Cinaport and Fire & Flower Announce Closing of $36.5 Million Financing

November 02, 2018 11:08 AM EDT | Source: Cinaport Acquisition Corp. II

Toronto, Ontario--(Newsfile Corp. - November 2, 2018) - Cinaport Acquisition Corp. II (TSXV: CPQ.P) ("Cinaport" or the "Company"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), and Fire & Flower Inc. ("Fire & Flower"), an independent retail chain that offers cannabis products and accessories, are pleased to announce that Fire & Flower has completed the previously announced private placement (the "Private Placement") in connection with the previously announced proposed reverse takeover of the Company by Fire & Flower (the "Qualifying Transaction").

The Private Placement was made through a syndicate of agents, led by GMP Securities L.P. and AltaCorp Capital Inc., and included Clarus Securities Inc., Echelon Wealth Partners Inc. and Eight Capital (collectively, the "Agents"). Pursuant to the Private Placement, Fire & Flower issued 24,333,334 subscription receipts (the "Subscription Receipts") at a price of $1.50 per Subscription Receipt for aggregate gross proceeds of $36,500,001.

The gross proceeds from the Private Placement less a portion of the fees and expenses of the Agents (the "Escrowed Funds") have been delivered to Computershare Trust Company of Canada ("CTCC"), as subscription receipt agent. The Escrowed Funds shall be held by CTCC until the waiver and/or satisfaction of certain escrow release conditions, including, but not limited to, the completion, satisfaction or waiver of all conditions precedent to the Qualifying Transaction (other than the release of the Escrowed Funds), the receipt of all shareholder and regulatory approvals required for the Qualifying Transaction and other customary escrow conditions for a transaction of this nature as described in the Company's press release dated September 28, 2018 (the "Escrow Release Conditions")

In connection with the Private Placement, Fire & Flower has paid the Agents cash consideration in the aggregate amount of $1,926,330 (the "Cash Consideration"). Fifty percent (50%) of the Cash Consideration has been paid to the Agents and the remaining fifty percent (50%) of the Cash Consideration has been deposited into escrow and will be released upon satisfaction and/or waiver of the Escrow Release Conditions.

As an additional consideration, the Agents have received 1,284,220 Compensation Options ("Compensation Options") in connection with the Private Placement. Each Compensation Option will be exercisable after the satisfaction and/or waiver of the Escrow Release Conditions for one (1) common share of the resulting issuer (each a "Resulting Issuer Share") after giving effect to the Qualifying Transaction. Each Compensation Option will be exercisable for a Resulting Issuer Share at a price of $1.50 until the date that is 12 months following the satisfaction and/or waiver of the Escrow Release Conditions (subject to any necessary adjustments, including those relevant to the terms of the Qualifying Transaction).

The Private Placement was completed in connection with the Qualifying Transaction between the Company and Fire & Flower, initially announced on September 13, 2018 and updated on October 31, 2018. Subject to approval by the Exchange, the Qualifying Transaction will be completed by way of a three-cornered amalgamation whereby Fire & Flower will amalgamate with 11048449 Canada Inc., a wholly-owned subsidiary of the Company. Upon satisfaction of the Escrow Release Conditions, each Subscription Receipt will be automatically exchanged, without payment of any additional consideration, for one common share of Fire & Flower, which will subsequently be exchanged for one Resulting Issuer Share pursuant to the terms of the Qualifying Transaction. In addition, the Compensation Options will also be exchanged for equivalent instruments of the Resulting Issuer exercisable for Resulting Issuer Shares.

Aside from Norman Inkster, a director of Fire & Flower, and his spouse, none of the Non-Arm's Length Parties (such term as defined in the policies of the Exchange) to the Company and Fire & Flower participated in the Private Placement.

The net proceeds raised from the Private Placement will be used by Fire & Flower for capital expenditures, working capital and general corporate purposes.

About Fire & Flower Inc.

Fire & Flower is an independent retail chain that offers cannabis products and accessories to the adult-use market in provinces where the sale of cannabis by private retailers is legal under: (a) An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts (the "Cannabis Act") which came into effect on October 17, 2018; and (b) applicable provincial regimes for regulating the sale of cannabis by licensed private retailers. Fire & Flower was founded by leading legal cannabis entrepreneurs in Canada, with significant combined experience in launching premium, successful businesses with extensive experience in the legal cannabis space.

Fire & Flower was incorporated under the Canada Business Corporation Act on March 17, 2017.

Fire & Flower has obtained provincial licenses to operate six cannabis retail stores in Alberta and two cannabis retail stores in Saskatchewan, and is pursuing additional licenses to operate stores in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.

For more information, please contact:

Cinaport Acquisition Corp. II

Avi Grewal, Chief Executive Officer
Phone: (416) 213-8118 Ext. 210
E-mail: agrewal@cinaport.com

Fire & Flower Inc.

Trevor Fencott, Chief Executive Officer
E-mail: tfencott@fireandflower.com

This news release does not constitute an offer to sell or a solicitation of an offer to buy 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.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and, if applicable, pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required approval is obtained. There can be no assurance that the Qualifying Transaction will be completed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Qualifying Transaction; the terms and conditions of the proposed Private Placement; use of funds; and the business and operations of the Company after completion of the proposed Qualifying Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the results of operations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Cinaport and Fire & Flower disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press release.

Not for distribution to U.S. news wire services or dissemination in the United States.

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