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

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VANCOUVER, BC, Nov. 19, 2021 /CNW/ - Freshlocal Solutions Inc. (TSX: LOCL) (OTC: FLOCF) ("Freshlocal" or the "Company") is pleased to announce a brokered private placement of up to $12,100,000 aggregate principal amount of convertible debenture units (the "Convertible Debenture Units") at a price of $1,000 per Convertible Debenture Unit (the "Offering"). The Offering is being led by Desjardins Securities Inc. (the "Agent") and Cormark Securities Inc as co-agent on a best effort basis. Each Convertible Debenture Unit will be comprised of (i) one 8% subordinated unsecured convertible debenture of the Company in a principal amount of $1,000 (collectively, the "Convertible Debentures"), which will be convertible into common shares of the Company (each a "Common Share") at a conversion price of $1.90 per Common Share, subject to adjustment in certain events (the "Conversion Price") and maturing on December 31, 2024 (the "Maturity Date"); and (ii) 263 common share purchase warrants of the Company (the "Warrants"). Each Warrant will entitle the holder thereof to purchase one Common Share at a price of $1.25 per share until the Maturity Date. The Company has granted the Agent an option (the "Agent's Option") to sell an additional $1,815,000 in Convertible Debenture Units under the Offering for total gross proceeds of $13,915,000 (expected to be exercised in full).

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

In relation to the Company's debt facility with SVB that was originally announced on May 19, 2021, and the Company's breach of certain financial covenants of the facility as disclosed on August 17, 2021, the private placement is expected to meet a required condition of a forbearance agreement between the Company and SVB that is currently under negotiation. There can be no assurance that such an agreement will be reached, and further updates in this regard will be disclosed when appropriate 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 30 and December 31 of each year. The Convertible Debentures will be convertible at the holder's option into Common Shares at any time prior to the close of business on the earlier of the Maturity Date and the business day immediately preceding the date fixed for redemption of the Convertible Debentures at the Conversion Price, being a ratio of 526.32 Common Shares per $1,000 principal amount of Convertible Debentures. Holders converting their Convertible Debentures will receive accrued and unpaid interest thereon to the date of conversion.

The Convertible Debentures may be prepaid in cash for an amount equal to 105% of the principal amount plus accrued interest at any time on a date that is 24 months following the Closing Date (as defined below) on not greater than 60 days' and not less than 30 days' notice, provided that the Company elects to prepay the then outstanding aggregate amount of Convertible Debentures outstanding.

Closing of the Offering is expected to occur on or about November 26, 2021 or such other date to be mutually agreed upon between the Company and 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 under the Offering. Such participation may be considered to be "related party transactions" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company intends to rely on the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 in respect of related party participation in the Offering as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for the Offering, insofar as it involves interested parties, is expected to exceed 25% of the Company's market capitalization. In the event of participation of any director of the Company, such director shall disclose such participation and shall abstain from voting on the approval by the board of directors of the Company. The Company will not file a material change report 21 days prior to the Closing Date because details will not be settled until shortly prior to the Closing Date and the Company intends to complete the Offering as soon as commercially possible.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company in the United States nor shall there be any offer, solicitation or sale of the Convertible Debenture Units in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful. The Debenture Units described in this news release (and any common shares of the Company issued upon the conversion, redemption or maturity of the Convertible Debenture Units) have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or the securities laws of any state and may not be offered, sold or delivered in the United States absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act and applicable U.S. state or other jurisdictions' securities laws.

About Freshlocal Solutions Inc.

Freshlocal Solutions Inc. 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 leverage 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 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 and through SPUD.ca, the Company's award-winning online marketplace eGrocery 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 deemed "forward–looking statements" or "forward–looking information" within the meaning of applicable Canadian and U.S. securities laws. Words such as "may", "will", "would", "could", "expect", "believe", "plan", "anticipate", "intend", "estimate", "continue", or the negative or comparable terminology, as well as terms usually used in the future and the conditional, are intended to identify forward– looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward– looking statements or information will transpire or occur, including, but not limited, to the closing of the Offering and the timing thereof, the size of the Offering, the use of 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 management's good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Freshlocal's control. These risks, uncertainties and assumptions include, but are not limited to, the failure to satisfy any of the conditions to the completion of the Offering and those 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 projected in any forward-looking statements. Freshlocal does not intend, nor does Freshlocal undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws.

SOURCE Freshlocal Solutions Inc.

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