FROM SHAWN DYM CO-FOUNDER / GREEN ACRES MINORITY SHAREHOLDER DEPOSIT ON JUNE 19TH
D. The Replacement DIP
49. I believe that FAF’s underlying business is strong and that a fire sale at this time is not necessary and not in the best interests of all stakeholders. Unfortunately, Couche Tard, FAF’s senior secured creditor, unsecured creditor, DIP Lender, largest shareholder, and proposed Stalking Horse Bidder, disagrees and insists that a truncated SISP be commenced immediately. As such, in order for FAF’s value to be truly maximized, Couche Tard must be replaced as DIP Lender.
50. Following the adjournment of the Applicants’ motion for approval of the SISP and related relief, I immediately began communicating with parties that I believed would be interested in developing a solution to preserve existing stakeholder interests. These parties
3 The SISP Phase 1 Bid Deadline is July 13, 2023 and, if no competing bids are tendered, Court approval is to be the week of July 24, 2023.
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included several family offices, and high and ultra high net worth individuals. Through these discussions a syndicate (the “Syndicate”) was formed that has committed to provide FAF with interim financing on terms that are superior to the interim financing offered by Courche Tard. The Syndicate includes, among others, Osmington Inc., Sharno Group Inc., Shalcor Management Inc.. The names of the individuals who have ultimate control over these entities were disclosed to the Monitor late last night. To say that these individuals have the financial wherewithal to fund the Replacement DIP Facility is an understatement. Nevertheless, Green Acre is working with the Monitor to provide satisfactory evidence of the Syndicate’s ability to meet the obligations under the Replacement DIP Facility Agreement, and has already provided preliminary evidence (such as was available on a Sunday night).
51. The material terms of the Replacement DIP Facility Agreement are substantially similar to the Couche Tard DIP Facility Agreement, but contain a lower rate of interest (10% vs. 12%), and a lower exit fee ($300,000 vs. $400,000). The Replacement DIP Facility Agreement includes a covenants to repay all amounts outstanding under the Couche Tard Facility Agreement, and to otherwise fund the operations of the Applicants.in consultation with the Monitor and to the satisfaction of the Replacement DIP Lender.
52. The Replacement DIP Facility Agreement also includes a covenant for the Applicants’ to engage in good-faith discussions with Green Acre with a view to developing a plan of compromise or arrangement that maximizes value for all stakeholders. In the event that such a plan is determined not to be feasible, the parties will pivot to a SISP strategy by July 15, 2023 and market themselves from a position of financial stability, as described below.
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53. The $9.8 million facility established by the Replacement DIP Facility Agreement is more than sufficient to fund the Applicants’ cash requirements as forecast in the 13-week cash flow appended to the Monitor’s Pre-Filing Report (the “Cash Flow Forecast”).
D. SISP
54. If the Replacement DIP Facility Agreement is approved, Green Acre, with the agreement of the proposed Replacement DIP Lender, proposes that the SISP Order motion be adjourned sine die, while the Applicants continue to stabilize their business and operations. To ensure no prejudice to the Applicants or Couche Tard, the amount outstanding under the Couche Tard DIP Facility will be repaid within three business days of the issuance of a further Amended and Restated Initial Order effecting the Replacement DIP Facility Agreement. Green Acre believes that, as stated in Miller Thompson’s June 13 letter to the Applicants’ counsel, FAF can transition to being cash flow positive before exiting CCAA. Positive cash flow would enable FAF to market itself from a position of strength, which could result in a restructuring that maintains shareholder value (such as a plan of arrangement funded by a rights offering).
E. Shareholder Support
55. The majority of FAF’s common stock is held by retail investors.
56. At the time Couche Tard made its initial investment in FAF (July 2019), shares in FAF
traded at approximately C$11.00. At peak, in February 2021, FAF’s shares traded at C$15.00. At market close on the date of FAF’s CCAA filing (June 5, 2023), FAF’s shares were priced at C$0.29. From a market capitalization peak of approximately half a billion dollars, this value
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plummeted to a market capitalization of approximately C$13 million on the day prior to filing for CCAA.
57. As such, it is obvious that, absent a true financial restructuring as opposed to sales process, thousands of retail shareholders will lose the entirety of their investment alongside Green Acre and millions of dollars of shareholder value will be destroyed.
58. Following the June 15 hearing, counsel to Green Acre has received a steady stream of support for Green Acre. As of the date of writing, individual shareholders representing approximately 1.6 million common shares have indicated support for Green Acre’s position (as that position was articulated in Green Acre’s counsel’s letters to the Applicant’s counsel, referenced above).
D. Conclusion
59. I swear this affidavit in opposition to the Applicant’s motion for a SISP Order and related relief, and in support of Green Acre’s cross-motion and for no other purpose.
SWORN before me at the City of Toronto, in the Province of Ontario, this 19th day of June 2023, in accordance with O. Reg. 431/20 Administering Oath or Declaration Remotely.
A Commissioner for taking Affidavits
PATRICK CORNEY
Shawn Dym