VANCOUVER, BC, Sept. 17, 2020 /CNW/ - Itasca Capital Ltd.
(TSXV: ICL) ("Itasca" or
"Company") is pleased to announce that one of its investee
companies, 1347 Investors LLC ("1347 LLC") has agreed to
acquire (the "Acquisition"), for consideration of
$11.5 million in cash, a sawmill and
related assets located in Kenora,
Ontario from the court-appointed receiver of a
resource-based vendor. In connection with the Acquisition,
Itasca intends to complete a
non-brokered private placement financing and add Paul Rivett and Rick
Doman to its board of directors. The Acquisition, which has
been approved by a court vesting order of the Manitoba Court of Queen's Bench granted on
September 9, 2020, is expected to
close on or about October 5, 2020.
The Company also intends to change its name to "GreenFirst Forest
Products Inc." following closing. The proposed name change is
subject to shareholder and TSXV approval. All amounts are in
Canadian dollars unless indicated otherwise.
"We are excited to welcome Paul
Rivett and Rick Doman to the
Itasca board of directors," said
Kyle Cerminara, Chairman of the
Itasca board. Cerminara added,
"Itasca will certainly benefit
from the experience of Paul and Rick and we look forward to a
bright future for the company as we pursue new lumber investments
under the GreenFirst banner."
The purchased assets are comprised of a sawmill and related
equipment and lands of approximately 114 acres. The sawmill sits on
a 42 acre site leaving over 72 acres of undeveloped lakefront land
in the attractive Lake-of-the-Woods region. The sawmill is
located near major transportation routes, including the
Trans-Canada Highway and the main Canadian Pacific rail line,
providing easy access to the nearby Canadian-United States border
and several key mid-west U.S. markets, including Minneapolis, Chicago, St.
Louis and Dallas.
"We believe this is an excellent development for 1347 LLC, which
is our principal investment" said Larry
Swets, Chief Executive Officer of Itasca. Swets continued "The investment to be
made by 1347 LLC is in line with Itasca's mandate to invest in the natural
resource and industrial sectors. We understand that 1347 LLC
intends to bring the Kenora
sawmill online quickly".
The Kenora sawmill has access
to up to 450,000 cubic meters per year of high-quality, northern
SPF timber and is equipped to produce up to 100 million board feet
(MMBF) per year on 2 shifts of quality SPF (Premium, #1&2, stud
grade and MSR grades focused on PET 8-9' lumber products). It is
expected that the Kenora sawmill
can be optimized to achieve production capacity of 200 million
board feet annually.
In connection with the Acquisition, Itasca intends to complete a non-brokered
private placement financing (the "Private Placement") of
2,000,000 units (the "Units") at a purchase price of
$0.50 per Unit and of 4,000
convertible debentures (the "Convertible Debentures") at a
purchase price of $1,000 per
Convertible Debenture for aggregate gross proceeds of $5,000,000. It is expected that Paul Rivett and Rick
Doman will be the subscribers under the Private
Placement.
Each Unit is comprised of one common share of Itasca (a "Common Share") and one
Common Share purchase warrant of Itasca (a "Warrant"). Each Warrant
entitles the holder thereof to purchase one Common Share at a
purchase price of $0.535 until the
date that is five years after the date that the Warrant is issued.
Each Unit is immediately separable into one Common Share and one
Warrant upon issuance.
Each Convertible Debenture will be secured, and has a maturity
date of two years from the date of issuance. The Convertible
Debentures will bear interest at a rate of 4% per annum until the
completion of a Qualified Investment (as defined below) and 2% per
annum thereafter; provided that, if the Requisite Approval
(as defined below) is not obtained on or before December 31, 2020, the interest rate shall be
increased by ten percentage points in each case, to 14% and 12%,
respectively. If, prior to the maturity date, Itasca closes an investment in excess of
$25,000,000 (a "Qualified
Investment") the principal amount of each Convertible
Debenture will, subject to the limitations described below,
automatically convert at maturity into Units at a price of
$0.50 per Unit (provided that the
term of any Warrant issued in connection therewith will be limited
to 5 years from the date of issuance of the Convertible Debenture).
