Flower One Files Prospectus for C$50 Million Offering

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Flower One Holdings (CSE: FONE) (OTCQB: FLOOF) has filed a final prospectus for its C$50 million public offering. The company plans to offer 50,000 convertible debenture units at $1,000 per debenture unit.

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As part of the offering, the company has granted agents an over-allotment option for additional debenture units; additional convertible debentures at an C$824.51 a piece; additional warrants at C$0.914 apiece; or any combination thereof; given the total number of additional debentures and warrants issued under the over-allotment option does not exceed 7,500 debentures or 1,440,000 warrants.

Each debenture unit will consist of one 9.5% unsecured convertible debenture maturing three years from the date of issuance and 192 common share purchase warrants.

The convertible debentures will bear interest at a rate of 9.5% per annum from the date of issue, payable semi-annually in arrears on the last day of June and December in each year and will have a maturity 36 months from the date of issuance.

The principal amount of each convertible debenture will be convertible, for no additional consideration, into Flower One common shares at the option of the holder at any time prior to the earlier of the close of business on the maturity date; and the business day immediately preceding the date specified by the company for redemption of the convertible debentures upon a change of control at a conversion price equal to C$2.60, subject to certain adjustment and acceleration provisions.

Each warrant will entitle the holder thereof to purchase one common share at an exercise price of C$2.60 at any time up to 36 months following closing date of the offering, which is scheduled to occur on or before March 26, 2019, or such other date as may be agreed upon by the company and the lead agents.

Agency Agreement

In connection with the offering, Flower One has entered into an agency agreement with Mackie Research Capital Corp. and Canaccord Genuity Corp., on behalf of a syndicate of agents including Cormark Securities, Eight Capital, Industrial Alliance Securities, and PI Financial.

Under the terms of the agreement, the agents will be paid a cash commission equal to 6.0% of the gross proceeds of the offering.

As additional consideration, at the closing of the offering, the agent will be issued non-transferable warrants of the company to purchase such number of common shares as is equal to 3.5% of the number of common shares issuable upon conversion of the convertible debentures (based on a C$2.60 conversion price); plus the number of common shares issuable upon exercise of the warrants sold under the offering, each such broker warrant exercisable into a common share at an exercise price equal to the conversion price any time up to 36 months from the closing date.

Flower One intends to use net proceeds from the offering for the payment of outstanding notes, acquisition of assets, ongoing construction and development of its Nevada production facility, working capital, and general corporate purposes.

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