TORONTO, Nov. 15, 2019 /CNW/ – Flower One Holdings Inc. (“Flower One” or the “Company”) (CSE: FONE) (OTCQX: FLOOF), today announced the closing of its previously announced marketed public offering (the “Offering”) of unsecured convertible debenture units of the Company (the “Debenture Units”) for aggregate gross proceeds of $20,850,000, which includes the proceeds from the partial exercise of the Over-Allotment Option (as defined below). In connection with the Offering, the Company issued a total of 20,850 Debenture Units at a price of $1,000 per Debenture Unit (the “Offering Price”).
The Offering was completed pursuant to an agency agreement (the “Agency Agreement”) dated November 8, 2019 with Mackie Research Capital Corporation and Canaccord Genuity Corp., as co-lead agents and joint bookrunners (collectively, the “Lead Agents”), on behalf of a syndicate of agents including Industrial Alliance Securities Inc., Haywood Securities Inc., PI Financial Corp., Echelon Wealth Partners Inc. and Eight Capital (together with the Lead Agents, the “Agents”).
As part of the Offering, the Agents have been granted an over-allotment option (the “Over-Allotment Option”) for up to 30 days after the closing of the Offering, exercisable, in whole or in part at any time and from time to time, to increase the size of the Offering by up to 15% in Debenture Units (and/or the components thereof) on the same terms and conditions of the Offering. Pursuant to the Offering, the Company is pleased to announce additional gross proceeds of $850,000 from the partial exercise of the Over-Allotment Option, representing an additional 850 Debenture Units issued today by the Company. The Agents may from time to time for a period of 30 days as of today exercise the remaining or part of the Over-Allotment Option to cover over-allotments and for market stabilization purposes.
The net proceeds received by the Company from the Offering are intended to be used for: (a) advancing and supporting the continued launch of its Brand Partners’ products into the Nevada market; (b) working capital and general corporate purposes; and (c) initial exploratory costs associated with the Company’s market entry plans for California.
Each Debenture Unit consists of one 9.5% unsecured convertible debenture (the “Convertible Debentures”) maturing three years from the date of issuance and 666 common share purchase warrants of the Company (the “Warrants”). Each Warrant shall entitle the holder thereof to purchase one common share in the capital of the Company (each, a “Common Share”) at an exercise price of $1.55 at any time up to November 15, 2022, subject to certain adjustment and acceleration provisions. If, at any time prior to the expiry date of the Warrants, the volume weighted average trading price of the Common Shares on the Canadian Securities Exchange (the “CSE”), or other principal exchange on which the Common Shares are listed, is greater than $3.10 for 20 consecutive trading days, the Company may deliver a notice to the holders of Warrants accelerating the expiry date of the Warrants to the date that is 30 days following the date of such notice.
The Convertible Debentures shall bear interest at a rate of 9.5% per annum from the date of issue, payable semi-annually in arrears on the last day of June and December in each year and will have a maturity 36 months from the date of issuance (the “Maturity Date”). The principal amount of each Convertible Debenture shall be convertible, for no additional consideration, into Common Shares at the option of the holder at any time prior to the earlier of: (i) the close of business on the Maturity Date, and (ii) the business day immediately preceding the date specified by the Company for redemption of the Convertible Debentures upon a change of control at a conversion price equal to $1.50 (the “Conversion Price”), subject to a mandatory conversion privilege. If the holder elects to convert the Convertible Debentures after January 15, 2020, then the holder will also receive the Effective Interest (as defined herein), payable in cash or Common Shares at a price equal to the daily volume weighted average trading price of the Common Shares on the CSE for the consecutive 20 trading days preceding the date of such election, or a combination of cash and Common Shares, at the Company’s option. The effective interest (“Effective Interest”) is an amount equal to the interest that the holder would have received if the holder had held the Convertible Debentures until the Maturity Date.
Pursuant to the terms of the Agency Agreement, the Company paid the Agents a cash commission equal to 6.0% of the gross proceeds of the Offering, and issued to the Agents 972,027 non-transferable warrants (the “Broker Warrants”) of the Company, each such Broker Warrant exercisable into a Common Share at an exercise price equal to the Conversion Price at any time up to November 15, 2022.
The Convertible Debentures and the Warrants have been approved for listing with the CSE under symbols “FONE.DB.A” and “FONE.WT.A”, respectively and are expected to begin trading as of November 18, 2019.
Neither the Debentures Units (and the Convertible Debentures and the Warrants forming part of the Debenture Units) have been or will be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and such securities may therefore not be offered or sold in the United States or to or for the account or benefit of a person in the United States or a U.S. Person (as defined in Regulation S of the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Debenture Units in any jurisdiction in which such offer, solicitation or sale would be unlawful.
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. Flower One’s flagship 400,000 square-foot greenhouse and 55,000 square-foot production facility is used for large scale cannabis cultivation, processing, and manufacturing. Flower One also owns and operates a second production facility in Las Vegas, with 25,000 square-feet of indoor cultivation and a commercial kitchen that will produce several of the nation’s top-performing edible and beverage brands. Flower One produces a wide range of products ranging from wholesale flower, full-spectrum oils, and distillates to finished consumer packaged goods including flower, pre-rolls, concentrates, edibles, beverages, and topicals for the top-performing brands in cannabis.
The Company’s common shares are traded on the Canadian Securities Exchange under the Company’s symbol “FONE” and in the United States on the OTCQX Best Market under the symbol “FLOOF”. For more information, visit: https://flowerone.com.
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