Fire & Flower Holdings Corp (FAF)

[FUNMAN]

FIRE & FLOWER ANNOUNCES PROPOSED AMENDMENT TO DEBENTURES HELD BY ALIMENTATION COUCHE-TARD AND POSTPONEMENT OF SPECIAL SHAREHOLDERS' MEETING

DECEMBER, 15, 2022

TORONTO, Dec. 15, 2022 /CNW/ - Fire & Flower Holdings Corp. ("Fire & Flower" or the "Company") (TSX: FAF) (OTCWX: FFLWF), today announced that it has entered into an agreement (the "Amendment Agreement") to amend the approximately $2.4 million principal amount of unsecured convertible debentures (the "Debentures") held by 2707031 Ontario Inc., an indirect wholly-owned subsidiary of Alimentation Couche-Tard Inc. ("ACT"), to extend the maturity date from June 30, 2023 to August 31, 2024 (the "Debenture Amendment").

Fire & Flower Holdings Corp. Logo (CNW Group/Fire & Flower Holdings Corp.)

Conditions Precedent
The Debenture Amendment shall come into effect immediately following the satisfaction of certain conditions precedent, including: (a) the receipt of the requisite approvals for the Debenture Amendment by the holders of the common shares of the Company (the "Shareholders") as required by applicable securities laws and the policies of the Toronto Stock Exchange (the "TSX"); and (b) the approval by the Shareholders of: (i) the previously announced private placement, whereby ACT will subscribe for 3,034,017 Common Shares at a price of $1.64798 per Common Share, for aggregate proceeds of approximately $5,000,000 (the "Private Placement"); and (ii) the previously announced amendments to the Series C Common Share purchase warrants of the Company held by ACT (the "Series C Amendments"). A description of the Private Placement and Series C Amendments is available in the Company's management information circular dated November 4, 2022 (the "Circular") in respect of the special meeting of Shareholders (the "Special Meeting") to consider the approval of the Private Placement and the Series C Amendments. A copy of the Circular is available on the Company's SEDAR profile at www.sedar.com. There can be no certainty as to when the Debenture Amendment will become effective, if at all.

In the event the Debenture Amendment comes into effect, the extension of the maturity date from June 30, 2023 to August 31, 2024 may result in the Company paying to ACT up to an additional $230,000 in interest, which amount may still be satisfied, at the election of the Company, by the issuance of common shares of the Company (the "Common Shares") at a conversion price equal to 95% of the 20-day volume weighted average trading price of the Common Shares at the time any such interest is payable.

"We are pleased to have negotiated this extension as part of our ongoing discussions related to the comprehensive ACT financing package that is subject to a minority shareholder vote," said Stéphane Trudel, CEO of Fire & Flower. "This extension is expected to contribute to our ability to execute on our plan to get to positive free cash flow by the second half of 2023 and secure our position as a leader in cannabis retailing, supported by our industry-leading Hifyre digital platform."

Postponement of Special Meeting
As the effectiveness of the Debenture Amendment is conditional on the approval of the Private Placement and the Series C Amendments by the Shareholders, the Company has determined to give the Shareholders additional time to consider their vote with respect to the Private Placement and Series C Amendments. As such, the Company has: (a) postponed the Special Meeting to December 29, 2022 at 1:00 p.m. EST at the offices of Dentons Canada LLP, 77 King Street West, Suite 400, Toronto, Ontario M5K 0A1; and (b) extended the proxy deadline for voting at the Special Meeting from Wednesday, December 14, 2022 at 10:00 a.m. EST to up until the start of the Special Meeting. If you have already voted your proxies in favour or against the Private Placement and Series C Amendments and wish to revoke your proxy, please see the Circular for further information.

Fire & Flower Board Recommendation
The board of directors of the Company (the "Board"), based on a unanimous recommendation of a special committee comprised of independent directors (the "Special Committee") and after consultation with its advisors, has unanimously determined that the Debenture Amendment is in the best interests of Fire & Flower and reiterates its recommendation that the Shareholders, other than ACT and its affiliates, vote in favour of the Private Placement and the Series C Amendments at the Special Meeting to be held on December 29, 2022.

