Electra Battery Materials Corporation (NASDAQ: ELBM; TSX-V:
ELBM) (“Electra”, or the “Company”) announced that it has
closed its previously announced private placement offering (the
“Note Offering”) of US$51 million principal amount of 8.99% senior
secured convertible notes due February 2028 (the “Notes”).
As part of the transaction, the Company purchased and cancelled
all of the outstanding approximately US$36 million principal amount
of the Company’s existing 6.95% senior secured notes due 2026 (the
“2026 Notes”) at par, plus accrued and unpaid interest through the
date of the closing. The net proceeds of the Note Offering of
approximately US$14 million will be used for capital expenditures
associated with the expansion and recommissioning of the Company’s
hydrometallurgical cobalt refinery, including buildings, equipment,
infrastructure, and other direct costs, as well as engineering and
project management costs.
The initial conversion rate of the Notes is 403.2140 common
shares of the Company (“Common Shares”) per US$1,000, equivalent to
an initial conversion price of approximately US$2.48 per Common
Share, subject to certain adjustments set forth in the indenture
governing the Notes (the “Note Indenture”), reflecting a premium of
approximately 17.5% to the 30-day volume weighted average price of
the Common Shares prior to the date the Note Offering was
announced.
The Notes bear interest at 8.99% per annum, subject to
adjustment in certain circumstances described in the Note
Indenture, payable in cash semi-annually in arrears in February and
August of each year, provided that during the first 12 months of
the term of the Notes, the Company may pay interest through the
issuance of Common Shares at an increased annual interest rate of
11.125%.
Cantor Fitzgerald & Co. (“CF&Co”) acted as sole
placement agent for the Note Offering and received a cash fee equal
to 4% of the difference between the principal amount of Notes and
the outstanding principal amount of 2026 Notes, a portion of which
was satisfied by the issuance of 27,500 Common Shares at a price of
US$2.18, as well as a fee of 50,000 Common Shares.
The Notes, the Warrants, the underlying Common Shares and the
Common Shares have not been registered under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”), or
any applicable U.S. state securities laws, and may not be offered
or sold in the United States absent registration or an available
exemption from the registration requirement of the U.S. Securities
Act and applicable U.S. state securities laws.
The Noteholders received an aggregate of 10,796,054 warrants to
purchase Common Shares (“Warrants”) exercisable for five years at
US$2.48 in connection with the Note Offering. The initial
Noteholders also received a royalty of an aggregate of 0.6% of
revenues for five years from the commencement of commercial
production, subject to certain allowable deductions in the first
year of the term.
Upon any early conversion of Notes, the Company will make an
interest make-whole payment equal to the lesser of the two years of
interest payments or interest payable to maturity, which may be
made in cash or shares at the Company’s election. There are also
payments required in the event of a fundamental change, such as a
change of control. In accordance with the policies of the TSX
Venture Exchange (“TSXV”), for as long as the Company is listed on
the TSXV, aggregate consideration that is deemed “interest” under
the Note Offering is capped at 24% per year absent TSXV approval.
In addition, provided the Company is not listed on TSXV, certain
price-based adjustment mechanisms will apply to the Notes and the
Warrants. Should such adjustments be required or should the
Noteholders become entitled to aggregate deemed interest in
conflict with TSXV policies, the Company has agreed to seek to
obtain approval from the TSXV to make such adjustments or allow
such payments to be made, or in the alternative, take other
measures up to and including seeking an alternative Canadian
listing venue.
Additional information with respect to the attributes of the
Notes, the Warrants and royalty can be found in the Company’s news
release dated February 8, 2023, the Note Indenture, the indenture
governing the Warrants, and a material change report to be filed in
connection with the Note Offering, each of which will be made
publicly available on SEDAR and EDGAR.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful.
About Electra Battery Materials
Electra is a processor of low-carbon, ethically-sourced battery
materials.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Cautionary Note Regarding Forward-Looking Statements
This news release may contain forward-looking statements and
forward-looking information (together, “forward-looking
statements”) within the meaning of applicable securities laws and
the United States Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, are
forward-looking statements. Generally, forward-looking statements
can be identified by the use of terminology such as “plans”,
“expects', “estimates”, “intends”, “anticipates”, “believes” or
variations of such words, or statements that certain actions,
events or results “may”, “could”, “would”, “might”, “occur” or “be
achieved”. Such forward-looking statements include, without
limitation, statements regarding the attributes and terms of the
Notes and related agreements and the expected use of proceeds of
the Offering. Forward-looking statements involve risks,
uncertainties and other factors that could cause actual results,
performance, and opportunities to differ materially from those
implied by such forward-looking statements. Factors that could
cause actual results to differ materially from these
forward-looking statements are set forth in the management
discussion and analysis and other disclosures of risk factors for
Electra Battery Materials Corporation, filed on SEDAR at
www.sedar.com and with on EDGAR at www.sec.gov. Although Electra
Battery Materials Corporation believes that the information and
assumptions used in preparing the forward-looking statements are
reasonable, undue reliance should not be placed on these
statements, which only apply as of the date of this news release,
and no assurance can be given that such events will occur in the
disclosed times frames or at all. Except where required by
applicable law, Electra Battery Materials Corporation disclaims any
intention or obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230213005647/en/
Joe Racanelli Vice President, Investor Relations
info@ElectraBMC.com 1.416.900.3891
Electra Battery Materials (NASDAQ:ELBM)
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