LOCL Freshlocal Solutions Inc

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, BC, April 12, 2022 /CNW/ - Freshlocal Solutions Inc. (TSX: LOCL) (OTC: FLOCF) ("Freshlocal" or the "Company") is pleased to announce that it has entered into a loan and security agreement (the "Loan Agreement") with a group of strategic lenders (collectively, the "Lenders"), pursuant to which the Lenders have agreed to advance $7,000,000 (the "Loan") to Freshlocal, to support the Company's ongoing financial and operational transformation, and to ultimately replace Silicon Valley Bank (the "Bank") as the Company's senior lender. The proceeds of the Loan will be used to immediately repay a portion of the Company's existing loan with the Bank and to fund operations.

Pursuant to the terms of the Loan Agreement, the Loan bears interest at a rate of 10.0% per annum, payable quarterly in arrears, and matures on September 30, 2023 (the "Maturity Date"). At the Company's option, accrued interest at each interest payment date may be paid in kind (a "PIK Interest Payment") by capitalizing such interest and increasing the principal amount of the Loan. Any PIK Interest Payments will bear interest at a rate of 12.5% per annum.

The Loan Agreement permits, subject to certain conditions, the Lenders, and for other persons arranged by the Lenders, to increase the principal amount of the Loan by up to $3,000,000 (the "Additional Funding") and provides the Lenders with the right to nominate an individual to the board of directors of the Company (the "Nomination Right"). In addition, the Loan Agreement includes certain covenants by the Company to use net proceeds from the divestiture of certain material assets of the Company to repay the Bank and the Lenders, as set forth therein, as well as other customary representations, warranties, covenants and conditions in respect of secured credit facilities. Upon repayment of all outstanding amounts to the Bank, the Lenders will become the Company's new senior lenders.

In connection with the Loan Agreement, the Company issued to each Lender 400 common share purchase warrants (each, a "Warrant") for each $1,000 principal amount of the Loan advanced by such Lender. Each Warrant entitles the holder thereof to purchase one common share of the Company at an exercise price of $0.45 per share until the Maturity Date. The Warrants, including any shares issued upon exercise of the Warrants, are subject to a four (4) month hold period as prescribed by the Toronto Stock Exchange and applicable securities laws.

In connection with the Nomination Right, Freshlocal is pleased to announce the appointment of Mr. Ronan McGrath to the Board of Directors as an independent director of the Company. Mr. McGrath is an investor and experienced public company director. He is on the Board of Redline Communications Group Inc. (TSX: RDL) and has served on the boards of several other public companies. Mr. McGrath has consulted on strategic issues with some of the world's largest technology companies and is the former President of Rogers Shared Services and Chief Information Officer for Rogers Communications Inc., and previously Chief Information Officer for Canadian National Railway Company. He was also VP Accounting and Comptroller for Canadian National Railway Company.

"The immediate partial repayment of senior debt, and a roadmap to ultimately replace the senior lender with a group of strategic lenders, will provide additional financial strength to Freshlocal. The new senior debt does not include financial or liquidity covenants, which also broadens financing alternatives available to us," said Simon Cairns, CEO of Freshlocal. "In addition, we welcome Mr. McGrath to our board. An individual with his skills and experience will have an immediate positive impact on our company and operations."

The Warrants, including any shares issued upon exercise thereof, have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States or to, or for the account or benefit of, U.S. persons.

Freshlocal is a Vancouver-based company that is building a leadership position in the provision of end-to-end grocery e-commerce solutions. The Company operates two primary businesses, FoodX and eGrocery, both of which support its corporate mission to innovate food systems for people, planet and prosperity. Food-X Technologies ("FoodX") is Freshlocal's scalable end-to-end SaaS-based eGrocery Management Solution (eGMS) which is designed to meet the needs of large and small grocery retailers while providing profitable unit economics. The FoodX eGMS is the culmination of over 20 years of experience in online grocery and the Company's proven track record of delivering efficiently, sustainably and profitably. The Company's consumer eGrocery business has expanded into one of Canada's largest online grocery companies, with a focus on delivering fresh, local, organic produce and groceries, along with exceptional customer experiences. Freshlocal serves the main urban markets in Alberta and British Columbia through its brick and mortar store locations operating under the Blush Lane and Be Fresh banners, as well as through SPUD.ca which is the Company's award-winning online eGrocery platform. Freshlocal's common shares are listed on the Toronto Stock Exchange under the symbol "LOCL" and quoted on the OTC Pink Marketplace under the symbol "FLOCF". Please visit www.freshlocalsolutions.com.

Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include but are not limited to statements or information with respect to the timing of receipt and repayment of the funding under the Loan Agreement and Additional Funding, if obtained, the intended use of proceeds thereof and any positive impact on the Company from the new board member, the new strategic senior lenders or the use of proceeds of the Loan. Often, but not always, forward-looking statements or information can be identified by the use of words such as "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.

With respect to forward-looking statements and information contained herein, the Company has made numerous assumptions, including, among other things, assumptions about general business and economic conditions of the Company and the market in which it operates. The foregoing list of assumptions is not exhaustive.

Although management of the Company believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that forward-looking statements or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to: risks associated with the business of the Company; business and economic conditions in the eGrocery industry generally; the supply and demand for labour and other project inputs; changes in commodity prices; changes in interest and currency exchange rates; risks relating to unanticipated operational difficulties (including failure of technology or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters); changes in general economic conditions or conditions in the financial markets; changes in laws; risks related to the direct and indirect impact of COVID-19 including, but not limited to, its impact on general economic conditions; the ability to obtain financing as required; and other risk factors as detailed from time to time. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

SOURCE Freshlocal Solutions Inc.