Flow Capital Announces Non-Convertible Debenture Transaction

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
[email protected]

1 Adelaide Street East, Suite 3002,
PO Box 171,
Toronto, Ontario M5C 2V9

Forward-Looking Information and Statements

This press release contains certain “forward-looking information” or “forward looking statements” within the meaning of applicable securities legislation. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein includes information relating to the terms of the Debentures, the proposed use of proceeds of the Loan and the potential for issuing additional Debentures.

The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release. All subsequent written and oral forward- looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice. Readers should not place undue reliance on forward-looking information contained in this press release.

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