Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWF) has fashioned a financing deal with Alimentation Couche-Tard Inc. — owner of Circle K convenience stores — in which ACT would supply the company with a $11 million principal amount loan.
The two have also revised a stock purchasing agreement, in which ACT will snap up $5 million worth of common shares of Fire & Flower. ACT is currently the holder of 17,796,284 Series C Warrants.
“These financings with our strategic partner, Alimentation Couche-Tard, provide Fire & Flower with access to capital on favorable terms and demonstrate continued strategic alignment between the two companies as we continue to execute our technology-enabled retail strategy,” said Stéphane Trudel, Chief Executive Officer of Fire & Flower.
“The company will prudently use this capital to continue to grow the business and build upon the recent success we have seen through improvements in our retail, wholesale and logistics, and digital business segments.”
ACT will loan $11 million to the company with an interest rate of 11.0%. The loan matures on December 31, 2023, and ACT will have first-priority security on all of the assets of the company and its subsidiaries, including all intellectual property subject only to permitted liens. Fire & Flower noted in its last earnings report that it had current liabilities of C$31 million and total liabilities of C$79 million.
Fire & Flower may prepay all or any portion of the loan without a bonus or penalty. Funding under the loan agreement is subject to approval from the Toronto Stock Exchange, with funding of the loan expected to occur shortly thereafter.
For the stock purchase, ACT will subscribe for 3,034,017 shares at a price of $1.64798 per share for proceeds of approximately $5 million. Fire & Flower is entitled to terminate the deal and enter into an agreement with respect to an unsolicited superior proposal, in which case the loan shall become immediately due and payable.
“In addition to our co-located store program with Fire & Flower, Alimentation Couche-Tard has committed to advance these financings to enable Fire & Flower to execute upon its growth-oriented strategy,” said Alex Miller, Executive Vice-President, Operations, North America, and Global Commercial Optimization of Alimentation Couche-Tard.
Miller added, “Fire & Flower continues to be our strategic partner in the growing cannabis retail market, and we look forward to continuing to work with Fire & Flower on other initiatives.”