Under the agreement, the underwriters will purchase on a bought deal basis, pursuant to the filing of a short form prospectus, a total of 11,500,000 units of the Company at a price of $3.50 per unit, totaling $40,250,000. One unit of the company consists of one common share of the company and one half of one common share purchase warrant of the company. The stock fell over 11% to $2.74 on the OTC Marketplace. It is down from its 52-week high of $3.29.
Additionally, the underwriters will purchase 30,000 unsecured convertible debentures of the Company, at a price of $1,000 per Convertible Debenture, for $30,000,000; bringing the total value of the deal to just over $70,000,000.
Each warrant will be exercisable as one common share of the company for up to two years following the closing date at a price of $4.25 per share. If common shares have a daily volume weighted average $7.00 or more for a period of 15 days, the company may accelerate the exercise period of the warrants for a period of no less than 30 days after the company gives written notice of the acceleration.
The Convertible Debentures will have a maturity date of three years, bearing an interest rate of 6% from the date of the closing, and made payable semi-annually on June 30 and December 31 of each year. At the holder’s discretion, the convertible debentures will be convertible into common shares, at a price of $4.00, at any time prior to the maturity date.
The company has also given the underwriters an over-allotment option to purchase 1,725,000 additional units of the company and 4,500 additional Convertible Debentures. The option would be exercisable on or at any time before the 30th day following the close date of the agreement. If the underwriters exercise the option, an additional $10,537,500 would be raised; bring the total value of the agreement to $80,787,500.
The proceeds from the agreement will go towards construction and development at the company’s Vanluven facility and planned Kimmett facility, general working capital, corporate development, and product development.