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CALGARY,
AB, Aug. 7, 2024 /CNW/ - CVW CleanTech
(TSXV: CVW) (OTCQX: CVWFF) ("CVW CleanTech" or the
"Company") announced today that effective today it is
entering into a royalty investment with Northstar Clean
Technologies Inc. (TSXV: ROOF) (OTCQB: ROOOF) ("Northstar")
pursuant to which the Company has agreed to purchase a five-year
$14 million second secured 10%
convertible debenture of Northstar (the "Convertible
Debenture"), which will be convertible into a revenue royalty
on Northstar's next two asphalt shingle reprocessing facilities
(the "Transaction"). Upon conversion of the Convertible
Debenture, and pursuant to the terms of the royalty agreement, CVW
CleanTech is entitled to receive recurring royalty payments based
on revenues at Northstar's next two facilities, which will be no
less than 12% of such revenues. In connection with the Transaction,
CVW CleanTech has made an initial payment to Northstar in the
amount of $1.5 million. The
Transaction is expected to close on or around September 30, 2024.
CVW CleanTech also announces that it has entered into an
agreement with Canaccord Genuity Corp. and Eight Capital to act as
co-lead agents and joint bookrunners, on behalf of a syndicate of
agents (the "Agents"), which also includes Ventum Financial
Corporation, in connection with a "commercially reasonable efforts"
private placement offering (the "Offering"), consisting of
up to 16,666,667 common shares (each, a "Common Share") at
an issue price of $0.90 per Common
Share (the "Offering Price") for total gross proceeds of up
to $15 million. CVW CleanTech has
also granted the Agents an option, exercisable in whole or in part,
prior to the closing of the Offering, to sell up to an additional
15% of the Common Shares offered under the Offering ("Agents'
Option"). Proceeds from the Offering will fund the Transaction
and associated costs. The Offering is expected to close on
September 5, 2024.
Directors and Special Advisor to the Company Pierre Lassonde are
supportive of the Transaction. The Offering is anchored by Mr.
Lassonde who intends to personally invest $1,000,000 bringing his ownership in the Company
to approximately 8% of the Company. Certain directors of the
Company have committed an additional $1,750,000 to the Offering. The Offering is
supported by a robust president's list including Pierre Lassonde, Darren
Morcombe, other board members and management as well as a
Canadian long only fund totaling approximately $9,000,000.
"At CVW CleanTech, our vision is to accelerate clean
technologies that sustainably recover valuable commodities, helping
drive the world's move to net zero," said Darren Morcombe, Chairman of the Board at CVW
CleanTech. "We see a significant market opportunity for CVW
CleanTech to partner with clean technology operators and provide
strategic financing via royalty structures to create a leading,
diversified royalty platform in a sector with strong macroeconomic
tailwinds alongside the immense value we expect to create through
the commercialization of our own Creating Value from Waste™
technology."
"We are delighted to announce our maiden royalty
transaction, and are very pleased to have Northstar Clean
Technologies as our first royalty partner. As we diversify our
company into a clean tech royalty platform, it presents a
transformative opportunity to create shareholder value and
accelerate growth," said Akshay
Dubey, CEO of CVW CleanTech. "This first royalty transaction
clearly illustrates the significant opportunity to provide our
shareholders with positive commodity-linked returns by investing
alongside clean technology companies supporting the decarbonized
and circular economy while generating strong returns and
accelerating cash flow generation."
Northstar has developed a patented, proprietary process to
recover liquid asphalt (effectively bitumen), aggregate, and fiber
from end-of-life and waste asphalt shingles, which would otherwise
be destined for landfills. Northstar's unique revenue model
includes receiving tipping fees from the collection of asphalt
shingles as feedstock supply, alongside sales of liquid asphalt,
aggregate and fiber. Northstar's proprietary clean technology has
been significantly de-risked by the advancement of its pilot plant
in Delta, British Columbia.
Northstar is currently constructing a commercial asphalt shingle
reprocessing facility in Calgary,
Alberta which is expected to commence commissioning by the
end of 2024. Northstar has significant expansion plans across
Canada and the United
States.
Akshay Dubey continued "At the
same time, we continue to enthusiastically pursue the commercial
deployment of our proprietary Creating Value From
Waste™ ("CVW™") technology. The CVW™ technology
is a Tier 1 opportunity advanced to the precipice of
commercialization, potentially offering tremendous value to our
investors with the ability to generate consistent long-term cash
flow streams. We believe diversifying into other clean technologies
will strengthen our financial position as we pursue the commercial
deployment of our proprietary technology."
According to Aidan Mills,
President and CEO of Northstar, "The proposed Transaction with CVW
CleanTech will be transformational for Northstar. Firstly, the
closing of the $14 million in funding
will rapidly accelerate the development of our next two facilities
and reduce Northstar's requirement for near term equity capital
raising to fund our growth. Secondly, the Transaction will add
considerable financing optionality to the Northstar development
program, offering Northstar the option, but not the obligation, to
work with CVW CleanTech to add royalty financing to future
facilities. Finally, the Transaction will add a reputable and
sophisticated long-term partner in CVW CleanTech who has both
technical expertise and support from the highly successful
entrepreneurs that make up its leadership team."
In connection with the announcement of its first royalty
transaction, CVW CleanTech has updated its website and investor
presentation. Investors are encouraged to view the Company's
updated materials which can be found at www.cvwcleantech.com.
Terms of the Transaction
Upon announcement of the Transaction, CVW CleanTech has
purchased from Northstar an initial five-year unsecured convertible
debenture (the "Initial Convertible Debenture") in the
amount of $1.5 million. Subject to
closing of the Transaction, the Initial Convertible Debenture will
be replaced by the larger $14 million
Convertible Debenture. The closing of the Transaction is
conditional on, among other things, the Company raising not less
than $12.5 million in net proceeds
under the Offering.
