Alimentation Couche-Tard Inc. or ACT, the owners of Circle K have increased its equity stake in Canadian cannabis company Fire & Flower Holdings Corp. (OTCQX: FFLWF). ACT announced that it plans to convert all of its approximately $28.5 million outstanding principal amount of 8.0% secured convertible debentures issued in April 2020 as well as the conversion of approximately $23.6 million principal amount of 8.0% unsecured convertible debentures issued to 2707031 Ontario Inc. Following the conversion, ACT will have converted a total of approximately $52 million principal amount of debt to equity and ACT will hold 19.9% of the issued and outstanding shares of Fire & Flower.
Shawn Dym, Director and Founder of Green Acre Capital LP, commented, “We, along with other holders of the April 2020 Debentures, voluntarily agreed to amend the debentures to allow for the conversion well in advance of their maturity as we felt it was consistent with our support of the Company as shareholders rather than creditors. As management continues to execute on its growth plans and build shareholder value, we are supportive of de-levering the balance sheet to aid the Company’s expansion into new high-growth markets. The Company has sufficient resources to grow its store count in Canada and expand its leading position in Canadian cannabis retail. Furthermore, we believe it is important to show the strength in its financial position as it pursues a listing on the Nasdaq and sets out for US brand expansion through its recently announced licensing deal with American Acres.”
“These conversions will significantly improve our balance sheet, reduce interest costs and support enhanced access to non-dilutive financing with our banking partner, ATB Financial,” remarked Trevor Fencott, Chief Executive Officer of Fire & Flower. “We are very pleased with the support of our partners and welcome ACTs increased 19.9% ownership stake. We look forward to continuing to aggressively pursue our growth strategy in both Canada and the United States.”
Convenience Store Strategy
Many believe that once cannabis is decheduled, it could be treated much the same as tobacco or alcohol. This would mean that cannabis products like pre-rolls could be sold from behind the counter of convenience stores like Circle K. Cigarettes are sold this way and the stores are trained to check IDs for age in order to buy the products. It isn’t a stretch to believe that the cannabis companies that are able to sell through convenience stores would do massive volumes in sales. A model that is similar to basic beers like Budweiser or Miller beer.
Fire & Flower is a multi-banner cannabis retail operator that owns and operates the Fire & Flower, Friendly Stranger, Happy Dayz, and Hotbox brands. Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc. and Friendly Stranger Holdings Corp., licensed cannabis retailers that own and operate cannabis retail stores in the provinces of Alberta, Saskatchewan, Manitoba and Ontario, and the Yukon territory.