Cielo Waste Solutions Corp. (TSXV:CMC; OTCQB:CWSFF)
(
“Cielo” or the
“Company”), a
waste-to-fuel environmental technology company, is pleased to
announce a proposed financing and provide an update on a previously
disclosed proposed financing, announce a purchase and sale
agreement for its property in Fort Saskatchewan, Alberta, which
upon completion will eliminate the Company’s $11 million mortgage
loan, and provide an operational update.
Financing
Up to CAD $5 million Mortgage Loan
The Company has entered into a loan commitment
letter (the “Commitment Letter”) with First Choice
Financial Incorporated (“FCF”), as lender, for a
mortgage loan (the “Mortgage Loan”) of up to an
aggregate principal amount of CAD $5 million. The Company will
initially receive a principal amount of $2 million, which is
anticipated to be completed prior to the end of this week. The
Mortgage Loan is subject to the approval of the TSX Venture
Exchange (the “Exchange”).
The Mortgage Loan will bear simple interest of
7.5% per annum and FCF will withhold $150,000 as an interest
reserve to satisfy the first 12 months of interest payments. In
addition, FCF will be entitled to receive a financing fee of 3.5%
per advance ($70,000 for the first advance of $2 million). No
securities will be issued in connection with the Mortgage Loan and
no other fees or commissions will be payable.
The Mortgage Loan will be secured against the
Company’s property in Aldersyde, Alberta, including a site-specific
general security agreement against the assets on the property. The
proceeds of the Mortgage Loan will be used for general working
capital.
The Mortgage Loan will have a term of 24 months
from the closing date with respect to each advance (each a
“Closing Date”), however, at any point following
the 12 month anniversary of a Closing Date, in the event that FCF
is dissatisfied following an evaluation of Cielo’s financial
condition, business and technological progress, FCF may require the
Company to repay the Mortgage Loan, in whole or in part, within 90
days of the notice from FCF to the Company that such repayment is
required. Cielo will have the right to repay the Mortgage Loan at
any time, without penalty. In addition, once the structure and
financing terms for the Company’s first commercial facility (the
“First Commercial Facility”) have been determined,
Cielo may make a proposal to FCF to exchange the principal portion
of the Mortgage Loan for participation in the First Commercial
Facility, which FCF will be entitled to accept or reject.
Management believes that this will result in minimizing the
dilutive impact to Cielo while unlocking potential value for third
parties, such as FCF, that may be interested in participating
directly in the First Commercial Facility financing.
Vikas Sharma, CEO of FCF, commented: “We
appreciate the actions of management over the last year to
strengthen Cielo’s overall position and move the company further
along the path to commercialization. We believe in Cielo’s
long-term plans and that this credit facility and our purchase of
the real estate help position Cielo to reach its upcoming
milestones, including railway tie testing. We are pleased with
the recent EPA re-submission and are hopeful for a positive
response and quick turnaround. We have been long time supporters of
Cielo and look forward to strengthening our relationship even
further going forward.”
Termination of Crestmont Financing
Further to the Company’s news releases dated
April 10, 2023 and May 1, 2023 regarding a debt financing to be
completed with Crestmont Investments, LLC
(“Crestmont”), despite continued efforts to
finalize the terms and complete the proposed financing, and
notwithstanding that Cielo and Crestmont have formed a professional
relationship that Cielo anticipates to continue in the long term,
the parties have agreed to terminate the binding letter of intent.
Management believes that the terms of the proposed Mortgage Loan
with FCF are more favourable to the Company and that Crestmont’s
preference and strength is in the facilitation of larger financing
transactions, and as such, the parties are continuing discussions
with regard to the full financing of the Company’s First Commercial
Facility rather than bridge financing for the Company’s research
and development facility and working capital.
David Beach, Principal of Crestmont, commented:
“After an exhaustive due diligence period with Cielo, Crestmont has
come to appreciate that Cielo’s project pipeline is very
compelling. It is with a deep understanding of Cielo’s future
project finance needs as well as Crestmont’s desire to be involved
in a more substantial way that we turn our attention to the larger
project financing that Cielo requires.”
Proposed Sale of Land
The Company has entered into a purchase and sale
agreement with FCF, as purchaser, for the sale (the
“Sale”) of the Company’s property in Fort
Saskatchewan, Alberta (the “FS Property”).
The purchase price for the FS Property is CAD
$13 million (the “Purchase Price”), subject to the
terms of the Note (as defined below), to be paid as follows:
-
FCF previously provided a mortgage loan of CAD $11 million (the
“Existing Mortgage Loan”) to the Company, which
was secured in part by the FS Property. On completion of the Sale,
the Existing Mortgage will be repaid in full;
-
The remaining CAD $2 million will be paid by way of a promissory
note (the “Note”) from FCF in favour of Cielo,
whereby FCF will be required to use commercially reasonable best
efforts to enter into a purchase and sale agreement for the sale of
the FS Property on or before September 30, 2024. Should FCF be
unable to do so, the Purchase Price will be reduced by CAD $2
million.
