Conversion Deadline”) of the Arrangement to convert each
$1,000 principal amount of Debentures plus all accrued and unpaid
interest from the issue date of the Debentures to the conversion
date thereof, resulting in the issuance of 2,887 Common Shares per
$1,000 principal amount of Debenture (such 2,887 Common Shares
being issued in respect of the conversion of the principal amount
of Debentures plus the accrued and unpaid interest, hereafter, the
“Early Conversion Opportunity”). The Company will
issue a subsequent press release announcing the start of the Early
Conversion Period once the Debenture Amendments are made
effective.
The Early Conversion Opportunity is being
offered by Flowr pursuant to the Debenture Amendments to all
Debentureholders during the Early Conversion Period. The
Arrangement is expected to close on or about December 22, 2020.
Debentureholders may elect not to convert Debentures pursuant to
the Debenture Amendments. Any Debentures not converted during the
Early Conversion Period and prior to Early Conversion Deadline will
remain outstanding and will continue to be governed by the current
terms of the debenture between the Company and Computershare Trust
Company of Canada dated April 27, 2020 (the
“Indenture”).
To be effective, the Debenture Amendments
require: (i) the approval of holders of no less than 66 2/3% of the
principal amount of the Debentures, which the Company intends to
seek by way of written approval of holders of Debentures; and (ii)
approval of the TSXV. Certain insiders of the Company holding
approximately $11.9 million of the outstanding principal
amount of the Debentures (the “Supporting
Debentureholders”), representing approximately 55%
of the outstanding Debentures, have already agreed to approve or
otherwise support the Debenture Amendments and to convert their
Debentures on such terms.
During the negotiations in respect of the
Arrangement, pursuant to the Arrangement Agreement, the parties
based the conversion of the Debentures on an exchange mechanism
resulting in the Debentures being converted at the closing of the
Arrangement Agreement at a price of $0.50 per share with all
accrued and unpaid interest to maturity being converted. In
accordance with TSXV policy, the parties seek to amend those terms
and the Company has allocated a conversion price equal to $0.37 per
Common Share in respect of the conversion of the principal amount
of the Debentures converted during the Early Conversion Period and
in respect of the accrued and unpaid interest thereon (from the
issue date thereof to the conversion date thereof). The conversion
price, which is at a discount to the current market price of the
Common Shares, reflects the converting Debentureholders’ election
to forego the interest that would otherwise accrue and be payable
to them until the maturity date of the Debentures plus the release
of all security interest granted to such Debentureholder under the
Indenture and related Debenture security documents.
If all outstanding Debentures are converted
pursuant to the Debenture Amendments, the Company will issue
approximately 62,311,399 Common Shares, representing repayment of
the entire $21,579,000 aggregate principal amount of such
Debentures plus all accrued and unpaid interest thereon from the
issue date thereof to the conversion date thereof. If only the
Supporting Debentureholders convert the Debentures pursuant to the
Debenture Amendments, the Company will issue approximately
34,241,094 Common Shares.
Certain of the Company’s directors, officers,
and holders of more than 10% of the outstanding Common Shares, hold
Debentures and the Debenture Amendments therefore constitute a
“related party transaction” as defined in Multilateral Instrument
61-101 – Protection of Minority Security Holders in Special
Transactions (“MI 61-101”). In accordance with
Section 5.4(1) of MI 61-101, the Company is not required to obtain
a formal valuation for the Debenture Amendments as the transaction
does not fall within one of the prescribed categories of related
party transaction under MI 61-101. In addition, the Company is
exempt from the requirement to obtain minority approval for the
Debenture Amendments as it is relying on the financial hardship
exemption pursuant to Section 5.7(e) of MI 61-101. In relying on
the financial hardship exemption, the board of directors of the
Company (the “Board”) reviewed the terms of the
Debenture Amendments and evaluated them in the context of the
current and prospective financial position of the Company. The
Board (including all of the Company’s independent directors who are
independent in respect of the Debentures Amendments) unanimously
determined that the Company is in serious financial difficulty, the
Debenture Amendments and the transactions contemplated thereby are
designed to improve the financial position of the Company and the
Debenture Amendments are reasonable in the current circumstances of
the Company.
