Avant Brands announced that 1000343100 Ontario, an entity of which Avant owns 50% of the issued and outstanding shares, has entered into a stalking horse purchase agreement to acquire all of the issued and outstanding shares in the capital of The Flowr Group (Okanagan), a subsidiary of The Flowr Corporation, in connection with the Flowr Group's proceedings under the Companies' Creditors Arrangement Act and its related sales and investment solicitation process. The authorization by Flowr Okanagan and The Flowr Canada Holdings ULC to enter into the Stalking Horse Purchase Agreement and its acceptance as the Stalking Horse Bid is subject to approval by the Ontario Superior Court of Justice. It is also anticipated that the Purchaser will change its name to Avant Brands K1 Inc. prior to closing.
"Continuing on from a strong record third quarter, we anticipate that the overall global demand for Avant's products exceeds our current output," said Norton Singhavon, Founder and Chief Executive Officer of Avant. "As a result, Avant has entered into the Stalking Horse Purchase Agreement in order to satisfy this demand. Flowr has developed an 85,000 square foot facility built to GMP standards, which is conveniently located in Kelowna, British Columbia, making this a natural fit for the Avant portfolio."
The Stalking Horse Purchase Agreement was entered into between the Purchaser, Flowr Okanagan, and Flowr ULC. The purchase price payable by the Purchaser for the Purchased Shares pursuant to the Stalking Horse Purchase Agreement shall be equal to $3,888,888.88 plus an amount reasonably necessary to fund the cash requirements of the Flowr Group to close the transactions if any, and the assumption of certain liabilities set out in the Stalking Horse Purchase Agreement, as may be adjusted in accordance with its terms.
The Purchase Price will be satisfied through: (a) a credit bid of the DIP Loan in a principal amount of $2,000,000, plus the Closing DIP Amount, if any, and any accrued and unpaid interest, expenses, fees, and other amounts thereon, (b) a cash amount equal to the Purchase Price less the Credit Bid in cash, a portion of which may be payable in non-cash consideration in certain circumstances, and (c) the assumption of the Assumed Liabilities. Excluded assets and excluded liabilities of Flowr Okanagan will be discharged from Flowr Okanagan pursuant to an Approval and Vesting Order to be sought in accordance with the terms of the Stalking Horse Purchase Agreement.
If the transaction contemplated by the Stalking House Purchase Agreement closes, the Flowr Okanagan facility would increase Avant's overall square footage of cultivation facilities to approximately 185,000 square feet and thereby increasing Avant's annual production capacity by approximately 60%. It is anticipated that Avant will be one of the largest indoor producers in Canada of indoor-grown, ultra-premium cannabis.
The consummation of the transactions contemplated under the Stalking Horse Purchase Agreement are subject to satisfaction or waiver of a number of conditions set forth in the Stalking Horse Transaction Agreement, including, among other things, receipt of regulatory approval, the Stalking Horse Purchase Agreement being determined to be the successful bid in the SISP and the Court granting both an order approving the Stalking Horse Purchase Agreement and an Approval and Vesting Order. If other bids superior to the Stalking Horse Purchase Agreement are submitted in the SISP, an auction will be held, and the Purchaser may elect to increase the Purchase Price or otherwise vary the terms of the Stalking Horse Purchase Agreement.
In the event the Purchaser is not the winning bidder under any such auction, the Stalking Horse Purchase Agreement will be terminated, and the Purchaser will be entitled to payment of a break-up fee in the amount of $185,000 following the closing of the winning bid.
The Company previously announced that the Purchaser had executed a term sheet with Flowr and its subsidiaries, Flowr Okanagan, Flowr ULC, and Terrace Global, pursuant to which the Purchaser has made available debtor-in-possession loan in a principal amount of up to $2,000,000 in connection with the Flowr Group's filing for protection from the Court under the Companies' Creditors Arrangement Act.
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