Access to Medical Cannabis Is Now Legal in Ireland Under New Pilot Scheme

Access to Medical Cannabis Is Now Legal in Ireland Under New Pilot Scheme

TORONTO, June 24, 2019 (GLOBE NEWSWIRE) — PRESS RELEASE — The Flowr Corporation has announced that it has entered into a definitive agreement to acquire the remaining 80.2-percent interest in Holigen Holdings Limited by way of a share purchase. Flowr previously announced its intention to acquire 19.8 percent of Holigen. Upon the closing of the acquisition, Flowr expects to own 100 percent of the issued and outstanding shares of Holigen. The acquisition has been approved by the board of directors of each of Flowr and Holigen and is strongly supported by both management teams.

“The full acquisition of Holigen is a natural evolution of our global cannabis strategy. The combination of Flowr’s leading cultivation know-how and facility design with Holigen’s global footprint, expertise in GMP and deep pharmaceutical experience is an excellent fit. The opportunities in the European and Australian-Asian medical cannabis markets are enormous and Holigen brings unmatched scale to service these regions,” said Vinay Tolia, Flowr’s chief executive officer.  “Over the course of this year, we have worked closely with Holigen’s management to help develop their incredible assets, notably Aljustrel, their Portuguese outdoor cultivation facility. Aljustrel, which is expected to be operational in the second half of 2019, is a planned 7-million-square-foot outdoor cultivation footprint with an expected ability to produce over 500,000 kilos annually and was deemed a Project of National Interest by the Portuguese Government. This acquisition positions us to be successful with two distinct and economically sustainable strategies, the premium dried flower market in Canada and the low-cost, large-scale extract medical market globally.”

The purchase price for the acquisition is expected to be satisfied by the issuance to DFT Trading Limited and Pleiades Trading Limited, the vendors under the agreement of 32,632,545 Series 1 Voting Convertible Redeemable Preferred shares of the company, cash consideration in an amount equal to the Canadian dollar equivalent of €4,269,927.31 based on the Bank of Canada exchange rate on the business day prior to the closing date of the acquisition and an amount equal to the Canadian dollar equivalent of certain amounts loaned by related parties to a vendor to Holigen, up to a maximum amount of C$2,000,000. In addition, Flowr has agreed to pay the aggregate amount of €1,378,106.53 to certain of Holigen’s creditors, subject to closing. The purchase price is subject to adjustment based on the working capital of Holigen at closing.

Pursuant to their terms (i) 10 percent of the consideration shares will automatically convert into common shares of Flowr immediately after issuance on closing; and (ii) 40 percent of the consideration shares will automatically convert into common shares six months from the closing, in each case on a 1:1 basis. The remaining 50 percent of the consideration shares will convert into common shares when and if Holigen achieves certain milestones related to the lodging of product applications and achieving certain planting targets in Australia and Portugal. Flowr has agreed to expend an aggregate of €17 million and AUD$11 million between closing and January 2020 in order to help Holigen achieve such planting targets. Except as provided by law, the holders of consideration shares are entitled to vote with the holders of outstanding common shares and in any such vote, each consideration share shall be entitled to a number of votes equal to the number of common shares into which such consideration share is convertible.

Pursuant to the agreement, Flowr has agreed to appoint Pauric Duffy (the control person of DFT Trading Limited) to the board of directors of Flowr on closing, subject to TSX.V approval, and Duffy and Peter Comerford (the control person of Pleiades Trading Limited) will be employed by the company as Managing Director, Europe and Managing Director, Australia respectively. The agreement contains customary representations, warranties and covenants of each of Flowr, the vendors and certain guarantors of the Vendors, being DFT Holdings Limited (the parent of DFT Trading Limited), Pauric Duffy, Pleiades Holdings Limited (the parent of Pleiades Trading Limited) and Peter Comerford.

In connection with the acquisition, Duffy will indirectly receive, among other consideration, 26,160,060 consideration shares. As a result, Duffy will enter into a governance agreement with Flowr, whereby he will agree to certain customary standstill and transfer restrictions. The governance agreement also provides that until the earlier of the first business day on which Duffy beneficially owns shares of Flowr representing less than 13 percent of the then issued and outstanding common shares on a partially diluted basis, and (ii) the conversion or redemption of all of the consideration shares held by Duffy and his affiliates, the completion of certain transactions (as set out in the governance agreement) by the company will require consent of Duffy (not to be unreasonably withheld). This consent right, however, will not restrict the board of directors of Flowr from exercising its fiduciary duties.

Holigen is to pay to its financial advisor a transaction fee of C$750,000, contingent upon the closing of a transaction such as the acquisition. Pursuant to the SPA, the company has agreed to pay the transaction fee if closing occurs.

Closing is subject to, among other things, the TSX.V’s conditional approval of the listing of the common shares upon conversion of the consideration shares and the receipt of approval of Flowr’s shareholders (if required). If the closing has not occurred on or before July 15, 2019 (which date may be extended by mutual agreement of the parties), and if such outside date has not been extended by the parties, Flowr or the vendors may terminate the agreement.

Each of Holigen and its subsidiaries, the vendors and the guarantors are arm’s length parties to Flowr.

Published at Tue, 02 Jul 2019 15:49:00 +0000

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