/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES./
The Subscription Agreement allows for Couche-Tard to obtain a controlling interest in the Company with an aggregate investment of more than $380,000,000 of growth capital for Fire & Flower’s global expansion (the “Strategic Investment”).
Fire & Flower has demonstrated that it is capable of rapidly scaling its retail platform through a best-of-class store concept, a leading digital platform and a focus on the safe, responsible and lawful sale of cannabis. This investment will provide Fire & Flower with additional funds to support the further development of its proprietary Hifyre™ digital retail platform and expansion of its retail store network across Canada and internationally where legally permitted.
“This strategic investment by Couche-Tard, one of the world’s largest retailers, is transformative for Fire & Flower. The retail cannabis platform we developed marries a best-in-class in-store experience with our proprietary Hifyre™ digital infrastructure and this is a huge vote of confidence in the platform,” shared Trevor Fencott, Fire & Flower’s Chief Executive Officer. “The support of Couche-Tard’s world-class leadership team, coupled with their impressive international footprint which includes major markets such as the US,Mexico and Europe, provide us with outstanding opportunities for aggressive growth.”
“Couche-Tard is excited to make this strategic investment in one of the fastest growing cannabis ‘pure-play’ retailers,” said Brian Hannasch, President and CEO of Couche-Tard. “This investment in Fire & Flower, with a path to a controlling stake, will enable us to leverage their leadership, network and advanced digital platform to accelerate our journey in this new and flourishing sector.”
The Board, after consultation with its legal and financial advisors, has unanimously determined that the Transaction is in the best interest of Fire & Flower and is unanimously recommending that shareholders vote in favour of the Transaction. In making this determination, the Board considered a number of factors, including the receipt of a fairness opinion from each of Eight Capital and AltaCorp Capital Inc. that, based upon and subject to the assumptions, qualifications and limitations as set out in such fairness opinions, as of such date, the financial terms of the Transaction are fair, from a financial point of view, to the Company.
Issuance of Convertible Debentures
Concurrent with the closing of the Transaction, the Company and Couche-Tard will enter into an investor rights agreement (the “Investor Rights Agreement”), pursuant to which Couche-Tard shall be entitled to designate one nominee (an “Investor Nominee”) for election to the Board. For so long as (i) the Debentures remain outstanding in full; (ii) Couche-Tard owns at least 9.9% of the issued and outstanding Common Shares; or (iii) Couche-Tard is entitled (including pursuant to the exercise of certain participation and top-up rights as further set out in the Investor Rights Agreement), to acquire Common Shares, which, together with the other Common Shares held by Couche-Tard, would represent at least 9.9% of the issued and outstanding Common Shares, Couche-Tard shall also be entitled to designate a number of Investor Nominees for election to the Board proportionate to its then Common Share ownership interest in the Company. In addition, the Investor Rights Agreement provides Couche-Tard with certain registration rights with respect to its Common Shares.
The Transaction is subject to customary closing conditions and applicable regulatory approvals, including the receipt of approval by the holders of Common Shares as required by the policies of the TSX. In addition, conditional upon completion of the Transaction and the satisfaction of certain customary conditions of uplisting, Fire & Flower will be graduating from the TSX Venture Exchange to the TSX.
Voting and Support Agreements
Concurrent with the entering into of the Subscription Agreement, certain directors, officers and shareholders of the Company have entered into voting and support agreements pursuant to which such parties have agreed to vote an aggregate of 23,069,271 Common Shares in favour of the Transaction, representing approximately 19.6% of the issued and outstanding Common Shares
GMP Securities LP is acting as financial advisor to Fire & Flower and Dentons Canada LLP is acting as its legal advisor. In addition, each of Eight Capital and AltaCorp Capital Inc. provided a fairness opinion that, based upon and subject to the assumptions, qualifications and limitations set out therein, the financial terms of the Transaction are fair, from a financial point of view, to the Company.
National Bank Financial Inc. is acting as exclusive financial advisor to Couche-Tard and Davies Ward Phillips & Vineberg LLP is acting as its legal advisor.
Copies of the Subscription Agreement and the agreements attached thereto as exhibits, including the form of Debenture certificate, the form of Warrant certificate and the form of Investor Rights Agreement, will be filed on the Company’s profile on SEDAR at www.sedar.com. The above descriptions of the terms and conditions of the Subscription Agreement and the agreements attached thereto as exhibits, are qualified in their entirety by the terms of the Subscription Agreement.
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 Hifyre™ digital platform connects consumers with cannabis products. 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 in the provinces of Alberta and Saskatchewan and is a consultant and licensor to Fire & Flower-branded retail locations in the province of Ontario.
Couche-Tard is the leader in the Canadian convenience store industry. In the United States, it is the largest independent convenience store operator in terms of the number of company-operated stores. In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in the Scandinavian countries (Norway, Sweden and Denmark), in the Baltic countries (Estonia, Latvia and Lithuania), as well as in Ireland, and has an important presence in Poland.
As of April 28, 2019, Couche-Tard’s network comprised 9,866 convenience stores throughout North America, including 8,629 stores with road transportation fuel dispensing. Its North American network consists of 19 business units, including 15 in the United States covering 48 states and 4 in Canada covering all 10 provinces. Approximately 109,000 people are employed throughout its network and at its service offices in North America. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to approximately 1,300 locations in the United States.
In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through ten business units. As of April 28, 2019, Couche-Tard’s network comprised 2,709 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations which only offer road transportation fuel. Couche-Tard also offers other products, including stationary energy and aviation fuel. Including employees at branded franchise stores, approximately 24,000 people work in its retail network, terminals and service offices across Europe.
In addition, under licensing agreements, more than 2,150 stores are operated under the Circle K banner in 15 other countries and territories (Cambodia, China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to more than 16,000 stores.
For more information on Alimentation Couche-Tard Inc. or to consult its quarterly Consolidated Financial Statements and Management Discussion and Analysis, please visit: https://corpo.couche‑tard.com.
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 the Company at the date the statements are made based on information then available to the Company. Various factors and assumptions are applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Forward-looking statements are subject to and involve a number of known and unknown risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company’s actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements, including, but not limited to, the closing of the Transaction, the conversion and exercise of the Debentures and Warrants, respectively, thereunder, the graduation of the Company to the facilities of the TSX, the pace of the Company’s growth and expansion and the expansion of HiFyre’s capabilities and commercialization opportunities. No assurance can be given that the expectations reflected in forward-looking statements will prove to be correct.
The Company 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.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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