Accrued but unpaid interest on the Convertible Debentures will also
automatically convert at maturity into Units upon a Qualified
Investment in accordance with the policies of the TSX Venture
Exchange (the "TSXV") and subject to TSXV approval. Unless
and until shareholders of Itasca
approve the issuance of the Convertible Debentures in accordance
with the policies of the TSXV (the "Requisite Approval"),
the Convertible Debentures will only be convertible to the extent
that the issuance of the Common Shares issuable on conversion of
the Convertible Debentures and exercise of the associated Warrants
do not result in the holder thereof holding 20% or more of issued
and outstanding Common Shares of Itasca. If the Corporation fails
to complete a Qualified Investment prior to the date that is 6
months following the issuance of the Convertible Debenture, the
holder thereof may require Itasca
to redeem and repurchase the Convertible Debenture for their face
amount plus all accrued and unpaid interest.
The securities issued pursuant to the Private Placement will be
subject to a statutory hold period which will expire four months
plus a day from the date of issuance.
Completion of the Private Placement is subject to the approval
of the TSXV. Itasca expects the
Private Placement to close concurrently with the closing of the
Acquisition at which time Paul
Rivett and Rick Doman are
expected to be appointed to the board of directors of the
Company.
"Paul and I are excited to join Itasca's board and look forward to working
with Larry and the Itasca team to
begin building GreenFirst as focused on lumber and forestry
investments", said Rick Doman who
added, "Similar to our recent success building Eacom with the
Domtar lumber assets, we look forward to assisting 1347 LLC in its
acquisition and optimization of the sawmill while also looking
globally for additional sawmill assets in the future."
The net proceeds of the Private Placement are intended to be
used for further investments into 1347 LLC, including bringing the
sawmill online, and for other future investments by Itasca.
Forward Looking Information
Certain information in this news release constitutes
forward-looking statements under applicable securities laws. Any
statements that are contained in this news release that are not
statements of historical fact are forward-looking statements.
Forward looking statements are often identified by terms such as
"may", "should", "anticipate", "expect", "potential", "believe",
"intend", "estimate" or the negative of these terms and similar
expressions. Forward-looking statements in this news release
include, but are not limited to statements with respect to the
timing to complete the Acquisition, the timing to bring the
Kenora sawmill online, the
anticipated benefits of the Acquisition to 1347 LLC (including
anticipated benefits to production capacity), the Private Placement
and board appointments, statements made by parties with respect to
the Acquisition and the Private Placement and the timing to
complete the Private Placement, name change and board appointments
related thereto and the use of funds.
Forward-looking statements are based on assumptions, including
expectations and assumptions concerning: interest and foreign
exchange rates; capital efficiencies, the lumber industry (and its
growth and growth rates) in North
America, the anticipated benefits of the Acquisition and the
Company's future plans and ability to complete future investments.
While the Company considers these assumptions to be reasonable,
based on information currently available, they may prove to be
incorrect. Readers are cautioned not to place undue reliance on
forward-looking statements. In addition, forward-looking statements
necessarily involve known and unknown risks, including, without
limitation, risks associated with general economic conditions;
adverse industry events; future legislative, tax and regulatory
developments. Readers are cautioned that the foregoing list is not
exhaustive and other risks are set out in the Company's public
disclosure record filed under the Company's profile on
www.sedar.com. Readers are further cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated.
Forward-looking statements contained in this news release are
expressly qualified by this cautionary statement and reflect our
expectations as of the date hereof, and thus are subject to change
thereafter. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
Neither TSXV nor its Regulation Services Provider (as that term
is defined in policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this news release.
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SOURCE Itasca Capital Ltd.
