The Flowr Corporation (TSXV: FLWR) this morning announced a secured convertible debenture private placement for gross proceeds of $20.0 million, of which the firms Chairman and Chief Strategist, as well as the firms CEO, will be subscribing for over $10.0 million.
The secured debenture will see units sold at a price of $1000 each, and will consist of one subordinated secured debenture and one common share purchase warrant. Each debenture bears interest at a rate of 10% per annum, and is convertible into common shares of the company at a price of $0.58 per share. Interest, which is paid semi annually in arrears, will be paid out in common shares at the price of the previous days close at time of payment.
The company does not directly state the term of the debentures, however they are believed to be for a period of four years. Any warrant issued will have a maturity of 36 months and a conversion price of $0.76 per share.
In terms of security interest, the debentures will rank subordinate to any currently outstanding secured debt, and senior to any future debt that is both secured or unsecured.
The participation of two key members of Flowr’s management team will enable the company to maintain a 58% inside ownership position despite the large financing. In addition to their involvement, a number of members of the firms executive team have voluntarily agreed to a 12 month lockup of their current holdings in the company on the closing of the offering.
Proceeds of the offering will be used for general working capital purposes, and is expected to enable the company to become cash flow positive in the second half of 2020. The offering is expected to close on April 23, 2020.
The company subsequently announced that it will be releasing its fourth quarter results on April 29 after the close of markets.
The Flowr Corp last traded at $0.58 on the TSX Venture.
Information for this briefing was found via Sedar and the Flowr Corp. 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.
