The Flowr Corporation Announces Third Quarter 2020 Earnings Date & Amendments to Convertible Debentures and Early Conversion

  • Flowr will release third quarter earnings after the close of the financial markets on Tuesday, November 24th, 2020 and will host a conference call to review results on Tuesday, November 24th, 2020 at 5:30 p.m. ET.
  • Flowr announces proposing certain amendments to the Convertible Debentures and Early Conversion.

TORONTO, Nov. 16, 2020 (GLOBE NEWSWIRE) — 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/7384863Conference call and webcast replay details are as follows:

Toll Free: 1-800-585-8367
Toll/International: 1-416-621-4642
Passcode: 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 Tolia
CEO and Director

CONTACT INFORMATION:

INVESTORS & MEDIA:
Thierry Elmaleh
Head of Capital Markets
(877) 356-9726 ext. 1528
thierry@flowr.ca

Forward-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.

SOURCE GLOBENEWSWIRE