- Avant 50% joint venture closes previously announced bid to purchase Flowr Okanagan, including Flowr Okanagan's Kelowna operation, for approximately $3.850 million and $1.265 million in Avant Shares
- Provides Avant with combined facilities of approximately 185,000 square ft
- Expected to increase Avant's production capabilities by 60%[1]
- Results in Avant being one of the largest indoor, ultra-premium producers in Canada2
KELOWNA, BC / ACCESSWIRE / February 3, 2023 / Avant Brands Inc. (TSX:AVNT)(OTCQX:AVTBF)(FRA:1BU0) ("Avant" or the "Company"), a leading producer of innovative, premium handcrafted cannabis products, announced that Avant Brands K1 Inc. (formerly 1000343100 Ontario Inc.) (the "Purchaser"), an entity of which Avant owns 50% of the issued and outstanding shares, closed its previously announced acquisition of all of the issued and outstanding shares (the "Purchased Shares") in the capital of The Flowr Group (Okanagan) Inc. ("Flowr Okanagan"), a subsidiary of The Flowr Corporation (FLWR; FLWPF) ("Flowr"), on February 1, 2023 pursuant to an amended and restated purchase agreement among the Purchaser, Flowr Okanagan and Flowr Canada Holdings ULC ("Flowr ULC") dated December 1, 2022, as amended.
As previously announced, the Flowr Okanagan facility will increase Avant's overall square footage of cultivation facilities to approximately 185,000 square feet and is expected to increase Avant's annual production capacity by approximately 60%1. It is anticipated that Avant will be one of the largest producers in Canada of indoor grown, ultra-premium cannabis2.
The aggregate purchase price for the Purchased Shares was equal to $5,115,000, consisting of (a) $3,850,000 payable in cash and satisfied in the manner described below; and (b) 7,402,186 common shares in the capital of Avant ("Avant Shares") with a value of $1,265,000 based on the deemed price of $0.1708955 per Avant Share (the "Avant Share Consideration"), plus (i) the amount of the Closing DIP Loan (to the extent not otherwise repaid); and (ii) the value of the Assumed Liabilities (as those terms are defined in the Purchase Agreement), subject to certain adjustments (collectively, the "Purchase Price").
The Purchase Price was satisfied through: (a) a credit bid of all amounts owing to the Purchaser under the DIP Term Sheet (as defined below) including any accrued and unpaid interest, expenses, fees and other amounts (collectively, the "Credit Bid"), (b) delivery of the Avant Share Consideration, (c) an amount in cash equal to the Purchase Price less the Credit Bid and the Avant Share Consideration, and (d) the assumption of certain liabilities, as set out in the Purchase Agreement.
The Company previously announced that the Purchaser had executed a term sheet (as amended, the "DIP Term Sheet") with Flowr and its subsidiaries, Flowr Okanagan, Flowr ULC and Terrace Global Inc. ("Terrace" and collectively with Flowr, Flowr Okanagan and Flowr ULC, the "Flowr Group"), pursuant to which the Purchaser advanced a debtor-in-possession loan (the "DIP Loan") in connection with the Flowr Group's filing for protection from the Court under the CCAA. On January 31, 2023, the DIP Term Sheet was amended, and the principal amount of the DIP Loan was increased by $500,000 to an aggregate of $2,500,000.
About Avant Brands Inc.
Avant is an innovative, market-leading premium cannabis company. Avant has multiple operational production facilities across Canada, which produce high-quality, handcrafted cannabis products, based on unique and exceptional cultivars. Avant's products are distributed via three complementary sales channels: recreational, medical and export. Avant's recreational consumer brands include: BLK MKT™, Tenzo™, Cognōscente™ and Treehugger™, which are sold in British Columbia, Saskatchewan, Manitoba, Ontario, Atlantic Canada and the territories.The Company's medical cannabis brand, GreenTec™, is distributed nationwide, directly to qualified patients through its GreenTec Medical portal and through various medical cannabis partners.
Avant is a publicly traded corporation listed on the Toronto Stock Exchange (TSX: AVNT), and cross-trades on the OTCQX Best Market (OTCQX: AVTBF) and Frankfurt Stock Exchange (FRA: 1BU0). The Company is headquartered in Kelowna, British Columbia and has operations in British Columbia, Alberta, and Ontario.
To learn more about Avant, access the investor presentation, or learn more about its consumer brands, please visit www.avantbrands.ca.
For additional information, please contact:
Investor Relations at Avant Brands Inc.
1-800-351-6358
[email protected]
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:
This news release includes certain "forward-looking information" as defined under applicable Canadian securities legislation, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: the expected increase to Avant's overall square footage of cultivation facilities and increase in annual production capabilities; the Company's expectation that they will become one of the largest indoor producers of premium cannabis products in Canada; advances pursuant to the DIP Loan and Closing DIP Loan; and expectations for other economic, business, and/or competitive factors. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Examples include statements that the Company will operate in a fiscally disciplined manner; that the Company will build long-term shareholder value and reduce operational expenses; or that the Company will increase its revenue and gross margins.
Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance, or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the prompt and effective integration of Flowr Okanagan's operations with the Company's; the ability to achieve the anticipated synergies; inherent uncertainty associated with projections; diversion of management time on transaction related issues; expectations regarding future growth and expansion; regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets and inflation-related risks; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; and the risk factors set out in the Company's annual information form dated February 28, 2022, filed with Canadian securities regulators and available on the Company's profile on SEDAR at www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
1 This estimate is based on the assumption that the output at Flowr's facility will be consistent with the production output at Avant's existing facilities.
2 This estimate is based on publicly available information on other Licensed Producers, with products for sale on OCS.ca, that are priced in-line with Avant's flagship brand, BLK MKT or higher.
SOURCE: Avant Brands, Inc.