Freshlocal Solutions Inc.Announces $ 12 Million Private Placement of Convertible Debenture Units

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VANCOUVER, BC, November 19, 2021 / CNW / – Freshlocal Solutions Inc. (TSX: LOCL) (OTC: FLOCF) (“Freshlocal” or the “Company”) is pleased to announce a private placement with brokerage of up to $ 12,100,000 total principal amount of convertible debenture units (the “convertible debenture units”) at a price of $ 1,000 per unit of Convertible Debenture (the “Offer”). The placement is managed by Desjardins Securities Inc. (the “Agent”) and Cormark Securities Inc. as a co-agent on a best effort basis. Each convertible debenture unit will consist of (i) an 8% unsecured subordinated convertible debenture of the Company with a capital of $ 1,000 (collectively, the “Convertible Debentures”), which will be convertible into common shares of the Company (each one “Common Share”) at a conversion price of $ 1.90 per ordinary share, subject to adjustment in certain cases (the “conversion price”) and maturing on December 31, 2024 (the due date “); and (ii) 263 warrants to purchase common shares of the Company (the “Warrants”). Each warrant will allow its holder to purchase one common share at the price of $ 1.25 per share until the maturity date. The Company has granted the Agent an option (the “Agent’s Option”) to sell another $ 1,815,000 in convertible debenture units in connection with the offering for total gross proceeds of $ 13,915,000 (should be exercised in full).

The Company intends to use the net proceeds of the Offering for working capital, debt repayment and / or general corporate purposes. The Convertible Debentures will be unsecured obligations of the Company and rank pari passu entitled to pay principal and interest together with all other existing unsecured subordinated debt of the Company.

With respect to the Company’s loan facility with SVB which was originally announced on May 19, 2021, and the Company’s failure to comply with certain financial covenants of the facility, as disclosed on August 17, 2021, the private placement is expected to fulfill a condition of a forbearance agreement between the Company and SVB which is currently under negotiation. There can be no assurance that any such agreement will be reached, and further updates in this regard will be disclosed from time to time in accordance with applicable securities laws.

The convertible debentures will bear interest at a rate of 8.0% per annum from the date of issue, payable semi-annually in arrears in cash on June 30th and the 31st of December of each year. The convertible debentures will be convertible at the option of the holder into common shares at any time before the close of business on the earliest between the maturity date and the business day immediately preceding the date fixed for the redemption of the convertible debentures at the conversion price, being a ratio of 526.32 ordinary shares per $ 1,000 principal amount of convertible debentures. Holders who convert their Convertible Debentures will receive accrued and unpaid interest thereon up to the date of conversion.

Convertible Debentures may be redeemed early in cash in an amount equal to 105% of the principal plus accrued interest at any time on a date falling 24 months after the closing date (as defined below) within a period of ” not more than 60 days and not less than 30 days notice, provided that the Company elects to prepay the total amount then outstanding of the Convertible Debentures outstanding.

The closing of the Offer should take place on or around November 26, 2021 or any other date to be agreed between the Company and the Agent (the “Closing Date”).

The offering is subject to regulatory approval, including that of the Toronto Stock Exchange.

Insiders and related parties of the Company may acquire Convertible Debenture Units as part of the Offering. Such participation can be considered as “related party transactions” within the meaning of Multilateral Instrument 61-101. Protection of holders of minority securities in special transactions (“MI 61-101”). The Company intends to avail itself of the exemptions from the formal assessment and minority shareholder approval requirements of NI 61-101 with respect to the participation of related parties in the Offer, as neither fair market value ( as determined under NI 61-101) of the subject matter nor the fair market value of the consideration for the Offer, to the extent that it involves interested parties, should not exceed 25% of the market capitalization of the Company. In the event that a director of the Company participates, such director must disclose this participation and refrain from voting on the approval by the board of directors of the Company. The Company will not file a material change report 21 days before the Closing Date as the details will only be settled shortly before the Closing Date and the Company intends to complete the Offer as soon as commercially possible.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company in United States nor will there be any offer, solicitation or sale of convertible debenture units in any state or other jurisdiction in which such offer, solicitation or sale would be illegal. The debenture units described in this press release (and any common shares of the Company issued on the conversion, redemption or maturity of the convertible debenture units) have not been and will not be registered under of the United States Securities Act of 1933, as amended (the “US Securities Act”), or the securities laws of any state and may not be offered, sold or delivered in United States in the absence of registration or an applicable exemption from registration requirements under the US Securities Act and applicable securities laws of US states or other jurisdictions.

About Freshlocal Solutions Inc.

Freshlocal Solutions Inc. is a Vancouvermarket-based company that is building a leading position in providing end-to-end grocery e-commerce solutions. The Company operates two main businesses, FoodX and eGrocery, both of which support its corporate mission of leveraging innovation and technology to create a sustainable and profitable food system for all. Food-X Technologies Inc. (“FoodX”) is Freshlocal’s scalable end-to-end, SaaS-based online grocery management solution (eGMS) designed to meet the needs of large and small food retailers while providing a profitable economic unit. The FoodX eGMS is the culmination of over 20 years of online grocery shopping experience and the company’s proven track record of delivering efficient, sustainable and profitable delivery. The Company’s consumer electronic grocery business has become one of from Canada leading online grocery companies, with a focus on delivering fresh, local and organic products and groceries, as well as exceptional customer experiences. Freshlocal serves the main urban markets of Alberta and British Columbia through its physical stores operating under the Blush Lane and Be Fresh banners; and through SPUD.ca, the Company’s award-winning online grocery marketplace platform. Freshlocal’s common shares are listed on the Toronto Stock Exchange under the symbol “LOCL”. Please visit www.freshlocalsolutions.com.

Notice on forward-looking information

Certain statements contained in this press release may be considered “forward-looking statements” or “forward-looking information” within the meaning of applicable Canadian and US securities laws. Words such as “may”, “will”, “would”, “could”, “expect”, “believe”, “plan”, “anticipate”, “intend”, “estimate”, “continue” or negative or comparable terminology, as well as terms commonly used in the future and conditional, are intended to identify forward-looking statements. Forward-looking statements should not be interpreted as guarantees of future performance or results, and will not necessarily constitute precise indications as to whether, or when or by which, such future performance will be achieved. No assurance can be given that the events anticipated by any forward-looking statements or information will or will occur, including, but not limited to, the closing of the offer and the timing of the offer, the size of the offer. offer, use of the proceeds of the Offering and any exercise of the Agent’s Option. Forward-looking information is based on information available at the time and / or on the good faith belief of management regarding future events and is subject to known or unknown risks, uncertainties, assumptions and other unforeseeable factors. , many of which are beyond the control of Freshlocal. These risks, uncertainties and assumptions include, without limitation, the failure to comply with any of the conditions for the completion of the Offer and the risks described under “Risk Factors” in Freshlocal’s filing statement dated April 9, 2021, a copy of which is available on SEDAR at www.sedar.com and could cause actual events or results to differ materially from those anticipated in the forward-looking statements. Freshlocal does not intend, and Freshlocal assumes no obligation, to update or revise any forward-looking information contained in this press release to reflect subsequent or other information, events or circumstances, except as required by applicable laws.

SOURCE Freshlocal Solutions Inc.

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