The Flowr Corporation (TSXV: FLWR) (OTC:FLWPF) is buying Terrace Global in a deal valued at $63 million. The proposed transaction provides a 47% premium to Terrace Global’s current share price and a premium of 76% to the last Terrace Global financing at $0.125 per share. Flowr said it has secured support from approximately 38% of the shareholders of Terrace Global. Once the deal is completed, existing Flowr and Terrace Global shareholders would own approximately 60.9% and 39.1% of the pro forma company, respectively, on a fully-diluted in-the-money basis (including the conversion of $11.9 million of Flowr convertible debentures).
“Terrace Global and Flowr have enjoyed a collaborative and symbiotic working relationship and share similar philosophies, making this transaction a strong fit for us. With Flowr, we believe that we can realize our full potential and are excited to participate in the upside of Flowr,” commented Francisco Ortiz von Bismarck, Chief Executive Officer of Terrace Global. “Combining our complementary management expertise, and collaborative strengths will result in a combined entity that is poised for global growth.”
All insiders of Flowr will be required to convert their 10% subordinated secured debentures into Flowr Shares, representing a conversion of at least $11.9 million principal amount of debentures. Flowr will also use commercially reasonable efforts to secure the full conversion of all of the issued and outstanding convertible debentures in the aggregate principal amount of $21.6 million.
Together the two companies have a strong balance sheet with more than $31 million in combined cash and marketable securities to support growth. Significant debt reduction and improved credit covenants contemplated by the transaction as a result of a minimum Flowr 10% subordinated secured debenture conversion of approximately $11.9 million.
Terrace Global shareholders, through their ownership of Flowr Shares, will have the opportunity to participate in the growth of Flowr and will benefit from the enhanced growth prospects of the combined company. Complimentary operations in Portugal and existing joint venture secures control over the entire cannabis value chain and leverages existing international partnerships and expertise.