TORONTO--(BUSINESS WIRE)--Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (“Flow” or the “Company”) today announced the closing of the first tranche of a non-brokered private placement offering (the "Private Placement") of unsecured convertible debenture units of the Company (collectively, the "Convertible Debenture Units"), in which it issued and sold 172.992 Convertible Debenture Units at a price of CDN$10,000 per Convertible Debenture Unit for gross proceeds of CDN$1.73 million. The Company intends to close the balance of the Private Placement for total gross proceeds of up to CDN$7,000,000 (including the first tranche) in one or more additional tranches on such date(s) as may be determined by the Company.
Each Convertible Debenture Unit was comprised of: (i) one 12% unsecured convertible debenture (each, a "Convertible Debenture") in the principal amount of CDN$10,000 convertible into subordinate voting shares of the Company (the "SVS" and each such SVS, a "Conversion SVS") at a conversion price of $0.41 per Conversion SVS (the “Conversion Price”); and (ii) 4,878 SVS purchase warrants (each, a "Warrant") each of which entitles the holder thereof to purchase one SVS (each, a "Warrant SVS") at a price of $0.41 per Warrant SVS for a period of three years. The Company issued 843,855 Warrants in the closing of the first tranche of the Private Placement.
The Convertible Debentures will mature three years from their date of issue (the "Maturity Date") and bear interest ("Interest") at a rate of 12% per annum, accruing from their date of issue and compounding annually, and payable in cash on the Maturity Date. The principal amount of the Convertible Debentures will not be repaid in cash and will be repaid on the Maturity Date by the Company issuing a number of Conversion SVS equal to the sum of the aggregate outstanding principal amount of the Convertible Debentures divided by the Conversion Price. The Company has an option but not an obligation to repay the principal amount of the Convertible Debentures in cash.
Beginning on the date that is six months from the issuance of the Convertible Debentures, the principal amount of the Convertible Debentures may be converted into Conversion SVS, in whole or in part, at the option of the holders of the Convertible Debentures at the Conversion Price. Holders converting their Convertible Debentures will receive accrued and unpaid interest on the principal amount of the Convertible Debentures converted for the period from and including the date of issue to, but excluding, the date of conversion, with such interest being accrued and compounded annually and paid on the Maturity Date.
Beginning on the date that is six months from the issuance of the Convertible Debentures, the Company may force the conversion of all of the outstanding principal amount of the Convertible Debentures at the Conversion Price if the daily volume weighted average trading price of the SVS on the Toronto Stock Exchange (the “TSX”) exceeds $0.85 for at least five consecutive trading days (the “Mandatory Conversion”). Upon Mandatory Conversion, holders of the Convertible Debentures will receive accrued and unpaid interest on the principal amount of the Convertible Debentures converted for the period from and including the date of issue to, but excluding, the date of the Mandatory Conversion, with such interest being accrued and compounded annually and paid on the Maturity Date.
Provided that no event of default has occurred under the Convertible Debentures which is continuing, the Company has the right to redeem the whole or any portion of the outstanding principal amount of the Convertible Debentures without any premium or penalty at a redemption price equal to the outstanding principal amount under the Convertible Debentures, together with interest on the principal amount so redeemed accrued and unpaid to the date fixed for redemption.
The Warrants include a mandatory exercise provision whereby, if at any time following the date that is six months from the issuance of the Warrants and prior to the expiry date of the Warrants, the closing trading price of the SVS exceeds $0.85 for five consecutive trading days on the TSX, the Company may force the exercise of all the then unexercised Warrants and require the holders of the Warrants to exercise their Warrants in whole.
The Convertible Debentures, the Warrants, the Conversion SVS and the Warrant SVS are subject to a statutory hold period of four months and one day from the date of issuance of the Convertible Debenture Units ending on May 1, 2025.
The proceeds of the Private Placement will be used for working capital and general corporate purposes. The Private Placement remains subject to final approval by the TSX.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "1933 Act") and may not be offered or sold to, or for the account or benefit of, persons in the United States or "U.S. persons" (as such term is defined in Regulation S under the 1933 Act) absent registration or an applicable exemption from the registration requirements of the 1933 Act and any applicable state securities laws.
The TSX does not accept responsibility for the adequacy or accuracy of this release and has neither approved nor disapproved the contents of this press release.