Itafos Announces Borrowing of Convertible Unsecured Subordinated Debt in the Amount of US$15,000,000
12 September 2019 - 12:37PM
Itafos (TSX VENTURE: IFOS) (the “
Company”)
announced today that it has borrowed US$15,000,000 from CL
Fertilizers Holding LLC (“
CLF”) in the form of
convertible unsecured subordinated debt. The debt is 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 is subordinate
to the Company’s existing senior credit facility and subject to the
terms of subordination incorporated thereunder. The CLF Promissory
Note has an interest rate of 15% per year and is 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 is
added to and increases 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 will 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 will be converted into
the number of shares of the Company at the conversion price 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 will be
converted into the number of shares of the Company at the
conversion price 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).
The CLF Promissory Note, and any shares into
which it may convert upon an Equity Issuance, are subject to resale
restrictions in accordance with applicable law, including a four
month hold period in accordance with TSX Venture Exchange
policies.
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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