The Special Committee was established by the Board to consider certain proposals made by ACT, as well as other alternatives available to the Company and, if deemed advisable, negotiate with ACT. The Special Committee has unanimously recommended that the Board approve the Debenture Amendment. The Board (excluding conflicted directors), having received the unanimous recommendation of the Special Committee, unanimously approved the Debenture Amendment and determined that the Debenture Amendment is in the best interests of the Company and recommends that the Shareholders, other than ACT and its affiliates, vote in favour of the Debenture Amendment at a meeting of Shareholders to be held at a future date to be determined by the Company.

Related Party Transaction
ACT holds greater than 10% of the outstanding voting securities of the Company. As such, the Debenture Amendment constitutes a related-party transaction under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Debenture Amendment is not subject to the formal valuation requirements of MI 61-101. The Debenture Amendment is not exempt from the minority shareholder approval requirements under section 5.7 of MI 61-101, and as such, is subject to minority shareholder approval in accordance with MI 61-101, which approval is expected to be sought at a meeting of the Shareholders to be held at a future date to be determined by the Company.

Additional Information
A copy of the Amendment Agreement will be filed on the Company's profile on SEDAR at www.sedar.com.

About Fire & Flower
Fire & Flower is a cannabis consumer retail and technology platform with more than 90 corporate-owned stores in its network. The Company leverages its wholly-owned technology development subsidiary, Hifyre Inc., to continually advance its proprietary retail operations model while also providing additional independent high-margin revenue streams. Fire & Flower guides consumers through the complex world of cannabis through best-in-class retailing while the HifyreTM digital and analytics platform empowers retailers to optimize their connections with consumers. The Company's leadership team combines extensive experience in the technology, cannabis and retail industries.

Through the strategic investment of ACT (owner of Circle K convenience stores), the Company has set its sights on global expansion as new cannabis markets emerge and is poised to expand into the United States when permitted through its strategic licensing agreement with Fire & Flower U.S. Holdings upon the occurrence of certain changes to the cannabis regulatory regime. To learn more about Fire & Flower, visit www.fireandflower.com.

About Alimentation Couche-Tard Inc.
Couche-Tard is a global leader in convenience and mobility, operating in 24 countries and territories, with more than 14,300 stores, of which approximately 10,900 offer road transportation fuel. With its well-known Couche-Tard and Circle K banners, it is one of the largest independent convenience store operators in the United States and it is a leader in the convenience store industry and road transportation fuel retail in Canada, Scandinavia, the Baltics, as well as in Ireland. It also has an important presence in Poland and Hong Kong Special Administrative Region of the People's Republic of China. Approximately 122,000 people are employed throughout its network.

For more information on Alimentation Couche-Tard Inc. or to consult its audited annual Consolidated Financial Statements, unaudited interim Consolidated Financial Statements, and Management Discussion and Analysis, please visit: https://corpo.couche-tard.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This news release contains certain forward-looking information within the meaning of applicable Canadian securities laws ("forward-looking statements"). All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "project" and similar words, including negatives thereof, suggesting future outcomes or that certain events or conditions "may" or "will" occur. These statements are only predictions.

Forward-looking statements are based on the opinions and estimates of management of Fire & Flower at the date the statements are made based on information then available to Fire & Flower. Various factors and assumptions are applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Forward-looking statements are subject to and involve a number of known and unknown, variables, risks and uncertainties, many of which are beyond the control of Fire & Flower, which may cause Fire & Flower's actual performance and results to differ materially from any projections. Such factors, among other things, include: final regulatory and other approvals or consents (including shareholder approval).

No assurance can be given that the expectations reflected in forward-looking statements will prove to be correct. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. Additional information regarding risks and uncertainties relating to the Company's business are contained under the headings "Risk Factors" in the Company's Annual Information Form dated April 26, 2022 and "Risks and Uncertainties" in the management discussion and analysis for the thirteen weeks ended October 29, 2022 filed on its issuer profile on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

SOURCE Fire & Flower Holdings Corp.