Flow Beverage Corp. Announces Extension of the Maturity Date of the Term Loan with RI Flow LLC and RI Flow LLC Waives Events of Defaults of Term Loan and NFS Leasing Canada Ltd. Waives Events of Defaults Under Term Loan

Business Wire

17-05-2025

TORONTO--(BUSINESS WIRE)-- Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (' Flow ' or the ' Company ') announced today that RI Flow LLC (' RI Flow ') has extended the maturity date of the Term Loan ('the RI Flow Loan') to October 31, 2025. The Company also announced today that RI Flow LLC has irrevocably waived any rights and remedies in relation to certain breaches by the Company under the RI Flow Loan and Security Agreement dated October 31, 2024. Separately, NFS Leasing Canada Ltd. (' NFS ') has irrevocably waived any rights and remedies in relation to certain breaches by the Company under the Term Loan and Security Agreement dated December 30, 2022 (the ' NFS Loan ').
NFS and RI Flow are affiliated with Clifford L. Rucker, an insider of the Company, with RI Flow, NFS Canada and Clifford L. Rucker collectively owning, or having control or direction over, more than 10% of the voting rights attached to all of the Company's outstanding voting securities.
RI Flow Loan
On April 28, 2025, the Company obtained approval of the extension of the maturity date of the RI Flow Loan (the ' Maturity Date '), scheduled to mature on April 30, 2025. Effective April 30, 2025, the Maturity Date was extended until October 31, 2025.
On May 9, 2025, the Company also provided notice to RI Flow LLC (the ' RI Flow Notice '), that it had current trade accounts payable, under normal trade terms, and accrued expenses which were incurred in the ordinary course of business that were currently or may become overdue for a period greater than six months within the definition of Indebtedness as provided in the RI Flow Loan (the ' Aged Payables '). The Company also provided notice to RI Flow that it was currently subject to proceedings that had been instituted by certain vendors in respect of the Aged Payables and that it was aware of proceedings that had been threatened to be instituted by vendors in respect of Aged Payables (the ' Proceedings ') The Company notified RI Flow that, as a result of the incurrence of Aged Payables, it was not in compliance with each of the covenants to pay and discharge, in the ordinary course of business, all obligations and liabilities, to make any payment in respect of Material Indebtedness (defined in the NFS Term Loan as indebtedness in an aggregate principal amount exceeding $250,000.00) when due, to provide NFS promptly (and in any event within five business days after becoming aware of the occurrence of a default or vent of Default) a certificate of a officer of the Company specifying the nature thereof and the Company's proposed response thereto and to provide notice of the occurrence of any Default or Event of Default (each as defined in the NFS Loan) immediately upon knowledge thereof (each individually an ' RI Flow Loan Aged Payables Events of Default ' and, collectively, ' RI Flow Loan Aged Payables Events of Defaults '). The Company also notified RI Flow that, as a result of the occurrence of Proceedings, it was not in compliance with each of the covenants to promptly notify and, in any event within five business days after becoming aware, of any proceeding involving a sum, together with the sum involved in all other similar proceedings, in excess of $250,000.00 in the aggregate, to provide RI Flow promptly (and in any event within five business days after becoming aware of the occurrence of a default or vent of Default) a certificate of an officer of the Company specifying the nature thereof and the Company's proposed response thereto and to provide notice of the occurrence of any Default or Event of Default (each as defined in the RI Flow Loan) immediately upon knowledge thereof (each individually an ' RI Flow Loan Proceedings Events of Default ' and, collectively, ' NFS Loan Proceedings Events of Defaults ').
RI Flow has irrevocably waived the RI Flow Loan Aged Payables Event of Defaults for the period ending on May 31, 2025 and irrevocably waived the RI Flow Loan Proceedings Events of Defaults until June 9, 2025 in relation to the Proceedings.
