Cizzle Brands closes Flow Water acquisition

Executive Summary

• Cizzle Brands Corp. completed the acquisition of Flow Water Inc.'s co-manufacturing business for approximately $83.75 million CAD, subject to customary post-closing adjustments.
• The transaction is financed through a comprehensive package including a $40M USD senior secured credit facility from Orion Infrastructure Capital (OIC), a $22.25M vendor takeback loan, and two concurrent private placements totaling $12.225M.
• The acquisition is expected to immediately add scale, contributing ~$21.5M in revenue in H2 2026 and ~$46.5M in fiscal 2027, bringing combined pro forma revenue to ~$41M in 2026 and ~$75M in 2027.

Key Details

• Transaction Structure: Cizzle Brands Acquisition Inc. (a wholly owned subsidiary) acquired all issued and outstanding shares of Flow Water Inc. from RI Flow Sub LLC.
• Purchase Price: Aggregate purchase price of approximately $83.75 million CAD.
• Asset Scope: The target focuses exclusively on its beverage co-manufacturing business. Brand-related IP and trademarks were transferred out of the target to a vendor-owned company prior to closing. The target will be renamed Cizzle Brands Manufacturing Inc., and its Aurora, Ont. facility will be known as the Cwench Hydration factory.
• Financing Package:
  • Senior Secured Credit Facility: $40 million USD principal from Orion Infrastructure Capital (OIC), with an additional $10 million USD drawdown available. Term: 5 years. Interest rate: 12% per annum.
  • Warrants: Cizzle issued 7.5 million warrants to OIC to purchase common shares at $0.40 CAD per share.
  • Vendor Takeback Loan: $22.25 million CAD secured promissory note to RI Flow Sub. Term: 1 year. Interest rate: 12% per annum. Prepayable without penalty.
  • Private Placement 1 (Equity): $4,725,000 CAD offering of units at $0.40 CAD per unit. Each unit comprises one common share and 0.5 common share purchase warrant. Warrants are exercisable at $0.60 CAD per share for 24 months.
  • Private Placement 2 (Debt): $7.5 million CAD principal amount of convertible notes. Interest rate: 7.2% per annum. Conversion price: $0.50 CAD per common share. Maturity: 3 years.
• Strategic Investment: Cliff Rucker (via RI CZL Investor LLC) participated as a lead investor in the equity financing.
• Use of Proceeds: Net proceeds from private placements used to finance the acquisition, satisfy transaction-related obligations, and provide incremental working capital.
• Fees: Finders' fees of 500,000 common shares and 71,250 units were paid to certain persons.
• Financial Impact (Pro Forma):
  • Manufacturing business revenue contribution: ~$21.5 million CAD in H2 2026; ~$46.5 million CAD in fiscal 2027.
  • Combined pro forma consolidated revenue: ~$41 million CAD in fiscal 2026; ~$75 million CAD in fiscal 2027.
  • Expected to accelerate path to EBITDA and cash flow positivity.
• Advisers:
  • Cizzle: Bennett Jones LLP (Legal), Stifel Nicolaus Canada Inc. (Financial).
  • Vendor: Miller Thomson LLP (Legal).
  • OIC: Greenberg Traurig LLP (US Legal), Stikeman Elliott LLP (Canadian Legal).
  • Cizzle (Credit Facility): Jenner & Block LLP (US Legal).

Notable Quotes

• "To say that this transaction is a pivotal moment in Cizzle's history would be an understatement... By acquiring Flow's manufacturing business, we are adding a substantial and profitable manufacturing platform that immediately increases revenue, improves margins and materially accelerates our path to sustainable cash flow." — John Celenza, Founder and CEO