Flower One Confirms $10.1M Financing, Cannabis Company's Leadership Agrees To Pay Cuts

Flower One Holdings Inc.  FONE FLOOF (FSE: F11) announced a term loan financing with an existing shareholder for aggregate proceeds of $10.1 million. In addition, the company has made further advancements in its ongoing debt restructuring through an additional loan modification agreementwith 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," Kellen O'Keefe, president & CEO of Flower One stated. "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."

The company and certain of its subsidiaries have entered into a loan modification agreement with RB Loan Portfolio II, LLC, with respect to the company's existing $30 million 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.

Flower One's receipt of the term loan was facilitated by a participant's purchase of the interest in the term debt  from the term lender in the amount of $10.1 million.

Restructuring Efforts

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," Araxie Grant, Flower One's CFO stated. "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."