Pauric Duffy (“
PD”) and Peter Comerford
(“
PC”) announce today that certain Series 1 voting
convertible redeemable preferred shares (the “
Preferred
Shares”) in the capital of The Flowr Corporation
(“
Flowr” or the “
Issuer”) have
been converted into Common Shares (as defined below). PD and PC
previously acquired, through DFT Trading Limited (“
Pauric
Holdco”) and Pleiades Trading Ltd. (“
Peter
Holdco”), respectively, indirect ownership of an aggregate
of 32,632,545 Preferred Shares (the “
Consideration
Shares”) as partial consideration for the sale of their
respective interests in Holigen Holdings Limited
(“
Holigen”). The sale of Holigen to Flowr (the
“
Acquisition”) was completed pursuant to a share
purchase agreement dated June 24, 2019, as amended, between Flowr
(as purchaser), Pauric Holdco and Peter Holdco (together, the
“
Vendors”) (as vendors), and Pleiades Holdings
Ltd. (“
Peter Topco”), DFT Holdings Limited
(“
Pauric Topco”), PC and PD (as guarantors) (the
“
SPA”). In connection with the SPA, the Vendors
entered into a share conversion agreement with Flowr (the
“
Conversion Agreement”) that sets out the process
for, and conditions to, conversion of the Consideration Shares into
common shares of the Issuer (“
Common Shares”).
This press release is being issued pursuant to Canadian early
warning requirements.
On April 1, 2020, pursuant to the terms of the
Conversion Agreement, 7.5% of the Consideration Shares (the
“Converted Shares”) converted to Common Shares
(the “Conversion”) in connection with the deemed
completion of the Portugal Planting Milestone (Sintra) (as such
term is defined in the Conversion Agreement).
The Converted Shares, being 2,447,441 Preferred
Shares, immediately prior to the Conversion, represent
approximately 19% of the issued and outstanding Preferred Shares on
a non-diluted basis.
Together, immediately following the Conversion,
PD and PC (including, for certainty their joint actors) will
beneficially own, and have control and direction over 10,605,578
Preferred Shares, representing all of the issued and outstanding
Preferred Shares.
No consideration will be paid or received in
connection with the Conversion.
The conversion of the Converted Shares will be
for investment purposes. The Preferred Shares are subject to the
terms of escrow agreements dated as of the date of closing of the
Acquisition, in each case, among the applicable Vendor, Flowr and
The Laurel Hill Advisory Group Company, as escrow agent, (the
“Escrow Agreements”). In addition, in connection
with the closing of the Acquisition, each Vendor has entered into a
lock-up agreement with Flowr (collectively, the “Vendor
Lock-Up Agreements”), the Vendors have entered into the
Conversion Agreement and PD has entered into a governance agreement
with Pauric Holdco and Flowr (the “Governance
Agreement”). Subject to the terms of the SPA, the Escrow
Agreements, the Vendor Lock-Up Agreements, the Conversion Agreement
and the Governance Agreement, PD, PC and their respective joint
actors may, from time to time and at any time, acquire, as
applicable, additional Preferred Shares and/or Common Shares and/or
other equity, debt or other securities or instruments of Flowr in
the open market or otherwise, as applicable, and reserve the right
to dispose of any or all of the Preferred Shares and/or Common
Shares in the open market or otherwise at any time and from time to
time, and to engage in similar transactions with respect to the
Preferred Shares and/or Common Shares, the whole depending on
market conditions, the business and prospects of Flowr and other
relevant factors, including compliance with applicable securities
laws and the terms of the relevant agreements described herein.
Pursuant to the SPA, Flowr appointed PD to the
Flowr Board following the closing of the Acquisition.Board Observer
RightUntil the earlier of (i) the first business day on which PD
beneficially owns Preferred Shares and Common Shares (the
“Shares”) representing less than 10% of the then
issued and outstanding Common Shares on a partially diluted basis,
and (ii) the first business day on which PD ceases to be a director
of Flowr, PD has the right to appoint one non-voting observer to
attend and observe meetings of the Flowr Board, subject to such
observer first providing Flowr a confidentiality agreement in form
and content satisfactory to Flowr, acting reasonably.
