Emblem (TSXV:EMC) has announced that it has entered into a letter of engagement with Eight Capital whereby Eight Capital will purchase 12,195,123 units and 25,000 convertible unsecured debentures of the company on a bough deal basis for gross proceeds of $25 million and a price per convertible debenture of $1,000 for gross proceeds of $25 million to total $50 million.
As quoted in the press release:
Prior to closing the Offering, Eight Capital and the Company may agree to form a syndicate of underwriters.
The Company has agreed to grant Eight Capital an over-allotment option to purchase up to an additional 15% of the Units at the Unit Issue Price, exercisable in whole or in part, at any time on or prior to the date that is 30 days following the closing of the Offering. If this option is exercised in full, an additional $3,750,001 will be raised pursuant to the Offering and the aggregate proceeds of the Offering will be $53,750,003.
Each Unit will be comprised of one common share of the Company (a “Common Share“) and one common share purchase warrant (a “Warrant“). Each Warrant shall entitle the holder thereof to purchase one additional Common Share at an exercise price of $2.70, for a period of 24 months following the closing of the Offering.
The Convertible Debentures shall bear interest at a rate of 8.0% per annum from the date of issue, payable semi-annually in arrears on June 30 and December 31 of each year. The Convertible Debentures will have a maturity date of 36 months from the closing date of the Offering (the “Maturity Date“).
The Convertible Debentures will be convertible at the option of the holder into common shares of the Company (the “Conversion Shares“) at any time prior to the close of business on the Maturity Date at a conversion price of $2.30 per share (the “Conversion Price“). Beginning on the date following the closing date, the Company may force the conversion of all of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on 30 days prior written notice should the daily volume weighted average trading price of the Conversion Shares be greater than $3.45, for any 10 consecutive trading days.
Upon a change of control of the Company, holders of the Convertible Debentures will have the right to require the Company to repurchase their Convertible Debentures, in whole or in part, on the date that is 30 days following the change of control, at a price equal to 100% of the principal amount of the Convertible Debentures then outstanding plus accrued and unpaid interest thereon (the “Offer Price“). If 90% or more of the principal amount of the Convertible Debentures outstanding on the date of the notice of the change of control have been tendered for redemption, the Company will have the right to redeem all of the remaining Convertible Debentures at the Offer Price.
As consideration for its services, Eight Capital and a syndicate of underwriters to be formed in connection with the Offering will receive a cash commission equal to 6.0% of the gross proceeds of the Offering, other than in respect of Offered Securities sold to the Company’s president’s list for which the a cash commission equal to 3.0% will be paid. The Company will also issue non-transferrable compensation warrants to the underwriters in an amount equal to 3.0% of the gross proceeds of the Offering divided by the Unit Issue Price. Each compensation warrant will be exercisable into one Unit at the Unit Issue Price for a period of 24 months following the closing of the Offering.