The Flowr Corporation (CVE:FLWR) (OTCMKTS:FLWPF) said it has entered an equity line and profit sharing agreement with Terrace Global Inc. (TSX.V:TRCE), a Canadian firm focused on advancing international cannabis assets, to develop finished cannabis products for the European medicinal market under the Holigen brand.
Terrace Global has agreed to fund the operations and certain capital expenditures at Flowr’s outdoor facility in Aljustrel, Portugal in exchange for common shares and warrants in Flowr, to be issued in certain intervals during 2020, and the sharing of net proceeds from the sale of any medical cannabis products produced from the facility. The parties expect Terrace Global to fund at least $3 million under this partnership.
Flowr said the partnership also allows both companies to participate in the planting, growing, cultivation, harvesting and production of high-quality medical cannabis, with the agreement contemplating advancing the planting of up to 12 hectares of land at Aljustrel in 2020 to cultivate medicinal cannabis for the European market.
Additionally, the agreement provides for the establishment and approval of cultivation plans and operating budgets by Flowr and Terrace Global. Once approved, Terrace Global will provide Flowr with the funds required.
Flowr said it will begin initial planting efforts in Aljustrel immediately and that the products created will be sold under the Holigen brand in Europe, with Terrace Global entitled to 25% of the net proceeds of sales which may be reduced to 20% in certain circumstances.
In exchange for funding the plans, Flowr said Terrace Global will be issued shares at a price equal to the volume-weighted average trading price on the day prior to the day of such subscription less the maximum applicable discount available under the rules of the TSX Venture Exchange, subject in all circumstances to a minimum price of $0.52 per common share.
In a statement, Flowr’s chief executive Vinay Tolia said: “We are very pleased to announce this partnership with Terrace Global who bring a great deal of global cannabis industry experience and expertise to the table which will help us further advance our efforts in commercializing our Holigen business as we embark on one of the first large scale outdoor cultivation projects of medicinal cannabis in Europe.
"There is an increased level of comfort in this partnership given prior successful ventures and working relationships with senior leadership of both Terrace Global and Flowr.”
The company also said that it has granted 75,000 incentive stock options and 50,000 restricted share units to an officer of the firm, with the options exercisable at a price of $0.64.
Headquartered in Toronto, The Flowr Corporation aims to support improving outcomes through responsible cannabis use and strives to be the brand of choice for consumers and patients seeking the highest-quality craftsmanship and product consistency across a portfolio of differentiated cannabis products.
Contact the author Calum Muirhead at [email protected]