Orbite Technologies Announces $15 Million in Government Funding

Orbite Technologies (TSX:ORT) has entered a letter of intent with Investissement Québec for $15 million in financing.
As quoted in the press release:

The Financing is expected to be comprised of the purchase of 10% convertible non-secured debentures (the “Debentures”) in the principal amount of $5 million, the purchase of class A shares of the Company in the amount of $5 million, together with the grant of a $4.9 million bridge loan secured by the Company’s 2016 refundable investment tax credits (“ITC”).
Each Debenture consists of $1,000 principal amount of convertible unsecured debentures (the “Debentures”) of the Company, which will mature five years from the closing date and will bear interest at a rate of 10% per annum payable monthly. The interest accrued during the first 2 years will be capitalized and payable in cash at the maturity date of the Debenture or convertible into shares at the then market price, at the sole option of the holder. Each Debenture (capital only) will be convertible, at the option of the holder at any time prior to the maturity date, into class A shares of the Company at a price of $0.241 per share.
The equity portion of the Financing will be comprised of the purchase of 20,746,888 class A shares of Orbite at a price of $0.241 per share, for total gross proceeds of $5 million. The $4.9 million bridge loan will bear interest rate of 3.5% over the prevailing prime lending rate, which currently stands at 2.7%, payable monthly, collateralized against the Company’s ITC receivables for the 2016 financial year and repayable upon receipt by the Company of ITC payments for the 2016 financial year from tax authorities, but in no event later than July 23, 2018. Investissement Québec’s participation in the shares of Orbite together with that of its subsidiaries is currently below 10%, such that it is not an insider of the Company. Following the equity investment, and assuming no disposition of shares currently owned, Investissement Québec and its subsidiaries will collectively own approximately 13% of the issued and outstanding shares of the Company.

Orbite CEO, Glenn Kelly, said:

These funds, as we receive them, will allow us to reaccelerate our activities at Cap-Chat towards completion of our HPA plant. Commissioning activities, which have been ongoing these past weeks, continue to meet expectations, and we will be providing updates on plant start-up timing as we close the various tranches of the financing. We are grateful to Investissement Québec, who have proven to be a stable and supportive partner, for their continued support and commitment. We are also pleased with the structure of the financing, which limits dilution compared to alternative financing options.

Click here for the full press release.