About The
Flowr Corporation
The Flowr Corporation is a Toronto-headquartered
cannabis company with operations in Canada, Europe, and
Australia. Its Canadian operating campus, located in Kelowna,
BC, includes a purpose-built, GMP-designed indoor cultivation
facility; an outdoor and greenhouse cultivation site; and a
state-of-the-art R&D facility. From this campus, Flowr
produces recreational and medicinal products.
Internationally, Flowr intends to service the global medical
cannabis market through its subsidiary Holigen, which has a license
for cannabis cultivation in Portugal and operates GMP licensed
facilities in both Portugal and Australia.
Flowr aims to support improving outcomes through
responsible cannabis use and, as an established expert in cannabis
cultivation, strives to be the brand of choice for consumers and
patients seeking the highest-quality craftsmanship and product
consistency across a portfolio of differentiated cannabis
products.
For more information, please visit flowrcorp.com
or follow Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr
Corporation.
On behalf of The Flowr Corporation:Vinay
ToliaCEO and Director
CONTACT INFORMATION:
INVESTORS & MEDIA:Thierry ElmalehHead of Capital
Markets(877) 356-9726 ext.
1528thierry@flowr.caForward-Looking Information and
Statements
This press release contains “forward-looking
information” within the meaning of Canadian securities laws, which
may include but is not limited to statements made concerning: the
proposed Debenture Amendments and the completion and timing
thereof; the completion of the Arrangement; receipt of approval
from the TSX Venture Exchange and Debentureholders for the
Debenture Amendments; the conversion of Debentures by
Debentureholders; the issuance of Common Shares upon conversion of
the Debentures; and the anticipated release date for the Company’s
third quarter 2020 financial results. Often, but not always,
forward-looking information can be identified by the use of words
such as “plans”, “is expected”, “expects”, “scheduled”, “intends”,
“contemplates”, “anticipates”, “believes”, “proposes” or variations
(including negative and grammatical variations) of such words and
phrases, or state that certain actions, events or results “may”,
“could”, “would”, “might” or “will” be taken, occur or be achieved.
Such information and statements are based on the current
expectations of Flowr’s management and are based on assumptions and
subject to risks and uncertainties. Although Flowr’s management
believes that the assumptions underlying such information and
statements are reasonable, they may prove to be incorrect. The
forward-looking events and circumstances discussed in this press
release may not occur by certain specified dates or at all and
could differ materially as a result of known and unknown risk
factors and uncertainties affecting Flowr, including risks relating
to: the proposed Debenture Amendments and the completion and timing
thereof; the completion of the Arrangement, receipt of approval
from the TSX Venture Exchange and Debentureholders for the
Debenture Amendments; the conversion of Debentures by
Debentureholders; and the issuance of Common Shares upon conversion
of the Debentures; the Company being unable to release its third
quarter 2020 financial results on the anticipated timeline; general
economic and stock market conditions; adverse industry events; loss
of markets; future legislative and regulatory developments in
Canada and elsewhere; the cannabis industry in Canada generally;
the ability of Flowr to implement its business strategies; Flowr’s
inability to produce or sell premium quality cannabis, risks and
uncertainties detailed from time to time in Flowr’s filings with
the Canadian Securities Administrators; the Company’s inability to
raise capital or have the liquidity to operate or advance its
strategic initiatives and many other factors beyond the control of
Flowr.
Although Flowr has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking information or statements, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking information
or statement can be guaranteed. Except as required by applicable
securities laws, forward-looking information and statements speak
only as of the date on which they are made and Flowr undertakes no
obligation to publicly update or revise any forward-looking
information or statements, whether as a result of new information,
future events or otherwise. When considering such forward-looking
information and statements, readers should keep in mind the risk
factors and other cautionary statements in Flowr’s Annual
Information Form dated April 29, 2020 (the “AIF”) and filed with
the applicable securities regulatory authorities in Canada. The
risk factors and other factors noted in the AIF could cause actual
events or results to differ materially from those described in any
forward-looking information or statements.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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