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Flower One Announces $10.1MM Financing and Successful Loan Modification to Term Debt

February 14, 2022, 07:00 AM
Filed Under: Cannabis
Related: Cannabis

Flower One Holdings, the leading cannabis cultivator and producer in Nevada, announced a term loan financing with an existing shareholder for aggregate proceeds of $10.1M USD (the “Term Loan”). In addition, the Company has made further advancements in its ongoing debt restructuring through an additional loan modification agreement (the “Loan Modification Agreement”) with its term lender and its affiliates.

“With the closing of this debt financing and successful loan modification, we can complete the immediate facility improvements required that will better position the company for long term success as we prepare for a strong recovery from COVID-19 in Nevada. Both closings are very strong indicators of the confidence and belief our financial partners have in Flower One and our ability to continue to successfully execute on our turnaround plan,” said Kellen O’Keefe, President & CEO of Flower One.

The Company and certain of its subsidiaries have entered into a Loan Modification Agreement with RB Loan Portfolio II, LLC, (the “Term Lender”) with respect to the Company’s existing $30M term debt (the “Term Debt”), secured by the facility at 3950 N. Bruce St., North Las Vegas, Nevada. Through the Loan Modification Agreement, the Company would: (i) receive the Term Loan, (ii) capitalize the Payment in Kind (PIK) Interest upon the completion of the loan, and (iii) reduce the monthly interest payable from 14% to 10%, with the balance of interest of 4% to be payable upon the earlier of the Maturity Date (June 30, 2023), in the event of default or earlier payoff of the Term Debt.

The Company’s receipt of the Term Loan was facilitated by a participant’s purchase of the interest in the Term Debt (the “Participation Interest”) from the Term Lender in the amount of $10.1M.

The Flower One executive team, consisting of its CEO/President, Executive Vice President and CFO, have agreed to immediate salary reductions to support the Company’s ongoing restructuring and cash preservation efforts. In addition, the Company’s Board of Directors have also elected to receive a reduction to their cash compensation. The Company has taken multiple measures to reduce its overall operating expenses by introducing automation and new equipment in multiple areas including but not limited to packaging, pre-roll, and vape-filling.

“Reducing both our cost of capital and interest obligations greatly improves our cash flow and advances Flower One on our path to profitability,” said Araxie Grant, Flower One’s CFO. “We appreciate the support of our term lender as they continue to work with us to find creative solutions that allow us the runway required to achieve positive cash flow.”

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