TORONTO — August 2, 2023 — Flow Capital Corp. (TSXV:FW) (“Flow Capital” or the “Company”), a leading provider of flexible growth capital and alternative debt solutions, announces that it has entered into a loan transaction with certain third party lenders pursuant to which the lenders will advance the aggregate amount of C$17.9 million to the Company (the “Loans”). The Loans will be evidenced by unsecured, non-convertible debentures (the “Debentures”) issued by the Company to the Lenders pursuant to the terms of a debenture indenture entered into between the Company and Olympia Trust Company, as debenture trustee.
The Debentures will be issued in multiple series bearing interest at varying floating rates, with a minimum rate of 7% and a maximum rate of 12.5% based on the applicable series of Debentures, and will mature on August 1, 2043 (the “Maturity Date”), subject to earlier redemption or retraction in certain circumstances. The Debentures are unsecured, non-convertible, non-voting and carry no right to participate in the earnings of the Company. No portion of the principal or interest outstanding under the Debentures may be repaid in securities of the Company.
The net proceeds of the Loans will be used by the Company to repay existing indebtedness, fund investments and for general corporate purposes.
“We are excited about the introduction of the new redeemable debenture structure. By providing investors with a floating rate of interest, redeemability, and seniority to almost $40M in equity, we expect we can use it to raise additional capital over time. The net new funds will be invested into high growth companies in the form of senior secured loans, with warrant upside. Given our 5 year track record of over 30% IRR on our investments, we expect the deployment of funds into new investments will help us to continue to increase shareholder value,” said Alex Baluta, CEO of Flow Capital.
Certain officers and directors of the Company participated in the Transaction and, as such, the Transaction may constitute a related party transaction under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), but is otherwise exempt from the formal valuation and minority approval requirements of MI 61-101 by virtue of Sections 5.5(b) and 5.7(1)(f) of MI 61-101. No special committee was established in connection with the Transaction or the participation of the applicable officers and directors in the Transaction, and no materially contrary view or abstention was expressed or made by any director of the Company in relation thereto. Further details will be included in a material change report that will be filed by the Company in connection with the completion of the Transaction. The Company did not file the material change report more than 21 days before the expected closing date of the Transaction as the details of the Transaction and the total amount to be advanced by the applicable officers and directors were not settled until shortly prior to the closing of the Transaction, and the Company wished to complete the Transaction on an expedited basis for sound business reasons.
About Flow Capital
Flow Capital Corp. is a diversified alternative asset investor and advisor, specializing in providing minimally dilutive capital to emerging growth businesses. For more information on Flow Capital, please visit www.flowcap.com.
For further information, please contact:
Flow Capital Corp.
Alex Baluta
Chief Executive Officer
alex@flowcap.com
47 Colborne St, Suite 303
Toronto, Ontario M5E 1P8
Certain statements herein may be “forward-looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Flow or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements. These forward-looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and Flow assumes no obligation, except as required by law, to update any forward-looking statements to reflect new events or circumstances.
