Fire & Flower Holdings (TSX: FAF) this morning announced that it is cleaning up its balance sheet. The company has managed to convert a notable $52 million in debt sitting on its balance sheet to that of equity, placing the company in a much stronger financial position.
The first debt to be converted is $28.5 million in outstanding principal issued in April 2020. The debt, which contains an interest rate of 8.0% and is secured against assets of the company, was able to be converted as a function of the strengthen seen in the equity price as of late and the forced conversion clause attached to the debt.
With the equity trading over $1.25 for a period of ten days on a volume weighted basis, the company informed debtholders that the debt would be converted to equity. A total of 59.2 million shares are to be issued on March 3 in connection with the forced conversion of debt.
Following this conversion, the firm will then convert $23.6 million in principal amount of 8.0% unsecured debentures that were originally issued to a subsidiary of Alimentation Couche-Tard in 2019. This conversion is possible as a result of $20.0 million in debt being removed from the firms books, as well as the price of the equity trading over $1.00 on a volume weighted basis for a a twenty day period. Following the conversion, Alimentation will have a 19.9% equity stake in the firm, after the issuance of 31.9 million shares for the debt.
The conversions are to be completed by March 10, 2021.
Fire & Flower Holdings last traded at $1.38 on the TSX.
Information for this briefing was found via Sedar and Fire and Flower Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