As a result of the RI Flow Loan Aged Payables Events of Defaults and the RI Flow Loan Proceedings Events of Default, RI Flow would have had the right to declare the Term Loan to become due and payable immediately for cash, to enforce or foreclose the security interest created pursuant to the RI Term Loan or seek the appointment of a receiver, receiver-manager or keeper under applicable legislation to take possession of all or any portion of the Company's assets collateralized under the RI Flow Loan or to operate same. The current outstanding principal amount of the RI Flow Loan is $4,161,600.
NFS Term Loan
On April 28, 2025, the Company notified NFS that, as at April 30, 2025, it would not comply with the financial covenants requiring that, as of the last day of each fiscal quarter, the Company shall not permit the cash ratio (defined in the NFS Loan as the ratio of (a) the sum of (i) cash, plus (ii) cash equivalents (together, 'Total Cash'), to (b) all current liabilities due over the next ninety (90) days following such period) for the fiscal quarter period then ending to be less than 0.25 to 1.00 and total cash shall be at least $4,000,000.00 at all times (the ' Financial Covenants ').
On May 9, 2025, the Company also provided notice to NFS (the ' NFS Notice '), that it had current trade accounts payable, under normal trade terms, and accrued expenses which were incurred in the ordinary course of business that were currently or may become overdue for a period greater than six months within the definition of Indebtedness as provided in the NFS Loan (the ' Aged Payables '). The Company also provided notice to NFS that it was currently subject to proceedings that had been instituted by certain vendors in respect of the Aged Payables and that it was aware of proceedings that had been threatened to be instituted by vendors in respect of Aged Payables (the ' Proceedings '). In the NFS Notice, the Company notified NFS that, as a result of the incurrence of Aged Payables, it was not in compliance with each of the covenants to pay and discharge, in the ordinary course of business, all obligations and liabilities, to make any payment in respect of Material Indebtedness (defined in the NFS Term Loan as indebtedness in an aggregate principal amount exceeding $500,000.00) when due, to provide NFS promptly (and in any event within five business days after becoming aware of the occurrence of a default or event of default) a certificate of an officer of the Company specifying the nature thereof and the Company's proposed response thereto and to provide notice of the occurrence of any Default or Event of Default (each as defined in the NFS Loan) immediately upon knowledge thereof (each individually an ' NFS Loan Aged Payables Events of Default ' and, collectively, ' NFS Loan Aged Payables Events of Defaults '). The Company also notified NFS that, as a result of the occurrence of the Proceedings, it was not in compliance with each of the covenants to promptly notify (and in any event within five business days after becoming aware) of any actual or threatened proceeding involving a sum, together with the sum involved in all other similar proceedings, in excess of $250,000.00 in the aggregate, to provide NFS promptly, and in any event within five business days after becoming aware of the occurrence of a default or event of default, a certificate of an officer of the Company specifying the nature thereof and the Company's proposed response thereto and to provide notice of the occurrence of any default or event of Default (each as defined in the NFS Loan) immediately upon knowledge thereof (each individually an ' NFS Loan Proceedings Events of Default ' and, collectively, ' NFS Loan Proceedings Events of Defaults ').
NFS has irrevocably waived, strictly for the Company's fiscal quarter ending April 30, 2025, its rights and remedies due to non-compliance of the Company with the Financial Covenants. NFS has also irrevocably waived the NFS Loan Aged Payables Event of Defaults for the period ending on May 31, 2025 and irrevocably waived the NFS Loan Proceedings Events of Defaults until June 9, 2025 in relation to the Proceedings.
As a result of the NFS Loan Aged Payables Events of Defaults and the NFS Loan Proceedings Events of Default, NFS would have had, amongst other rights and remedies, the right to declare the NFS Loan or any portion of it to become due and payable immediately for cash, enforce or foreclose the security interest created pursuant to the NFS Loan or seek the appointment of a receiver, receiver-manager or keeper under applicable legislation to take possession of all or any portion of the Company's assets collateralized under the NFS Loan or to operate same. The current outstanding principal amount of the NFS Loan is $17,131,601.
