Canadian cannabis producer Avant Brands Inc. (TSX:AVNT) (OTCQX:AVTBF) wants to buy Flowr Okanagan and its 85,000-square-foot British Columbia grow facility for $3.88 million.
1000343100 Ontario Inc., in which Avant owns 50% of the issued and outstanding shares, has entered into a stalking horse purchase agreement to acquire all of the issued and outstanding shares in the capital of The Flowr Group Inc., a subsidiary of The Flowr Corp.
A stalking-horse bid is the initial bid on the assets of a bankrupt company. Other buyers can submit competing offers following a low-end stalking horse bid.
The deal still depends on approval from the Ontario Superior Court of Justice. 1000343100 Ontario Inc. will also change its name to Avant Brands K1 Inc. prior to closing.
“Continuing on from a strong record third quarter, we anticipate that the overall global demand for Avant’s products exceeds our current output,” said founder and CEO Norton Singhavon. “As a result, Avant has entered into the stalking horse purchase agreement in order to satisfy this demand. Flowr has developed an 85,000 square foot facility built to GMP standards, which is conveniently located in Kelowna, British Columbia, making this a natural fit for the Avant portfolio.”
The company said that the purchase price will be satisfied through:
- A credit bid of the debtor-in-possession (DIP) loan in a principal amount of C$2 million, plus the closing DIP amount, if any, and any accrued and unpaid interest, expenses, fees, and other amounts;
- Cash amount equal to the purchase price less the credit bid in cash, a portion of which may be payable in noncash consideration in certain circumstances; and
- Assumption of liabilities.
If the deal goes through, the Flowr Okanagan facility would increase Avant’s overall square footage of cultivation facilities to approximately 185,000 square feet and help raise Avant’s annual production capacity by approximately 60%, the company said.
If Avant ends up not becoming the winning bidder, the stalking horse purchase agreement will be terminated, and Avant will be entitled to payment of a $185,000 break-up fee following the winning bid’s close.
1000343100 Ontario Inc. previously executed a term sheet with Flowr and its subsidiaries, Flowr Okanagan, Flowr ULC, and Terrace Global Inc., to which it has made available a debtor-in-possession loan in a principal amount of up to C$2 million in connection with the Flowr Group’s filing for protection from the Court under the companies’ Creditors Arrangement Act.