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Monday, May 20, 2024
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.


Fire & Flower to get up to $30M in loans from Circle K owner

Some of the funds will go toward expanding its digital retail platform

Fire & Flower to get up to $30M in loans from Circle K owner
Fire & Flower launched a pilot in July 2020 with pot shops next to Circle K convenience stores in Alberta. Press photo

Cannabis retail chain Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWF) is getting access to a significant loan facility from its partner in the convenience store business.

On Monday, the company said it’s entered into a loan agreement with a wholly owned subsidiary of Cirle K-owner Alimentation Couche-Tard Inc. (TSX: ATD) for up to $30 million.

The amount can be drawn in three separate tranches of $10 million. The loan will accrue interest at an annual rate of 8 per cent, is payable quarterly and will mature on Oct. 1, 2022.

Fire & Flower says the deal “contemplates” prepayments via proceeds from ACT exercising warrants which become available Jan. 1, 2022. The loan is secured by assets in the company.

The company says the funds from the loans will be used to further develop its digital retail platform, as well as for general corporate purposes.

Read more: Fire & Flower revenues flat as digital platform proves vital

Read more: Fire & Flower consolidating shares for Nasdaq listing

Access to $30 million in debt financing is a strong show of support from ACT, and serves as proof of the companies’ alignment on the future of cannabis retail, Fire & Flower CEO Trevor Fencott says in a statement.

“Through their leadership, network and expertise, we are accelerating the dynamics of the retail shopping experience and creating a consumer-centric marketplace that leverages technology and data-driven insights to deliver a personalized collection of products to consumers and reaches them wherever they are at,” he continues.

“As we move forward in our development, we are excited to continue to leverage this relationship and further expand our co-located store program to deliver the most convenient shopping experience to our customers.”

ACT holds more than 10 per cent of outstanding voting securities in Fire & Flower, according to a statement. Given that, the company says its relied on exemptions to related-party transaction rules. More details are set to come in a material change report.

Company stock was down around 4 per cent Monday to around $6.07 on the Toronto Stock Exchange.

In July 2020, Fire & Flower first started adding pot shops next to two Circle K stores in Alberta. In October 2021 the firm said it was adding more adjacent stores in AlbertaSaskatchewan and Manitoba, following success of the initial pilot.

Read more: Fire & Flower adding new stores near Canadian Circle Ks

Read more: Fire & Flower plants roots in US with Palm Springs store

That deal also includes the opportunity for further expansion in Ontario and the U.S.

In August, Fire & Flower opened its first branded location in America, by way of a licensing deal with Fire & Flower U.S. Holdings, formerly American Acres Managers.

In September, Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) made a deal with Circle K to sell CBD vapes in U.S. stores.

Read more: Canopy CBD vape to be sold at US Circle K stores


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