Withdrawal of Financial Guidance
The Company previously introduced financial targets for the fiscal year ending October 31, 2025 (' FY 2025 '), having announced it expected to earn net revenue between $72 million and $82 million, gross margin between 38% and 48%, and Adjusted EBITDA between $6 million to $11 million (the ' Financial Targets '). In light of a number of developments, circumstances and considerations, including, among others, deteriorating market and macro-economic conditions, and despite the Company's comprehensive review of its existing organizational and business strategy with the continuing objectives of becoming EBITDA and cash flow positive, the Company now believes that it will not achieve the synergies and incremental cash flow increases to the level estimated in its previous guidance and it expects such figures and measures to be lower than previously guided. Consequently, the Company announces that it is entirely withdrawing its previously issued guidance on financial targets for FY 2025, and there can be no assurance that the Company will in the future decide to provide any guidance whatsoever with respect to any operational, financial or other measure.
About Flow
Flow is one of the fastest-growing premium water companies in North America. Founded in 2014, Flow's mission since day one has been to reduce environmental impacts by providing sustainably sourced natural mineral spring water in the most sustainable product formats. Today, the brand is B-Corp Certified with a best-in-class score of 114.5, offering a diversified line of health and wellness-oriented beverage products: original mineral spring water, award-winning organic flavours and sparkling mineral spring water in sizes ranging from 300-ml to 1-litre. All products contain naturally occurring electrolytes and essential minerals and support Flow's overarching purpose to 'bring wellness to the world through the positive power of water.' Flow beverage products are available at retailers in Canada and the United States, and online at flowhydration.com.
For more information on Flow, please visit Flow's investor relations site at: investors.flowhydration.com.
Forward-Looking Statements
This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws (' Forward-Looking Statements '). The Forward-Looking Statements contained in this press release relate to future events or Flow's future plans, operations, strategy, performance or financial position and are based on Flow's current expectations, estimates, projections, beliefs and assumptions, including, among other things, in respect of the Company's ability to maintain compliance with covenants under the NFS Term Loan and the RI Flow Loan and NFS' and RI Flow's willingness to waive any future non-compliance by the Company of its covenanted obligations under the NFS Loan and RI Flow Loan respectively. In particular, there is no assurance that the Company will maintain compliance with covenants under the NFS Term Loan and the RI Flow Loan nor that NFS or RI Flow will waive any future non-compliance by the Company of its covenanted obligations under the NFS Loan and RI Flow Loan respectively. Such Forward-Looking Statements have been made by Flow in light of the information available to it at the time the statements were made and reflect its experience and perception of historical trends. All statements and information other than historical fact may be forward‐looking statements. Such Forward‐Looking Statements are often, but not always, identified by the use of words such as 'may', 'would', 'should', 'could', 'expect', 'intend', 'estimate', 'anticipate', 'plan', 'foresee', 'believe', 'continue', 'expect', 'believe', 'anticipate', 'estimate', 'will', 'potential', 'proposed' and other similar words and expressions.
Forward-Looking Statements are based on certain expectations and assumptions and are subject to known and unknown risks and uncertainties and other factors, many of which are beyond Flow's control, that could cause actual events, results, performance and achievements to differ materially from those anticipated in these Forward-Looking Statements. Forward-Looking Statements are provided for the purpose of assisting the reader in understanding Flow and its business, operations, prospects, and risks at a point in time in the context of historical and possible future developments, and the reader is therefore cautioned that such information may not be appropriate for other purposes. Forward-Looking Statements should not be read as guarantees of future performance or results. Readers are cautioned not to place undue reliance on these Forward-Looking Statements, which speak only as of the date of this press release. Unless otherwise noted or the context otherwise indicates, the Forward-Looking Statements contained herein are provided as of the date hereof, and the Company disclaims any intention or obligation, except to the extent required by law, to update or revise any Forward-Looking Statements as a result of new information or future events, or for any other reason.
The following press release should be read in conjunction with the management's discussion and analysis and unaudited condensed consolidated interim financial statements and notes thereto as at and for the three months ended January 31, 2025. Additional information about Flow is available on the Company's profile on SEDAR+ at www.sedar.com