Red White & Bloom Brands Inc. (CSE: RWB and OTC: RWBYF) (“RWB” or the “Company”) is pleased to announce the completion of certain financing transactions that provide for approximately US$36.8 of new cash and the retirement of US$7.7M of debt.
“As evidenced by today’s announcement, we continue to demonstrate our ability to access the needed expansion and working capital, in the least dilutive possible manner to our shareholders, to execute on our strategy. With the previously announced pre-qualification in the State of Michigan and this cash injection, we will now move aggressively towards taking control of our investment in Michigan in which the immediate growth strategy includes rebranding our dispensaries under the High Times banner and preparing for the expansion of cultivation facilities so that we can hit the ground running upon final inspection,” said Brad Rogers, CEO and chairman of RWB, adding: “We also would like to welcome our new strategic investors in Florida. This group of investors have significant design/build capabilities in the State of Florida and will be a welcome addition as we embark on an aggressive expansion in that state.”
Details
The Company previously closed a non-brokered “units for debt” private placement of 8,445,426 units (the “Units”) at a price of CDN $1.15 per Unit for gross proceeds of CAD $9,712,239 (or USD $7,769,792). Each Unit consists of one Series II Convertible Preferred Share of RWB (each a “Series II Share”) and one half of one common share purchase warrant (with two half warrants being a “Warrant”). Each Warrant is exercisable to acquire one additional common share (each a “RWB Share”) at a price of CDN $1.15 per RWB Share until May 12, 2023. In addition to the statutory 4-month hold, the investors have agreed to a 12 month lock up of their shares.
In addition, RWB completed a private placement to an arm’s length purchaser (the “Purchaser”) of a principal amount US $6,500,000 unsecured debenture (the “Debenture”). The Debenture bears interest at the rate of 12% per annum and matures 150 days from the date of issuance. As consideration for the purchase of the Debenture by the Purchaser, RWB paid the Purchaser an origination fee by way of the issuance of 531,000 RWB Shares. The gross proceeds of the Debenture will be used by RWB for working capital purposes.
In addition, on June 4, 2021, RWB’s wholly-owned subsidiary, RWB Florida LLC, a Delaware limited liability company (“RWB Florida”) entered into agreements for an aggregate capital raise of US $30,234,224. The raise includes an investment of US $11,337,834 from certain strategic investors (collectively, the “Investors”) directly into RWB Florida (the “Investment Transaction”). Under the terms of the Investment Transaction, the Investors shall receive a direct equity stake in RWB Florida in the form of Class B membership interests in the aggregate of 17.70% of the Company’s outstanding interests. Concurrently with the Investment Transaction, the Investors have advanced an aggregate of US $18,896,390 in subordinated debt to RWB Florida at an 8% interest rate due in 36 months (the “Debt”). The Debt is subordinated to existing debt, secured by an assignment of certain collateral interests, is guaranteed by RWB and, at the option of the holder, is convertible into RWB Shares at a price of US$2.75. In addition, the investors have a 5 day option to invest a further approximately US$4 million on substantially the same terms.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
