Orbite Aluminae Inc. (TSX:ORT,OTCQX:EORBF) filed a preliminary short form prospectus of up to $16 million in Units comprised of Convertible Unsecured Debentures and Share Purchase Warrants of the Company. Orbite Aluminae also secured a binding subscription commitment for $40 million in additional Units in additional funding from Crede Capital Group, who has also agreed to purchase $10 million of Units under the Offering.
As quoted in the press release:
Short Form Prospectus
The Prospectus qualifies the distribution of a minimum of $10,000,000 and a maximum of $16,000,000 aggregate principal amount of units (the “Units”). Each Unit consists of $1,000 principal amount of 7.5% convertible unsecured unsubordinated debentures (the “Debentures”) and share purchase warrants (a “Warrant”) of the Corporation equivalent to 35% of the number of Class A Shares (“Common Shares”) into which the Debentures are convertible. Each full Warrant entitles the holder to purchase one Common Share at the price of $0.558 (which is equal to a 20% premium over the conversion price) for a period of 36 months following issuance.
Commitment for Additional Funding
Orbite and Crede have entered into a binding agreement (the “Subscription Commitment”) providing for the future subscription by way of private placement of up to $40 million in additional Units, subject to certain conditions listed hereinafter. The additional Units will have identical terms to those of the Units, with the exception that the conversion price shall be based on the 5 day VWAP of the Corporation’s shares on the last trading day prior to the date on which the Subscription Rights in respect of which the additional Units are issued first become exercisable, and the Warrants granted shall be equivalent to 45% of the number of Common Shares into which the Debentures are convertible, exercisable at a 20% premium over such conversion price.
Under the terms of the Subscription Commitment, Crede has undertaken to subscribe, 3 months from the closing of the Offering, to two series of subscription rights (“Subscription Rights”). Upon exercise, the Subscription Rights will require Crede to purchase additional Units in the total amount of up to $40 million, as follows:
- Series X Subscription Rights, requires Crede upon exercise to purchase additional Units in the amount of $10 million, exercisable on the earlier of (i) 4 months following the closing of the Offering, provided the additional Units underlying such Series X Subscription Rights have been qualified by prospectus, and (ii) 4 months following the issuance of the Series X Subscription Rights; and
- Series Y Subscription Rights, exercisable 10 months from closing of the Offering, requires Crede upon exercise to purchase additional Units in the amount of up to $30 million in tranches based on aggregate trading value benchmarks of the Common Shares.
Orbite Aluminae Inc. Chief Operating Officer, Glenn Kelly, said:
We are pleased to report to our shareholders, who have been extremely patient over the last four months, that we now have a binding funding commitment that should allow us to access the capital required for the finalization of our high-purity alumina facility in Cap-Chat, Quebec. However, we also remain focused on other financing initiatives, including our discussions with the Government of Quebec which have progressed well.
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