Flower One Announces Debt Financing of up to US$30 Million

Published: July 8, 2019

Flower One Holdings Inc. has entered into a debt financing agreement with RB Loan Portfolio II, LLC for up to US$30,000,000.

“With the completion and full planting of our flagship 400,000 square foot greenhouse, we are now in a continuous harvest cycle with our Nevada operations,” said Chief Financial Officer, Geoff Miachika. “This financing will principally support the acceleration of Flower One’s processing, finished goods, and high-volume packaging capabilities, leveraging our adjoining 55,000 square foot production facility to introduce and facilitate the Nevada product launches of our growing portfolio of Brand Partners.”

The Agreement is for a two-year term at a rate of LIBOR plus 8% with interest only payments for the term of the agreement. The Company has the ability to extend the term for a further 6 months and to pre-pay the outstanding debt at any time during the term, subject to a pre-payment penalty. As part of the agreement, RB Loan Portfolio II, LLC and certain assignees will receive, with respect to each advance, a 25%-warrant coverage (the “Warrants”) with the warrants having a term of 30 months. With respect to each advance, the Company will issue the Warrants at an exercise price equal to the greater of (A) the 20-day volume weighted average price (VWAP) of the Common shares of the Company (the “Common Shares”) on the Canadian Securities Exchange from the date of such advance, multiplied by 1.2 with respect to half of such Warrants and 1.4 with respect to the other half; and (B) the closing market price of the Common Shares on the trading day immediately prior to the announcement of such advance.

The Company has done an initial advance of US$20,000,000 and issued 1,139,757 warrants with a strike price of CAD$3.46 and 1,139,757 warrants with a strike price of CAD$4.03.

The Company will use the proceeds from the advance to further invest in its 400,000 square foot greenhouse and for general working capital and operational purposes.