Canadian marijuana retailer Fire & Flower raising CA$16M via key investor

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(This story has been updated with additional information about the warrant amendments.)

Major Canadian cannabis store chain Fire & Flower is raising 16 million Canadian dollars ($11.7 million) from its key investor, gas station and convenience store giant Alimentation Couche-Tard.

The capital raise includes a CA$11 million loan from Couche-Tard to Fire & Flower, which carries an 11% annual interest rate and matures at the end of 2023.

Couche-Tard also agreed to purchase Fire & Flower shares in a private placement for proceeds of roughly CA$5 million.

The transaction, announced Tuesday, also involves amendments to the terms of Series C Warrants in Fire & Flower held by Couche-Tard.

The amendments to the warrants “increase the value of the warrants to (Couche-Tard) while likely resulting in lower proceeds and a deferred timeline to receiving these proceeds for Fire & Flower,” analyst Andrew Semple and associate Alex Gelmych of Toronto-based Echelon Capital Markets wrote in a Tuesday research note.

That warrant and share deal is subject to regulatory approvals.

Fire & Flower “will prudently use this capital to continue to grow the business and build upon the recent success we have seen through improvements in our retail, wholesale and logistics, and digital business segments,” Fire & Flower CEO Stéphane Trudel said in a statement.

Trudel, formerly a Couche-Tard executive, took over at Fire & Flower in June.

Couche-Tard increased its stake in Fire & Flower to more than 35% in April.

Fire & Flower is developing stores co-located adjacent to Couche-Tard’s Circle K convenience stores.

Toronto-based Fire & Flower reported a CA$21.6 million loss for its most recent quarter.

The retailer’s shares trade as FAF on the Toronto Stock Exchange.