Canadian Licensed Producer Flowr Raises $20 Million Through Convertible Note Private Placement

The Flowr Corporation Announces a CAD $20 million Private Placement led by Insiders & Fourth Quarter Earnings Date
  • Flowr announces non-brokered private placement of convertible debenture units of $20 million, with ability to upsize to an aggregate of $25 million
  • Continued support by management and insiders who commit in excess of $10 million, led by Chairman and CEO
  • Group of major insiders agree to a voluntary 1-year lock-up
  • Flowr will release fourth quarter earnings after the close on Wednesday, April 29th, 2020 and will host a conference call to review results on Wednesday, April 29th, 2020 at 5:30pm ET.

TORONTO, April 21, 2020 (GLOBE NEWSWIRE) — The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) (“Flowr” or the “Company”) announced a non-brokered private placement for gross proceeds of CAD$20,000,000 (the “Offering”), with the ability, at the Company’s discretion, to upsize the amount to an aggregate gross proceeds of CAD$25,000,000. The Company expects to use the proceeds of the Offering for general working capital purposes.

Chairman & Chief Strategist Steve Klein and Chief Executive Officer Vinay Tolia are leading the Offering with commitments in excess of $10 million. Management and insiders will continue to own approximately 58% of the shares of the Company post financing on a fully diluted basis (including equity incentives).

In addition, certain directors, officers, employees and executives of Flowr, including Chairman & Chief Strategist Steve Klein, Chief Executive Officer Vinay Tolia, Founder and Managing Partner Thomas Flow, Managing Director, Europe Pauric Duffy and Managing Director, Australia & Asia Pacific Peter Comerford who currently collectively control approximately 58% of the Company have agreed to voluntary lock-up agreements (the “Lock-Up Agreements”) in connection with the closing of the Offering whereby all shares held by these shareholders will be subject to restrictions on sale until released under the terms of the Lock-Up Agreements on the 12-month anniversary of the closing date of the Offering (the “Closing Date”).

The Offering consists of units of the Company (the “Units”) at a price of CAD$1,000.00 per Unit. Each Unit consists of one subordinated secured debenture of the Company (each, a “Debenture”) and one common share (“Common Share”) purchase warrant (each, a “Warrant”).

Each Debenture is comprised of CAD$1,000.00 principal amount of convertible debentures of the Company. The Debentures will bear interest at a rate of 10.0% per annum from the Closing Date, calculated semi-annually in arrears on June 30 and December 31 of each year. Interest will, subject to TSX Venture Exchange (“TSXV”) approval, be paid annually in Common Shares and paid on December 31 of each year, with the last interest payment to be paid on the fourth anniversary of the Closing Date (the “Maturity Date”). Subject to TSXV approval, the conversion price with respect to the Common Shares issued as payment in kind on account of interest shall be the market price of the Common Shares on the business day immediately prior to the conversion date of such interest payment. Notwithstanding the foregoing, in the event that the TSXV does not approve the payment of interest in Common Shares for any particular interest payment period, such interest shall instead be paid in cash pursuant to the debenture indenture to be entered into between the Company and the debentureholders.

The Debentures will be convertible into Common Shares at the option of the debentureholder at any time and from time to time prior to the Maturity Date upon such holder providing five (5) business days’ notice to the Company. The conversion price with respect to the Common Shares issued upon conversion of Debentures is $0.58 per Common Share. Debentureholders converting their Debentures will be entitled to receive accrued and unpaid interest ‎‎thereon ‎for the ‎period from and including the date of the latest interest payment ‎‎date, to and ‎including the date of conversion‎.

Any outstanding principal amount of the Debentures not converted prior to the Maturity Date will be repaid by the Company, at the election of the holders of the Debentures, in cash or Common Shares on the Maturity Date.

Each Warrant entitles the holder thereof to acquire one Common Share (each, a “Warrant Share”) at an exercise price of $0.76 per Warrant Share (the “Exercise Price”) for a period of 36 months from the closing date (the “Expiry Date”). Any Warrants not exercised prior to the Expiry Date shall be deemed to be void and of no further force and effect.

The Debentures will rank subordinate to any and all current secured indebtedness and senior to any and all current and future unsecured indebtedness of the Company and any and all future secured indebtedness of the Company.

The closing of the Offering is currently expected to occur on or about April 23, 2020, but is at the discretion of the Company and is subject to certain conditions including, but not limited to, receipt of approval of the TSXV as well as finalization and execution of definitive documentation.

AltaCorp Capital Inc. (“AltaCorp”) is participating in this Offering as an advisor to the Company. AltaCorp is a subsidiary of ATB Financial (“ATB”), which entered into a credit agreement with the Company for access to debt financing of up to CAD$25 million on November 18th, 2019 (the “Credit Agreement”). ATB has consented to the Offering pursuant to the terms of the Credit Agreement. As part of the Offering, the Company and ATB have agreed to amend the terms of the Credit Agreement (the “Amending Agreement”). The Amending Agreement amends, among other things, the following:

  • the CAD$3.5 million cash collateral account put into place on the closing of the Credit Agreement will be used to permanently paydown the credit facilities under the Credit Agreement on a pro-rata basis;
  • the inclusion of certain cash-flow reporting requirements and additional certification requirements;
  • the reduction of certain baskets under the Credit Agreement, including permitted financial assistance and permitted investment baskets being reduced from CAD$15 million to CAD$9.5 million; and
  • the entering into of a subordination agreement between the senior lenders under the Credit Agreement and the debenture holders under the Offering.

Despite the challenging capital markets environment, we are extremely fortunate to announce this financing and to have continued support from management and insiders who have been instrumental in Flowr’s founding, strategic direction and financing since inception.

Vinay Tolia, Flowr’s CEO

“This capital is expected to enable Flowr to become cash flow positive in H2 2020 as we build on our focus of delivering premium dry flower to the Canadian marketplace driven by our flagship product BC Pink Kush and other high THC strains we will be launching imminently as all of our 20 grow rooms in our Kelowna 1 facility will soon be in harvest cycles. We expect to continue to achieve premium price points in the market with our optimized library of high THC strains. Future revenue growth will be further enhanced with contributions from Holigen given the recent receipt of our EU GMP license in Portugal.”

A material change report in respect of the Offering is expected to be filed less than 21 days before the expected Closing Date, which the Company believes is reasonable in the circumstances in order to facilitate an expeditious closing and quicker improvement in the Company’s balance sheet and financial position.


The Company will release its fourth quarter 2019 results after the close of the financial markets on Wednesday, April 29th, 2020, which will be followed by a conference call and webcast to review these results on Wednesday, April 29th at 5:30pm Eastern Time.

Conference call and webcast details are as follows:

Toll Free: 1-833-227-5845
Toll/International: 1-647-689-4072

Conference call replay details are as follows:

Toll Free: 1-800-585-8367
Toll/International: 1-416-621-4642
Passcode: 6296956

The replay of the conference call will be available through midnight on Wednesday, May 6, 2020.

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 that is currently under construction. 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 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 or follow Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr Corporation.

Original Press Release

Published by NCV Newswire
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