/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR
DISTRIBUTION TO UNITED STATES WIRE
SERVICES/
The Acquisition Will Increase Fire & Flower's Issued and
In-Queue Ontario Store Count to up to 27 - Solidifying a Clear
National Leadership Position
TORONTO, Nov. 2, 2020 /CNW/ - Fire & Flower
Holdings Corp. (TSX: FAF) (OTCQX:
FFLWF) ("FFHC") and its wholly-owned subsidiary
Fire & Flower Inc. (collectively, "Fire & Flower" or
the "Company") today announced that it has entered into a
definitive share purchase agreement (the "Share Purchase
Agreement") that will result in the Company acquiring all of
the issued and outstanding shares of Friendly Stranger Holdings
Corp. ("Friendly Stranger"), which, at closing, is expected
to own and operate 11 licensed cannabis retail stores across the
province of Ontario with 4
additional cannabis stores in queue to be licensed and operational
by the end of the fourth quarter of 2020 (the
"Transaction").
Upon closing, Fire & Flower is expected to have 66 stores
including 18 in Ontario and an
additional 9 stores in queue for licensing, giving the Company the
largest footprint in both Ontario
and Canada.
Pursuant and subject to the terms of the Share Purchase
Agreement, as consideration the Company will issue to the
shareholders of Friendly Stranger up to an aggregate of 31,117,750
common shares of FFHC (the "Consideration Shares").
"The acquisition of Friendly Stranger is transformative for Fire
& Flower and is a product of our financially disciplined
approach to aggregation in the sector. It will immediately put us
in a leading position in the major Ontario market, and it allows us to increase
the potential of the acquired stores using the proprietary
capabilities of our Hifyre™ digital retail and analytics platform"
shared Trevor Fencott, Chief
Executive Officer of Fire & Flower. "The acquisition will bring
some of Ontario's longest
established Cannabis brands into the Fire & Flower portfolio,
transforming us into a multi-banner operator that appeals to a
larger cross-section of cannabis customers. We are also excited to
add Friendly Stranger's demonstrated expertise in the high-margin
accessories business to our team. We look forward to continuing to
welcome Friendly Stranger customers into these stores and to our
Spark Perks™ customer engagement program that already counts more
than 150,000 members across the country."
"Friendly Stranger is very pleased to be joining Fire &
Flower, the leader in cannabis retail across the country," shared
James Jesty, President of Friendly
Stranger. Friendly Stranger will benefit from the best practices
set by the market leader including their technology-enabled
approach and the scale brought from their operations. Through
multiple brands in the Ontario
market, Fire & Flower will benefit from the ability to serve
diverse customer segments in the growing cannabis market."
Upon closing of the Transaction, it is expected that the Company
will acquire licenses to operate 11 cannabis retail stores
currently operating in the province of Ontario under the "Friendly Stranger",
"Hotbox" and "Happy Dayz" brand, including four in the key urban
market of Toronto. The stores will
continue to operate under the Friendly Stranger, HotBox and Happy
Dayz brands.
Pursuant to the terms of the Share Purchase Agreement, an
aggregate of 8,339,557 Consideration Shares will be held in escrow
following closing and will, subject to certain conditions, be
issued to the former shareholders of Friendly Stranger upon receipt
of all applicable authorizations at additional cannabis retail
store locations in each of Dundas,
Midland and Cambridge, Ontario.
Closing of the Transaction is subject to the satisfaction or
waiver of certain conditions, including the receipt of all required
third-party and regulatory approvals (including the approval of the
Toronto Stock Exchange and the Alcohol and Gaming Commission of
Ontario, as applicable). The
Transaction is expected to close in the fourth quarter of
2020.
Concurrently with the entering into of the Share Purchase
Agreement, the Company entered into a loan agreement with Friendly
Stranger (the "Loan Agreement"). Pursuant to the terms of
the Loan Agreement, Friendly Stranger may borrow from the Company
up to an aggregate of $2,000,000 (the
"Loan"), such amount to be used for the purchase of certain
licensed cannabis retail stores operating in the province of
Ontario and as contemplated in the
Share Purchase Agreement. Subject to the terms of the Loan
Agreement, the Loan matures on the earlier of March 31, 2021 and the date there is a change of
control of Friendly Stranger (which will occur upon the completion
of the Transaction). The Loan is secured against the assets of
Friendly Stranger and bears interest at a rate of 1.0% per annum,
which rate will be increased to 13.0% per annum in the event the
Share Purchase Agreement is terminated prior to the closing of the
Transaction.
Advisors
Stifel GMP is acting as financial advisor to Fire & Flower
and Dentons Canada LLP is acting as its legal advisor. Broderick
Capital is acting as financial advisor to Friendly Stranger and
Chitiz Pathak LLP is acting as legal advisor.
About Fire & Flower
Fire & Flower is a leading
purpose-built, independent adult-use cannabis retailer poised
to capture significant Canadian market share. The Company guides
consumers through the complex world of cannabis through
education-focused, best-in-class retailing while the
HifyreTM digital platform and SparkTM
program connect cannabis consumers with the latest cannabis
products and deliver cutting edge insights into evolving consumer
behaviours. The Company's leadership team combines extensive
experience in the cannabis industry with strong capabilities in
retail operations.
Fire & Flower Holdings Corp. owns all issued and outstanding
shares in Fire & Flower Inc., a licensed cannabis retailer that
owns cannabis retail store licences in the provinces of
Alberta, Saskatchewan, Manitoba and Ontario and the Yukon territory.
Through its strategic investment with Alimentation Couche-Tard
Inc., the Company has set its sights on the global expansion as new
cannabis markets emerge.
More information on Fire & Flower can be found at
www.fireandflower.com.
About Friendly Stranger
A long-standing retail
champion of cannabis culture and iconic brand, Friendly Stranger
Holdings Corp. is dedicated to ongoing long-term contribution
within the Canadian cannabis market through the launch of numerous
retail locations across the country. With strategic investments,
such as acquiring the other iconic cannabis culture brand Happy
Dayz, FSHC has built a portfolio of brands that resonate with
cannabis consumers.
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 in this news
release include, but are not limited to, statements in respect of
the Transaction, the closing of the Transaction, the acquisition by
the Fire & Flower of licensed cannabis retail stores in the
province of Ontario and the number
of Fire & Flower licensed cannabis retail stores in
Canada.
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 Transaction on the
terms described herein or at all. 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 and twenty-six weeks ended August 1, 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.
SOURCE Fire & Flower Holdings Corp.