The Sale is subject to certain conditions,
including the approval of the Exchange, and the waiver of the right
of first refusal held by the tenant of the FS Property (the
“Tenant”). The lease between Cielo and the Tenant
was also amended to provide for an additional 19 acres to be leased
by the Tenant. Other than customary fees, such as realtor
commissions, no third-party finder fees are payable with respect to
the Sale.
The closing of the Sale is anticipated to occur
on or before July 31, 2023. The Mortgage Loan and the Sale are not
conditional upon each other or otherwise connected.
Operational Update
The Company continues to work toward securing
permit approval from Alberta Environment and Protected Areas
(“EPA”) to begin railway tie testing, as
previously disclosed. The Company’s amended application is under
review with the EPA and once approval is granted, testing will
commence.
Ryan Jackson, CEO of Cielo, commented: “These
last several months we have been focused on achieving a number of
initiatives for Cielo, including the commissioning of the R&D
facility and our continuing efforts to secure a permit to commence
railway tie testing. With this loan from FCF and the sale of the
land, we believe we will have the resources we need at this time to
continue to move forward with our commercialization plan.”
This press release shall not constitute
an offer to sell or the solicitation of an offer to buy securities
of the Company in the United States nor shall there be any sale of
securities of the Company in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The securities described
herein have not been, and will not be, registered under the United
States Securities Act of 1933, as amended, or the securities laws
of any state of the United States. Accordingly, any of the
securities described herein may not be offered or sold in the
United States or to U.S. persons unless an exemption from
registration is available.
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.
ABOUT CIELO
Cielo Waste Solutions Corp. was incorporated
under the Business Corporations Act (British Columbia) on February
2, 2011. Cielo is a publicly traded company with its shares listed
to trade on the TSX Venture Exchange (“TSXV”)
under the symbol “CMC,” on the Frankfurt Exchange
(“DAX”) under the symbol “C36”, as well as on the
OTC Venture Market (“OTCQB”), under the symbol
“CWSFF.” The Company’s strategic intent is to become a leading
waste-to-fuel company using economically sustainable technology
while minimizing the environmental impact. Cielo has a patented
process that can convert waste feedstocks, including organic
material and wood derivative waste, to fuel. Having demonstrated
its ability to produce diesel and naphtha from waste, Cielo’s
business model is to construct additional processing facilities.
Cielo’s objective is to generate value by converting waste to fuel,
while fueling the sustainable energy transition.
For further information please contact:
Cielo Investor Relations
Phone: (403) 348-2972 Email:
investors@cielows.com
RB Milestone Group LLC Email:
cielo@rbmilestone.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This news release contains certain
forward-looking statements and forward-looking information
(collectively referred to herein as “forward-looking statements”)
within the meaning of applicable Canadian securities laws. All
statements other than statements of present or historical fact are
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as
“anticipate”, “achieve”, “could”, “believe”, “plan”, “intend”,
“objective”, “continuous”, “ongoing”, “estimate”, “outlook”,
“expect”, “may”, “will”, “project”, “should” or similar words,
including negatives thereof, suggesting future outcomes.
Forward-looking statements are subject to both
known and unknown risks, uncertainties, and other factors, many of
which are beyond the control of the Company, that may cause the
actual results, level of activity, performance, or achievements of
the Company to be materially different from those expressed or
implied by such forward looking statements. Cielo is making forward
looking statements, with respect to, but not limited to: the
completion of the Mortgage Loan on the terms described herein; the
first advance pursuant to the Mortgage Loan being CAD $2 million;
the timing of the completion of the Mortgage Loan; the use of
proceeds of the Mortgage Loan; the Sale of the FS Property on the
terms and described herein; the timing of the completion of the
Sale of the FS Facility; the repayment of the Existing Mortgage
Loan and all terms related to the Note; the proceeds of the
Mortgage Loan and the Sale providing Cielo with sufficient
resources to continue with the Company’s commercialization plan;
the formation of an entity in connection with, and future financing
of, the First Commercial Property; the continuing relationship
between Cielo and Crestmont and the proposed involvement of
Crestmont in or with the financing of the First Commercial
Facility; and pending EPA permit approval and the commencement of
railway tie testing following approval.
Investors should continue to review and consider
information disseminated through news releases and filed by the
Company on SEDAR. 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.
Forward-looking statements are not a guarantee
of future performance and involve a number of risks and
uncertainties, some of which are described herein. Such
forward-looking statements necessarily involve known and unknown
risks and uncertainties, which may cause the Company’s actual
performance and results to differ materially from any projections
of future performance or results expressed or implied by such
forward-looking statements. Any forward-looking statements are made
as of the date hereof and, except as required by law, the Company
assumes no obligation to publicly update or revise such statements
to reflect new information, subsequent or otherwise. Neither the
TSXV nor its Regulation Services Provider (as that term is defined
in the policies of the TSXV), nor OTCQB nor WKN, have reviewed, and
do not accept responsibility for the adequacy or accuracy of, the
content of this news release.
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