Consent Right
Until the earlier of the first business day on
which (i) PD beneficially owns Shares representing less than 13% of
the then issued and outstanding Common Shares on a partially
diluted basis, and (ii) the conversion or redemption of all of the
Preferred Shares held by PD and his affiliates, the completion of a
Consent Transaction (as defined herein) by Flowr will require the
prior written consent of PD (not to be unreasonably withheld). This
consent right, however, will not restrict the board of directors of
Flowr (the “Flowr Board”) from exercising its
fiduciary duties to the Issuer. “Consent
Transaction” means either (A) a merger, amalgamation,
arrangement, reorganization, or other business combination or
similar transaction involving Flowr and/or any of its subsidiaries
in which (i) the consent or approval of the Flowr Board and the
holders of Common Shares is required to complete the transaction,
(ii) less than 10% of the total consideration payable pursuant to
the transaction is cash consideration, and (iii) the holders of
Common Shares on a partially diluted basis immediately before the
completion of the transaction would hold less than 50% of the
common shares or other equity securities of Flowr’s successor or of
the continuing or surviving entity immediately following the
completion of such transaction, assuming the conversion of all of
the Preferred Shares and Class A preferred shares of The Flowr
Canada Holdings ULC immediately prior to the completion of the
transaction; or (B) (i) a share sale transaction that would result
in a direct or indirect change of control of RPK Biopharma,
Unipessoal Lda. (“RPK”) or TCann Pty Ltd.
(“TCann”); or (ii) the sale of all or
substantially all of the assets of RPK or TCann (in the case of (i)
and (ii), to a person that is not an affiliate of Flowr, but for
avoidance of doubt does not include an internal reorganization the
result of which would have Flowr continue to have ultimate control
of such entities).
Standstill
Until the first business day on which PD and his
affiliates collectively beneficially own Shares (including other
equity rights convertible into shares or equity interests of Flowr)
representing less than 5% of the then issued and outstanding Common
Shares (on a partially diluted basis), PD and his affiliates will
not, directly or indirectly, without the prior written consent or
waiver by Flowr: (i) acquire, or agree to acquire, or make any
proposal to acquire, directly or indirectly, by means of purchase,
merger, consolidation, take-over bid, exchange offer, tender offer,
business combination, arrangement, amalgamation or in any other
manner, whether in one transaction or a series of transactions, any
securities or assets of Flowr or any of its subsidiaries, other
than conversion of Preferred Shares into Common Shares through the
process set out in the Conversion Agreement; or (ii) undertake
certain additional actions that may affect control of or which are
hostile to Flowr (including, among others as set out in the
Governance Agreement, initiating any shareholder proposals or
soliciting proxies, commencing any take-over bid or similar
transaction; acting alone or in concert with others to control
Flowr or any of its subsidiaries, assisting with the foregoing or
announcing any intention with respect to the foregoing).
Voting
Subject to compliance with applicable laws, in
the event that the holders of Preferred Shares are entitled to vote
as a separate class on a shareholder proposal, PD has agreed to
vote any Preferred Shares (and use commercially reasonable efforts
to cause all of the Preferred Shares owned or beneficially owned by
PD or any of his affiliates or over which PD or any of his
affiliates has voting control or the power to direct voting
control), to be voted in accordance with a recommendation of the
Flowr Board.
Flowr’s head office is located at 60 Adelaide
Street East, Suite 1000, Toronto, Ontario, M5C 3E4. A copy of the
early warning reports with respect to the foregoing will appear on
Flowr’s profile on the System for Electronic Document Analysis and
Retrieval at www.sedar.com. A copy of the early warning report with
respect to PD may be obtained by contacting PD at +351 219 259 507.
A copy of the early warning report with respect to PC may be
obtained by contacting PC at +351 219 259 507.
Pauric Duffy
Lara Buildings, Level 1 Guzeppi Calleja Street Iklin IKL
1264Malta
Peter Comerford
Lara Buildings, Level 1 Guzeppi Calleja Street Iklin IKL
1264Malta
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