TORONTO–()–Terrace Global Inc. (TSXV: TRCE) (“Terrace Global” or the “Company”) is happy to announce it has entered right into a definitive association settlement (the “Agreement”) pursuant to which The Flowr Corporation (TSXV: FLWR) (“Flowr”) will purchase the entire issued and excellent frequent shares within the capital of Terrace Global (the “Transaction”).

Under the phrases of the Agreement, holders of Terrace Global frequent shares will obtain 0.4973 of a standard share of Flowr (“Flowr Shares”) for every Terrace Global frequent share held (“Terrace Global Shares”). Upon completion of the Transaction, present Flowr and Terrace Global shareholders would personal roughly 60.9% and 39.1% of the professional forma firm, respectively, on a completely diluted in-the-money foundation (together with the conversion of $11.9 million of Flowr convertible debentures).

The alternate ratio implies a value of $0.22 per Terrace Global frequent share and a premium of roughly 47%, based mostly on the thirty (30) day quantity weighted common costs of Flowr Shares on the TSX Venture Exchange and the spot value of Terrace Global as of October 19, 2020.

Transaction Highlights

  • Significant Premium Paid: The implied premium being paid by Flowr is roughly 47% based mostly upon the closing value of the Terrace Global Shares on October 19, 2020 and a premium of roughly 76% to the final Terrace Global financing at $0.125 per share.
  • Continued Participation in Expanded Platform for Future Growth in Canada and Europe: Terrace Global shareholders, by means of their possession of Flowr Shares, can have the chance to take part within the development of Flowr and can profit from the improved development prospects of the mixed firm. Flowr is a number one high-THC cultivator with a robust model presence in Canada and in addition has a robust toehold place within the burgeoning European medical hashish market.
  • Terrace Shareholder Alignment with Flowr Shareholders: As a part of the Transaction, all insiders of Flowr can be required to convert their 10% subordinated secured debentures into Flowr Shares, representing a conversion of not less than $11.9 million principal quantity of debentures. Flowr can even use commercially affordable efforts to safe the complete conversion of the entire issued and excellent convertible debentures within the mixture principal quantity of $21.6 million.
  • Strengthening Vertically Integrated Global Cannabis Company: Flowr is a number one international hashish firm and market chief with its distinct Flowr model. This transaction strengthens Flowr’s worldwide presence and improves entry to a number of demographic segments.
  • Alignment with Strong Management Team: Terrace Global was created by a gaggle of pioneers within the hashish sector who’ve many years of worldwide expertise within the hashish market and embody the founders of MedReleaf Corp., ICC Labs Inc. and Bedrocan Cannabis Corp. Both Flowr and Terrace Global boast sector main insider possession. Terrace Global to have three nominees on the reconstituted board of administrators of Flowr.
  • Robust Financial Position: Flowr and Terrace Global at present have a mixed $31 million in money and marketable securities, which can be used to assist model constructing, outside develop operations, and pursue strategic alternatives and investments that maximize shareholder worth.
  • Concurrent Liability Management: As a situation precedent to the closing of the Transaction, Flowr can be required to negotiate extra beneficial phrases with its senior collectors to enhance its credit score covenant package deal and it’ll additionally profit from a basket for future subordinated secured debenture financing within the quantity of not less than $11.9 million. This will present extra monetary flexibility for Flowr going ahead. The web result’s that at closing of the Transaction, Flowr can have diminished its total indebtedness by not less than $11.9 million.
  • Improved Capital Markets Profile: Flowr can be a number one licensed producer interesting to a broader shareholder base, with better entry to capital and improved buying and selling liquidity.
  • Accretive Synergies: The mixed entity is estimated to notice annual synergies of roughly $2 million per yr, permitting Flowr to function extra effectively with a dedication to continued excellence.

“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 complimentary management expertise, and collaborative strengths will result in a combined entity that is poised for global growth.”

Terms of the Transaction

The Transaction can be affected by means of a courtroom authorized plan of association below the Business Corporations Act (Ontario) (the “Arrangement”). Under the phrases of the Transaction, every shareholder of Terrace Global (“Terrace Global Shareholder”) will obtain 0.4973 of a Flowr Share per Terrace Global Share, which means a value per Terrace Global Share of $0.22 based mostly on the thirty (30) day quantity weighted common value (“VWAP”) of the Flowr Shares and the spot value of Terrace Global Shares on the TSX Venture Exchange (“TSXV”) as of October 19, 2020.

The Transaction is topic to the approval of the Ontario Superior Court of Justice (Commercial List). The Transaction can even require the approval at a particular assembly of Terrace Global Shareholders (the “Terrace Global Special Meeting”) of not lower than two-thirds (66 2/3%) of the votes validly forged by Terrace Global Shareholders, current in individual or by proxy on the assembly, and, by a majority of the minority votes validly forged by Terrace Global Shareholders, current in individual or by proxy on the assembly, as required pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

All of the administrators and senior officers of Terrace Global and different sure shareholders of the Company (who maintain within the mixture roughly 38% of the issued and excellent Terrace Global Shares on a non-diluted foundation) have entered right into a assist settlement with Flowr to, amongst different issues, assist the Transaction and vote their Terrace Global Shares in favour of the Transaction.

