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Flower One Announces $10.1M USD Financing and Successful Loan Modification to Term Debt
Rhea-AI Impact
(Moderate)
Rhea-AI Sentiment
(Positive)
Tags
Rhea-AI Summary
Flower One Holdings Inc. (CSE: FONE, OTCQX: FLOOF) announced a $10.1M term loan from an existing shareholder, bolstering its financial position as it restructures debt. The company modified its $30M term debt agreement to lower monthly interest from 14% to 10%, which will aid in cash flow improvements. Key executive salary reductions were enacted to support restructuring efforts amid ongoing recovery from COVID-19 in Nevada. The loan modification is exempt from formal valuation requirements under Multilateral Instrument 61-101 due to financial hardship.
Positive
Secured $10.1M term loan to support operations.
Reduced monthly interest on $30M term debt from 14% to 10%.
Executive salary reductions to enhance cash preservation efforts.
Negative
None.
LAS VEGAS--(BUSINESS WIRE)--
Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE: FONE) (OTCQX: FLOOF) (FSE: F11), the leading cannabis cultivator and producer in Nevada, today announced a term loan financing with an existing shareholder for aggregate proceeds of $10.1M USD (the “Term Loan”). In addition, the Company has made further advancements in its ongoing debt restructuring through an additional loan modification agreement (the “Loan Modification Agreement”) with its term lender and its affiliates.
“With the closing of this debt financing and successful loan modification, we can complete the immediate facility improvements required that will better position the company for long term success as we prepare for a strong recovery from COVID-19 in Nevada. Both closings are very strong indicators of the confidence and belief our financial partners have in Flower One and our ability to continue to successfully execute on our turnaround plan,” said Kellen O’Keefe, President & CEO 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”) with respect to the Company’s existing $30M term debt (the “Term Debt”), secured by the facility at 3950 N. Bruce St., North Las Vegas, Nevada. Through the Loan Modification Agreement, the Company would: (i) receive the Term Loan, (ii) capitalize the Payment in Kind (PIK) Interest upon the completion of the loan, and (iii) reduce the monthly interest payable from 14% to 10%, with the balance of interest of 4% to be payable upon the earlier of the Maturity Date (June 30, 2023), in the event of default or earlier payoff of the Term Debt.
The Company’s receipt of the Term Loan was facilitated by a participant’s purchase of the interest in the Term Debt (the “Participation Interest”) from the Term Lender in the amount of $10.1M.
The Flower One executive team, consisting of its CEO/President, Executive Vice President and CFO, have agreed to immediate salary reductions to support the Company’s ongoing restructuring and cash preservation efforts. In addition, the Company’s Board of Directors have also elected to receive a reduction to their cash compensation. The Company has taken multiple measures to reduce its overall operating expenses by introducing automation and new equipment in multiple areas including but not limited to packaging, pre-roll, and vape-filling.
“Reducing both our cost of capital and interest obligations greatly improves our cash flow and advances Flower One on our path to profitability,” said Araxie Grant, Flower One’s CFO. “We appreciate the support of our term lender as they continue to work with us to find creative solutions that allow us the runway required to achieve positive cash flow.”
The Company has determined that the Loan Modification Agreement and Term Loan are exempt from the formal valuation and minority approval requirements applicable to related party transactions under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”) pursuant to the financial hardship exemptions set forth in Sections 5.5(g) and 5.7(1)(e) of MI 61-101.
About Flower One Holdings Inc.
Flower One is the largest cannabis cultivator, producer, and full-service brand fulfillment partner in the state of Nevada. By combining more than 20 years of greenhouse operational excellence with best-in-class cannabis operators, Flower One offers consistent, reliable, and scalable fulfillment 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 in-house brand, NLVO, and more). Flower One currently produces a wide range of products from flower, full-spectrum oils, and distillates to finished consumer packaged goods, including a variety of: pre-rolls, concentrates, edibles, topicals, and more for top-performing brands in cannabis. Flower One’s Nevada footprint includes the Company’s flagship facility, a 400,000 square-foot high-tech greenhouse and 55,000 square-foot production facility, as well as a second site with a 25,000 square-foot indoor cultivation facility and commercial kitchen. Flower One has built an industry-leading team focused on becoming the first high-quality, low-cost brand fulfillment partner.
The Company’s common shares are traded 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.
Cautionary Note 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 statements”). Such 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 from any future actual results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes,” “belief,” “expects,” “intends,” “anticipates,” “potential,” “should,” “may,” “will,” “plans,” “continue” or other similar expressions to be uncertain and forward-looking.
Forward-looking statements may include, without limitation, statements pertaining to: the use of proceeds; the Company’s ability to complete immediate facility improvements and that such facility 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 on its “turnaround plan”; the Company’s ability to improve or achieve positive cash flow and profitability; expectation of continued or improved financial performance growth of the Company; statements relating to the Company’s position as a leader in the Nevada cannabis market and anticipated sales and record revenue; the Company’s leadership as a cannabis cultivator, producer, innovator and full-service brand fulfillment partner; and the production of a wide range of products for the nation’s top-performing brands.
The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement, the “Cautionary Statement regarding Forward-Looking Information” section contained the Company’s management’s discussion and analysis for the three and six months ended September 30, 2021 (the “MD&A”). All forward-looking statements in this press release are made as of the date of this press release. The forward-looking statements contained herein are also subject generally to assumptions and risks and uncertainties that are described from time to time in the Company’s public securities filings with the Canadian securities commissions, including the Company’s MD&A. 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 can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended.
Although the Company believes that any forward-looking information and statements 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 any such forward-looking information and statements will prove to be accurate, and accordingly readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance upon such forward-looking information and statements. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this press release are made as of the date of this release. Flower One disclaims and does not undertake any intention or obligation to update or revise any such 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 THEIR REGULATIONS SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
