Flower One Announces US$10.1 Million Financing and Successful Term Debt Loan Modification
LAS VEGAS–(BUSINESS WIRE)–Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE: FONE) (OTCQX: FLOOF) (FSE: F11), Nevada’s leading cultivator and producer of cannabis, today announced a term loan financing with an existing shareholder for aggregate proceeds of US$10.1 million (the “Term Loan”). In addition, the Company has made further progress in restructuring its outstanding debt through a supplemental loan modification agreement (the “Loan Modification Agreement”) with its term lender and affiliates.
“With the closing of this debt financing and the successful loan modification, we can complete the immediate necessary facility improvements that will better position the business for long-term success as we prepare for a strong recovery from COVID-19. in Nevada. Both closings are very strong indicators of our financial partners’ confidence and belief in Flower One and our ability to continue to successfully execute our turnaround plan,” said Kellen O’Keefe, President and Chief management of Flower One.
The Company and certain of its subsidiaries have entered into a loan modification agreement with RB Loan Portfolio II, LLC, (the “term lender”) in connection with the Company’s existing $30 million term debt (the “Term Debt”), secured by the facility at 3950 N. Bruce St., North Las Vegas, Nevada. Under the loan modification agreement, the company would: (i) receive the term loan, (ii) capitalize payment-in-kind (PIK) interest at the end of the loan, and (iii) reduce interest monthly installments payable from 14% to 10%, with the balance of 4% interest payable on the earliest maturity date (June 30, 2023), in the event of default or early repayment of the term debt.
The Corporation’s receipt of the Term Loan was facilitated by a Participant’s purchase of the Term Debt Interest (the “Interest”) from the Term Lender for an amount of $10.1 million.
Flower One’s management team, consisting of its CEO/Chairman, Executive Vice President and Chief Financial Officer, has agreed to immediate pay cuts to support the company’s ongoing restructuring and cash preservation efforts. company. In addition, the Company’s Board of Directors has also elected to receive a reduction in its cash compensation. The company has taken several steps to reduce its overall operating expenses by introducing automation and new equipment in several areas, including but not limited to packaging, pre-rolling and vaping filling. .
“Reducing both our cost of capital and our interest obligations significantly improves our cash flow and moves Flower One on the path to profitability,” said Araxie Grant, Flower One’s Chief Financial Officer. “We appreciate the support of our term lender as they continue to work with us to find creative solutions that allow us to have the runway needed to achieve positive cash flow.”
The Company has determined that the Loan Modification Agreement and the Term Loan are exempt from the formal review and minority approval requirements applicable to related party transactions under Multilateral Instrument 61-101 – Protection of holders of minority securities in special transactions (“NI 61-101”) pursuant to the financial hardship exemptions set out in sections 5.5(g) and 5.7(1)(e) of NI 61-101.
About Flower One Holdings Inc.
Flower One is the largest full-service branded cannabis cultivator, producer and fulfillment partner in the State of Nevada. Combining over 20 years of greenhouse operational excellence with best-in-class cannabis operators, Flower One delivers consistent, reliable and scalable execution to a growing number of industry-leading cannabis brands (Cookies, Kiva, Old Pal, Heavy Hitters, Lift Ticket’s, The Clear, HUXTON and Flower One’s leading house brand, NLVO, and more). Flower One currently produces a wide range of products from flowers, full spectrum oils and distillates to finished consumer packaged products, including a variety of: pre-rolls, concentrates, edibles, topicals and more for the most popular brands. cannabis performers. Flower One’s footprint in Nevada includes the company’s flagship facility, a 400,000 square foot high-tech greenhouse and a 55,000 square foot production facility, as well as a second site with an indoor growing facility. of 25,000 square feet and a commercial kitchen. Flower One has built an industry-leading team that aims to become the premier high-quality, low-cost brand fulfillment partner.
The Company’s common shares trade on the Canadian Securities Exchange under the Company’s symbol “FONE”, in the United States on the OTCQX Best Market under the symbol “FLOOF” and on the Frankfurt Stock Exchange under the symbol “F11”. For more information visit: https://flowerone.com.
Caution Regarding Forward-Looking Information
Statements in this press release that are not statements of historical or current fact constitute “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of United States securities laws ( collectively, “forward-looking information” statements”). These forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the Company to be materially different from historical results or any actual future results expressed or implied by these statements. prospective. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to review statements labeled with the terms “believes”, “beliefs”, “expects”, “intends”, “anticipates”. , “potential”, “should”, “may”, “will”, “plan”, “continue” or other similar expressions as uncertain and forward-looking.
Forward-looking statements may include, but are not limited to, statements regarding: product use; the Company’s ability to make immediate facility improvements and whether such improvements will position the Company for long-term success; that a strong recovery from COVID-19 will be achieved by the Company or in Nevada; the Company’s ability to continue to successfully execute its “recovery plan”; the Company’s ability to improve or achieve positive cash flow and profitability; the expectation of continued or improved growth in the Company’s financial performance; statements relating to the company’s position as a leader in the Nevada cannabis market and expected sales and record revenues; the company’s leadership as a full-service cannabis cultivator, producer, innovator and brand fulfillment partner; and producing a wide range of products for the most successful brands in the country.
The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement, the “Caution Regarding Forward-Looking Information” section contains the Company’s MD&A for the three and six months ended September 30 2021. (the “MD&A”). All forward-looking statements contained in this press release are made as of the date of this press release. The forward-looking statements contained herein are also generally subject to assumptions and risks and uncertainties that are described from time to time in the Company’s public filings with Canadian securities commissions, including the Company’s MD&A. the society. Although Flower One has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there may be other factors that cause the results , performance or achievements are not as anticipated, estimated or expected.
Although the Company believes that all forward-looking information and statements contained herein are reasonable, in light of the use of assumptions and the significant risks and uncertainties inherent in such information and statements, there can be no assurance that such information and statements forward-looking statements will prove to be accurate and, accordingly, readers are urged to rely on their own assessment of such risks and uncertainties and not to place undue reliance on such forward-looking information and statements. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements contained in this press release are made as of the date of this release. Flower One disclaims and undertakes no intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATORY SERVICE PROVIDER HAS REVIEWED NOR ACCEPTS RESPONSIBILITY FOR THE SUITABILITY OR ACCURACY OF THIS RELEASE.