/NOT FOR DISSEMINATION IN THE UNITED
STATES OR FOR DISTRIBUTION TO UNITED
STATES WIRE SERVICES/
TORONTO, Sept. 4, 2020 /CNW/ - Fire & Flower
Holdings Corp. ("Fire & Flower" or the "Company")
(TSX: FAF) (OTCQX: FFLWF), reminds shareholders that it will hold
its Special Meeting of shareholders (the "Meeting") on
Tuesday, September 15, 2020 at
1:00 pm ET online at
https://web.lumiagm.com/244712938. In conjunction with the
Meeting, Fire & Flower has filed its management information
circular dated August 10, 2020 (the
"Circular") and related proxy materials which are available
under the Company's profile on SEDAR.
As more fully described in the Circular, at the Meeting
shareholders will be asked to approve certain amendments to: (a)
securities of the Company issued to 2707031 Ontario Inc.
("270"), an indirect wholly-owned subsidiary of Alimentation
Couche-Tard Inc. ("ACT") (the "Proposed Amendments");
and (b) the $28,000,000 principal
amount of 8.0% secured convertible debentures of the Company
governed by a certain debenture indenture dated April 28, 2020 between the Company and
Computershare Trust Company of Canada as supplemented on July 23, 2020 (available under the Company's
profile on SEDAR).
Related Party Transaction
On account of 270 and ACT, being "related parties" (within the
meaning of Multilateral Instrument 61-101 – Protection of
Minority Securityholders in Special Transactions ("MI
61-101")) to the Company, the Proposed Amendments to the
ACT Securities (as defined in the Circular) are deemed to be a
"related party transaction" within the meaning of MI 61-101.
Accordingly, the Company is providing certain additional disclosure
in this press release as required pursuant to MI 61-101.
Pursuant to Part 5.4(1) of MI 61-101, the Proposed Amendments do
not require a formal valuation. There has been no bona
fide prior offer that relates to the subject matter of or is
otherwise relevant to the Proposed Amendments that was received by
the Company in the 24 months prior to July
23, 2020, the date of the Amendment Agreement (as defined
herein).
As further set out in the Circular, 270 and ACT and their
associates and affiliates (and any other "interested party" to the
Proposed Amendments as contemplated under MI 61-101) will not be
entitled to vote on the Proposed Amendments. As such, an
aggregate of 4,732,993 common shares of the Company ("Common
Shares") will not be allowed to vote on the Proposed Amendments
which is comprised as follows: 4,061,593 Common Shares held by 270;
62,400 Common Shares held by Stéphane Trudel, a director of 270; 400,000 Common
Shares by Brian Hannasch, a director
and senior officer of ACT; 109,000 Common Shares held by
Richard Fortin, a director of ACT;
and 100,000 Common Shares held by Réal Plourde, a director of
ACT.
Background to the Transaction
The provisions of the amendment agreement (the "Amendment
Agreement") entered into between the Company and 270
(which evidences the Proposed Amendments) are the result of
arm's length negotiations conducted between the Company, ACT and
their respective representatives and advisors. The following is a
summary of the material events, negotiations, discussions and
actions leading up to the execution of the Amendment Agreement and
its public announcement on July 23,
2020.
As part of their ongoing evaluation of the Corporation's
business, the Corporation's senior management and its board of
directors (the "Board") have regularly reviewed, considered
and assessed the Corporation's operations, growth opportunities,
financial performance and industry conditions, and considered
potential opportunities for alternative financings.
On May 8, 2020, the Board formed a
special committee (the "Special Committee") comprised of
Donald Wright, Harvey Shapiro and Avininder Grewal with a
mandate of assisting the Board in reviewing and negotiating matters
related to the Company's existing strategic capital investments and
financing arrangements and, if necessary, present the Board with
alternative strategic capital investments and financing
arrangements. Each of Messrs. Wright, Shapiro and
Grewal would be considered independent of any "interested
party" (as defined under MI 61-101) in a transaction whereby the
terms of the ACT Securities were to be amended.
During the course of May 2020, the
Special Committee considered various financing opportunities.
The Special Committee also evaluated certain potential amendments
to the ACT Securities that considered a mandatory exercise of
certain ACT Securities with a coinciding reduction in the
exercise/conversion price of certain of the ACT Securities (as
further set out in the Circular).
On May 27, 2020, Mr. Wright, in
his capacity as chair of the Special Committee first discussed the
Proposed Amendments with Stéphane Trudel, in his capacity as a representative of
ACT. Between May 28, 2020 and
June 11, 2020, representatives of the
Special Committee and ACT continued to discuss the terms of
potential amendments to the ACT Securities.
