The proposed amendments (the “Amendments“) to the Debentures, include, among other things:
(i) |
extending the maturity date of the Debentures from November 30, 2020 to November 30, 2023 (the “Maturity Date“); |
(ii) |
an interest rate of 7.0% per annum; |
(iii) |
at the option of the Company, to pay interest in-kind on the Debentures for the period from December 1, 2020 to November 30, 2021 by issuing additional Debentures to the holders of the Debentures; |
(iv) |
each $1,000 amount of Debentures will be convertible at the option of the holder, at any time prior to the Maturity Date into 3,125 freely tradeable common shares (the “Common Shares“) of the Company, representing a conversion price of $0.32 per Common Share (the “Conversion Price Amendment“), and |
(v) |
the Debentures will be redeemable by the Company at any time by fully repaying the principal amount and all accrued interest owing on the Debentures on the date selected for redemption or, at the option of the Company, by issuing Common Shares in respect of the principal amount owing at an issue price equal to 95% of the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX“) for the 20 trading days ending 5 trading days prior to the redemption date. |
The Amendments to the Debentures will be effective as of December 1, 2020, provided that the Conversion Price Amendment will be effective upon receipt of the Shareholder Approval, and the Company expects to enter into an amended and restated debenture indenture to give effect to such Amendments on or before December 1, 2020.
The Amendments remain subject to the approval of the TSX, the lenders of the Company and, in respect of the Conversion Price Amendment, the shareholders of the Company. A special meeting of the shareholders of the Company to approve the Conversion Price Amendment is expected to be held prior to December 31, 2020 (the “Shareholder Approval“), with the timing and details of such special meeting of shareholders to be announced separately.
If the Conversion Price Amendment does not receive the Shareholder Approval, the Maturity Date will be accelerated to December 31, 2020 and the Company will be required to repay the principal amount and all accrued interest owing under all of the Debentures on December 31, 2020, which will include all accrued and unpaid interest on the Debentures for the period from December 1, 2020 to, but excluding, December 31, 2020. If the Conversion Price Amendment is not approved and the Debentures mature on December 31, 2020, the Company intends to repay the principal amount owing on the Debentures by issuing Common Shares in accordance with the existing terms of the Debentures at an issue price equal to 95% of the volume weighted average trading price of the Common Shares on the TSX for the 20 trading days ending 5 trading days prior to December 31, 2020.
Burgundy Asset Management Ltd. (“Burgundy“) currently holds Debentures in an aggregate $9,402,000 principal amount of Debentures, representing 71.3% of the issued and outstanding Debentures. Burgundy also currently holds approximately 23,135,776 Common Shares representing approximately 10.7% of the issued and outstanding Common Shares. The Shareholder Approval is required in accordance with the rules of the TSX because Burgundy would receive greater than 10% of the currently issued and outstanding Common Shares on conversion of the Debentures based on the Conversion Price Amendment.
Further details regarding the Conversion Price Amendment and the other Amendments will be provided to shareholders in a management information circular, which is expected to be mailed to shareholders of the Company in November 2020.