Itafos Announces Intent to Borrow Convertible Unsecured Subordinated Debt in the Amount of US$15,000,000
11 September 2019 - 1:58PM
Itafos (TSX VENTURE: IFOS) (the “
Company”)
announced today that it intends to borrow US$15,000,000 from CL
Fertilizers Holding LLC (“
CLF”) in the form of
convertible unsecured subordinated debt, subject to approval from
the TSX Venture Exchange. The debt would be evidenced by an
unsecured and subordinated promissory note issued by the Company in
favor of CLF in the principal amount of US$15,000,000 (the
“
CLF Promissory Note”).
The proposed CLF Promissory Note would be
subordinate to the Company’s existing senior credit facility and
subject to the terms of subordination incorporated thereunder. The
CLF Promissory Note contemplates an interest rate of 15% per year
and would be payable on demand no earlier than six months after the
date on which the Company’s existing senior credit facility is paid
in full. The interest would be added to and increase the
outstanding principal balance of the CLF Promissory Note on a
quarterly basis. The proceeds of the CLF Promissory Note are
expected to be used to fund the general working capital and capital
expenditure needs of the Company and its subsidiaries. The
outstanding principal and interest under the CLF Promissory Note
would automatically convert into shares of the Company in
connection with any future equity issuances through which the
Company raises US$7,500,000 or more in cash (an “Equity
Issuance”).
Upon an Equity Issuance, the outstanding
principal amount of the CLF Promissory Note would be converted into
the number of shares of the Company equal to the greater of (a) the
volume-weighted average price of each share received by the Company
in connection with such Equity Issuance and (b) the market price of
the shares of the Company as of the date of the CLF Promissory
Note. Also upon an Equity Issuance, the accrued and unpaid interest
owing on the CLF Promissory Note as of the date of such Equity
Issuance would be converted into the number of shares of the
Company equal to the greater of (a) the volume-weighted average
price of each share received by the Company in connection with such
Equity Issuance and (b) the market price of the shares of the
Company as of the date of such Equity Issuance.
CLF is a “related party” to the Company under
Multilateral Instrument 61-101 Protection of Minority Security
Holders in Special Transactions (“MI 61-101”)
by virtue of its shareholding being in excess of 10% of the
Company’s issued and outstanding share capital. Accordingly, the
issuance by the Company to CLF of the CLF Promissory Note
constitutes a “related party transaction” under MI 61-101. The
issuance of the CLF Promissory Note by the Company to CLF is exempt
from (i) the formal valuation requirements under Section 5.4 of MI
61-101 pursuant to Subsection 5.5(b) of MI 61-101; and (ii) the
minority approval requirements under Section 5.6 of MI 61-101
pursuant to Subsection 5.7(1)(a).
About Itafos
Itafos is a vertically integrated phosphate
fertilizers and specialty products company with an attractive
portfolio of long-term strategic businesses and projects located in
key fertilizer markets worldwide. Itafos is managed by an
experienced and diverse team with extensive operations, commercial
and financial expertise. Itafos owns and operates Itafos Conda, a
vertically integrated phosphate fertilizer business with production
and sales capacity of approximately 550kt per year of monoammonium
phosphate (“MAP”), superphosphoric acid
(“SPA”), merchant grade phosphoric acid
(“MGA”) and specialty products including ammonium
polyphosphate (“APP”) located in Idaho, US and
Itafos Arraias, a phosphate fertilizer business with production and
sales capacity of approximately 500kt per year of single
superphosphate (“SSP”), SSP with micronutrients
(“SSP+”), premium PK compounds and excess sulfuric
acid located in Tocantins, Brazil. Itafos owns and is developing
Itafos Paris Hills, a high-grade phosphate mine project located in
Idaho, US, Itafos Farim, a high-grade phosphate mine project
located in Farim, Guinea-Bissau, Itafos Santana, a vertically
integrated high-grade phosphate mine and fertilizer plant project
located in Pará, Brazil, Itafos Mantaro, a large phosphate mine
project located in Junin, Peru and Itafos Araxá, a vertically
integrated rare earth elements and niobium mine and extraction
plant project located in Minas Gerais, Brazil.
For more information, or to join the Company’s
mailing list to receive notification of future press releases,
please visit the Company’s website, www.itafos.com.
Forward Looking Information
Certain information contained in this news
release constitutes forward looking information. All information
other than information of historical fact is forward looking
information. The use of any of the words “intend”, “anticipate”,
“plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”,
“should”, “would”, “believe”, “predict” and “potential” and similar
expressions are intended to identify forward looking information.
This information involves known and unknown risks, uncertainties
and other factors that may cause actual results or events to differ
materially from those anticipated in such forward looking
information. No assurance can be given that this information will
prove to be correct and such forward looking information included
in this news release should not be unduly relied upon.
Forward looking information is subject to a
number of risks and other factors that could cause actual results
and events to vary materially from that anticipated by such forward
looking information. Although the Company has attempted to identify
important factors that could cause actual results to differ
materially from those contained in forward-looking statements,
there may be other factors that cause results not to be as
anticipated, estimated or intended. Factors that may cause actual
results to differ materially from expected results described in
forward-looking statements include, but are not limited to, those
risk factors set out in the Company’s Management Discussion and
Analysis and other disclosure documents available under the
Company’s profile at www.sedar.com. Readers are cautioned that the
foregoing list of risks, uncertainties and assumptions are not
exhaustive. The forward-looking information included in this news
release is expressly qualified by this cautionary statement and is
made as of the date of this news release. Itafos undertakes no
obligation to publicly update or revise any forward-looking
information except as required by applicable securities laws.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information, please
contact:
Itafos Investor
Relationsinvestor@itafos.comwww.itafos.com
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