Term Debt Restructuring
The company and certain of its subsidiaries have entered into a term debt modification agreement with RB Loan Portfolio II, LLC, with respect to the company’s existing $45.65 million term debt, secured by the facility at 3950 N. Bruce St., North Las Vegas, Nevada. Through the term debt modification agreement, the company would:
Defer interest payments through October 31, 2022, in order to provide additional liquidity to the business.
Reduce the cash interest payments by 30%,
Extend the maturity date of the term debt to January 31, 2026,
Pay $9 million to the term lender on September 30, 2023, whereas the company has the option to pay this first loan paydown on January 31, 2024 with a 2.5% penalty.
Master Lease Restructuring
The company through its subsidiaries has also entered into a master lease modification agreement in connection with the agreement dated February 1, 2019 with RB Loan Portfolio I, LP, a Delaware limited partnership, regarding the equipment lease financing of certain equipment at the Bruce Facility, pursuant to which the lessor has agreed to forbear existing events of default and make certain modifications to the master lease, including:
The deferral of certain payments through October 31, 2022, in order to provide additional liquidity to the business.
Revising the amortization schedule to enable a reduction in monthly payments for the duration of the master lease.
Extend the maturity date of the Master Lease to March 3, 2025.
“Given the current state of the capital markets for cannabis, we are very pleased with this notable transaction. This crucial step in our restructuring not only provides the company with significant cash interest savings, but also allows for a deferral of interest payments, ensuring we are able to preserve capital,” Araxie Grant, Flower One’s CFO.
The company has determined that the term debt and master lease is exempt from the formal valuation and minority approval requirements applicable to related party transactions under Multilateral Instrument 61-101 – protection of minority security holders in special transactions (“MI 61-101”) pursuant to the financial hardship exemptions set forth in Sections 5.5(g) and 5.7(1)(e) of MI 61-101.
Photo by Giorgio Trovato on Unsplash
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