In June 2020 and based on ATB
Capital Markets Inc.'s ("ATBCM") qualifications,
expertise, experience in the cannabis industry, familiarity with
the Company and experience in capital markets, the Company engaged
ATBCM to act as financial advisor to the Company in respect of the
Proposed Amendments.
On June 11, 2020, legal counsel to
ACT delivered a draft non-binding term sheet to legal counsel to
the Company and which set out the terms of proposed amendments to
the ACT Securities. Between June 11
and June 18, 2020, representatives from the Special
Committee and ACT continued to discuss the terms of the non-binding
term sheet.
On June 18, 2020, the Company and
270 entered into a non-binding term sheet setting out the terms of
the Proposed Amendments.
Between June 19, 2020 and
July 23, 2020, the Special Committee,
ACT and their respective advisors negotiated the terms of the
Amendment Agreement and exchanged multiple drafts of the proposed
transaction documents.
On July 20, 2020, ATBCM provided a
presentation to the Board regarding the Proposed Amendments. ATBCM
then delivered to the Board an oral opinion to the effect that, as
of the date of such opinion and based on and subject to the
analyses referred to, and assumptions, qualifications and
limitations set forth therein, the financial terms of the Proposed
Amendments are fair, from a financial point of view, to the
shareholders of the Company other than ACT and 270 (the
"Fairness Opinion").
On July 23, 2020, the Special
Committee met and passed a resolution recommending to the Board
that the Board approve the Proposed Amendments and the Company's
entering of the Amendment Agreement and that the Board recommend
that the shareholders of the Company vote in favour of the Proposed
Amendments. In making its recommendation, the Special Committee
considered the Fairness Opinion, the rationale for the Proposed
Amendments, the fairness of the Proposed Amendments and reasonably
available alternatives to the Proposed Amendments (including the
status quo).
On July 23, 2020, having consulted
with its legal and financial advisors, having reviewed the
recommendation of the Special Committee and having reviewed and
deliberated on the Proposed Amendments, including without
limitation, the rationale for the Proposed Amendments, the Fairness
Opinion and reasonably available alternatives to the Proposed
Amendments, the Board approved the Proposed Amendments and the
entering into of the Amendment Agreement. After disclosing his
interest as a principal of ACT and 270, Stéphane Trudel abstained from voting on the approval
of the Proposed Amendments or the entering into of the Amendment
Agreement.
On July 23, 2020, the Company and
270 entered into the Amendment Agreement.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This news release contains certain forward-looking
information within the meaning of applicable Canadian securities
laws ("forward-looking statements"). All statements other than
statements of present or historical fact are forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "achieve",
"could", "believe", "plan", "intend", "objective", "continuous",
"ongoing", "estimate", "outlook", "expect", "project" and similar
words, including negatives thereof, suggesting future outcomes or
that certain events or conditions "may" or "will" occur.
These statements are only predictions.
Forward-looking statements are based on the opinions and
estimates of management of Fire & Flower at the
date the statements are made based on information then available to
the Fire & Flower. Various factors and
assumptions are applied in drawing conclusions or making the
forecasts or projections set out in forward-looking statements,
including with respect to the closing of the Acquisition.
Forward-looking statements are subject to and involve a number of
known and unknown, variables, risks and uncertainties, many of
which are beyond the control of Fire & Flower,
which may cause Fire & Flower's actual
performance and results to differ materially from any projections
of future performance or results expressed or implied by such
forward-looking statements. Such factors, among other
things, include: final regulatory and
other approvals or consents;
fluctuations in general macroeconomic conditions;
fluctuations in securities markets; the impact of the COVID-19
pandemic; the ability of the Company
to successfully achieve its business objectives and political
and social uncertainties.
No assurance can be given that the expectations reflected in
forward-looking statements will prove to be correct. Although
the forward-looking statements contained in this news release are
based upon what management of the Company believes, or believed at
the time, to be reasonable assumptions, the Company cannot assure
shareholders that actual results will be consistent with such
forward-looking statements, as there may be other factors that
cause results not to be as anticipated, estimated or intended.
Readers should not place undue reliance on the forward-looking
statements and information contained in this news release.
Additional information regarding risks and uncertainties relating
to the Company's business are contained under the heading "Risk
Factors" in the Company's annual information form dated
April 29, 2020 and the heading "Risks
and Uncertainties" in the management discussion and analysis for
the thirteen weeks ended May 2, 2020
filed on its issuer profile on SEDAR at www.sedar.com.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein.
Fire & Flower assumes no obligation to publicly
update or revise forward-looking statements to reflect new
information, future events or otherwise, except as expressly
required by applicable law.
SOURCE Fire & Flower Holdings Corp.