The Agreement gives for, amongst different issues, the board of administrators of Terrace Global having the ability to take into account a superior proposal in sure circumstances. The Agreement additionally gives for the fee by Terrace Global of a termination charge of up to $3,000,000 in favour of Flowr in sure circumstances. In addition, the Agreement gives that, below sure circumstances, the place the Transaction will not be accomplished due to the failure of Flowr to get hold of sure approvals or consents, Flowr could be required to reimburse Terrace Global’s bills up to $500,000.

Concurrent Liability Management

As famous above, the Transaction is conditional upon: (i) the modification of the prevailing indenture governing the 10% subordinated secured debentures issued by Flowr within the mixture principal quantity of $21.6 million to allow the early conversion of roughly $11.9 million of debentures held by insiders of Flowr; and (ii) sure amendments to the senior secured credit score facility from a syndicate of lenders led by ATB Financial, together with a future basket for the issuance of up to not less than $11.9 million subordinated secured debentures on considerably comparable phrases to the prevailing debentures in addition to the development of sure credit score covenants.

Closing and Closing Conditions

The Transaction stays topic to sure different closing situations together with the receipt of sure approvals and the satisfaction of sure customary closing situations. The events don’t anticipate requiring an approval of shareholders of Flowr to full the Transaction.

The Board of Directors of Terrace Global (the “Terrace Global Board”) unanimously recommends that Terrace Global Shareholders vote in favour of the decision to approve the Arrangement, which would be the topic of the Terrace Global Special Meeting anticipated to be held within the fourth quarter of 2020. The suggestion of the Terrace Global Board is supported by a equity opinion from Hyperion Capital Inc. to the impact that, as of the date of the opinion, and topic to the assumptions, limitations and {qualifications} on which every such opinion is predicated, the consideration to be acquired by Terrace Global Shareholders pursuant to the Transaction is truthful, from a monetary standpoint, to such shareholders.

It is at present anticipated that, topic to receipt of all regulatory, courtroom, shareholder and different approvals, and the satisfaction or waiver of all situations, the Transaction is predicted to be accomplished within the fourth quarter of 2020.

Further info concerning the Transaction can be included in Terrace Global’s administration info round to be mailed to Terrace Global Shareholders upfront of the Terrace Global Special Meeting and in Terrace Global’s materials change report in respect of the announcement of the Transaction, every of which can be filed with the Canadian securities regulators and can be accessible below Terrace Global’s profile at www.sedar.com.

Advisors and Counsel

Hyperion Capital Inc. is performing because the monetary advisor to Terrace Global and has supplied a equity opinion to the Terrace Global Board. Wildeboer Dellelce LLP is performing as authorized counsel to Terrace Global. Norton Rose Fulbright Canada LLP is performing as authorized counsel to the Board of Directors of Terrace Global.

ATB Capital Markets Inc. is performing because the unique monetary advisor to Flowr and has supplied a equity opinion to the Flowr Board. Fasken Martineau DuMoulin LLP is performing as authorized counsel to Flowr.

About Terrace Global

Terrace Global is a Canadian firm targeted on the event and acquisition of worldwide hashish property. Its single-minded purpose is to unlock worth in new jurisdictions. Terrace was created by a gaggle of pioneers within the hashish area who’ve come collectively to construct a greatest in school portfolio of property, throughout worldwide markets. With many years of cross-continent relationships, the Terrace workforce is uniquely positioned to unlock worth in new jurisdictions like nobody else can. For extra details about Terrace Global, please go to terraceglobal.ca.

About The Flowr Corporation

The Flowr Corporation is a Toronto-headquartered hashish firm with operations in Canada, Europe, and Australia. Its Canadian working campus, situated in Kelowna, BC, features a purpose-built, GMP-designed indoor cultivation facility; an outside and greenhouse cultivation website; and a state-of-the-art R&D facility. From this campus, Flowr produces leisure and medicinal merchandise. Internationally, Flowr intends to service the worldwide medical hashish market by means of its subsidiary Holigen, which has a license for hashish cultivation in Portugal and operates GMP licensed amenities in each Portugal and Australia.

Flowr goals to assist enhancing outcomes by means of accountable hashish use and, as a longtime professional in hashish cultivation, strives to be the model of alternative for customers and sufferers looking for the highest-quality craftsmanship and product consistency throughout a portfolio of differentiated hashish merchandise.

For extra info, please go to flowrcorp.com or observe Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr Corporation.

Forward-Looking Information and Statements

This information launch incorporates forward-looking statements relating to the Transaction, together with statements concerning the completion thereof and different statements that aren’t historic details. Such forward-looking statements are topic to vital dangers, uncertainties and assumptions. The outcomes or occasions predicted in these forward-looking statements could differ materially from precise outcomes or occasions. As a consequence, you might be cautioned not to place undue reliance on these forward-looking statements. The completion of the Transaction is topic to various phrases and situations, together with, with out limitation: (i) relevant governmental approvals (together with the TSX Venture Exchange), (ii) required shareholder approvals, (iii) vital courtroom approvals, and (iv) sure termination rights accessible to the events below the Agreement. These approvals is probably not obtained, the opposite situations to the Transaction is probably not happy in accordance with their phrases, and/or the events to the Agreement could train their termination rights, through which case the Transaction may very well be modified, restructured or terminated, as relevant. The forward-looking statements on this information launch are made as of-the-date of this launch. We undertake no obligation to touch upon expectations of, or statements made by third events in respect of the Transaction.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that time period is outlined in insurance policies of the TSX Venture Exchange) accepts accountability for the adequacy or accuracy of this launch.

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