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Avant Brands Inc. (OTCQX:AVTBF) (TSX:AVNT)(FRA:1BU0), announced that Avant Brands K1 Inc. (formerly 1000343100 Ontario Inc.), an entity of which Avant owns 50% of the issued and outstanding shares, has entered into a definitive purchase agreement to acquire all of the issued and outstanding shares in the capital of The Flowr Group (Okanagan) Inc., a subsidiary of The Flowr Corporation (OTCEM:FLWPF), in connection with the Flowr group's proceedings under the Companies' Creditors Arrangement Act and its related sales and investment solicitation process.
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%.
The purchase agreement was entered into between the purchaser, Flowr Okanagan and The Flowr Canada Holdings ULC following completion of an auction process in connection with the sales and investment solicitation process for the Flowr group conducted on December 1, 2022.
Transaction Details
The purchase price payable by the purchaser for the purchased shares pursuant to the purchase agreement shall be $5.1 million being equal to $4 million and common shares in the capital of Avant with a value of $1.1 million based on the deemed price per Avant share equal to a 15% discount to the volume weighted average price per Avant share on the Toronto Stock Exchange for the 10 consecutive trading days preceding the close of trading on the trading day before the closing date, plus the amount of the closing DIP loan and the value of the assumed liabilities, subject to certain adjustments. To the extent necessary, the closing DIP loan will finance, among other things, working capital needs of Flowr Okanagan until closing of the transactions contemplated under the purchase agreement and certain wind-down costs in connection with the Flowr group's CCAA proceedings.
The purchase price will be satisfied through:
A credit bid of the DIP loan and closing DIP loan, plus any accrued and unpaid interest, expenses, fees and other amounts.
Delivery of the Avant share consideration.
An amount in cash equal to the purchase price less the credit bid and the Avant share consideration, a portion of which may be payable in non-cash consideration in certain circumstances.
The assumption of certain liabilities set out in the purchase agreement. 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 purchase agreement.
The consummation of the transaction is subject to satisfaction or waiver of a number of conditions set forth in the purchase agreement, including, among other things, receipt of all regulatory approvals and of the Ontario Superior Court of Justice (Commercial List) granting an approval and vesting order. The transaction is expected to close within Q1 of 2023.
The company previously announced that the purchaser had executed a term sheet with Flowr and its subsidiaries, Flowr Okanagan, Flowr ULC and Terrace Global Inc. (collectively the "Flowr group"), pursuant to which the purchaser will advance a debtor-in-possession loan in the amount of $2 million in connection with the Flowr group's filing for protection from the court under the CCAA.
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