The Convertible Debenture is second lien secured with
protections afforded via an intercreditor agreement and a security
interest in Northstar's present and after-acquired property. The
Convertible Debenture carries a 10% annual coupon rate, with
semi-annual interest payments, and a five year term to maturity.
Northstar has the option to capitalize the coupon payments for the
first three years from the closing of the Transaction.
The royalty percentage will be determined at the conversion date
based on the principal amount of Convertible Debenture outstanding
at the time, and therefore will increase proportionally with the
amount of interest capitalized by Northstar prior to conversion.
The Convertible Debenture will automatically convert in two
tranches into royalties once either of the next two facilities of
Northstar reach agreed-upon volume and revenue thresholds. Upon
conversion of the Convertible Debenture, CVW CleanTech will receive
a royalty of no less than 12% on the revenue of each of Northstar's
next two commercial facilities. In the event that Northstar does
not reach agreed-upon volume and revenue thresholds within three
years from the closing date of the Transaction for their next two
operating facilities, CVW CleanTech may, at its sole discretion,
convert half the Convertible Debenture into a royalty on
Northstar's Calgary, Alberta
facility. Royalty payments to CVW CleanTech are subject to a fixed
charge coverage ratio test on the given facility, and any unpaid
amounts would accrue for future payment.
The Offering is subject to the receipt of all necessary
regulatory approvals including the final approval of the TSX
Venture Exchange. All Common Shares issued in connection with the
Offering will be subject to a statutory hold period expiring four
months and one day following the closing date of the Offering.
Certain subscribers under the Offering are considered to be a
"related party" of the Company. Each subscription by a "related
party" of the Company is considered to be a "related party
transaction" for purposes of Multilateral Instrument 61-101 –
Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). Pursuant to MI 61-101, the Company
will file a material change report providing disclosure in relation
to each "related party transaction" on SEDAR+ under the Company's
profile at www.sedar.com. The Company is relying on exemptions from
the formal valuation and minority shareholder approval requirements
available under MI 61-101. The Company is exempt from the formal
valuation requirement in section 5.4 of MI 61-101 in reliance on
sections 5.5(a) and (b) of MI 61-101 as the fair market value of
the transaction, insofar as it involves interested parties, is not
more than the 25% of the Company's market capitalization, and no
securities of the Company are listed or quoted for trading on
prescribed stock exchanges or stock markets. Additionally, the
Company is exempt from minority shareholder approval requirement in
section 5.6 of MI 61-101 in reliance on section 5.7(a) as the fair
market value of the transaction, insofar as it involves interested
parties, is not more than the 25% of the Company's market
capitalization. The Offering was approved by the board of directors
of the Company.
The Common Shares being offered pursuant to the Offering have
not been, nor will they be, registered under the U.S. Securities
Act and may not be offered or sold in the
United States or to, or for the account or benefit of, U.S.
persons absent registration or an applicable exemption from the
registration requirements. This news release shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the Common Shares in any state in which such
offer, solicitation or sale would be unlawful. "United States" and
"U.S. person" are as defined in Regulation S under the U.S.
Securities Act.
About CVW CleanTech
CVW CleanTech's vision is to invest in innovative technologies
which provide returns linked to commodities and which operate in a
sustainable manner that helps accelerate the world's transition to
net zero. CVW CleanTech is in the process of building a portfolio
of royalty-based cash flow streams by partnering with clean
technology innovators in the commodity space. CVW CleanTech is the
100% owner of its proprietary technology, Creating Value from
Waste™ ("CVW™"), which is designed to recover bitumen, solvents,
critical minerals, and water from oil sands froth treatment
tailings, which would reduce tailings pond fugitive methane
emissions, volatile organic compounds ("VOCs"), and enhance
tailings management.
About Northstar Clean Technologies
Northstar Clean Technologies Inc. is a Canadian clean technology
company focused on the sustainable recovery and reprocessing of
asphalt shingles. Northstar has developed a proprietary design
process for taking discarded asphalt shingles, otherwise destined
for already over-crowded landfills, and extracting the liquid
asphalt for use in new hot mix asphalt, shingle manufacturing and
asphalt flat roof systems, and aggregate and fiber for use in
construction products and other industrial applications. Focused on
the circular economy, Northstar plans to reprocess used or
defective asphalt shingle waste back into its three primary
components for reuse/resale at its first commercial scale up
facility in Calgary, Alberta. As
an emerging innovator in sustainable processing, Northstar's
mission is to be the leader in the recovery and reprocessing of
asphalt shingles in North America,
extracting the recovered components from asphalt shingles that
would otherwise be sent to landfill.
Disclosure Regarding Forward-Looking Information
This news release contains forward-looking statements and
information within the meaning of applicable Canadian securities
laws (collectively, "forward-looking information") that reflect the
current expectations of management about the future results,
performance, achievements, prospects, or opportunities for CVW
CleanTech (the "Company").
Forward-looking statements are frequently, but not always,
identified by words such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible" and similar
expressions, or statements that events, conditions or results
"will", "may", "could" or "should" occur or be achieved. The
forward-looking statements may include statements
regarding the intention to complete the Offering and
the expected use of proceeds of the Offering, the issuance of the
Common Shares, the expected closing dates of the Offering and the
Transaction and the Company's objectives, goals or future plans,
the potential for the Transaction and the Company's royalty
investment strategy to create value, the terms of the Transaction,
including the proposed royalty percentages and the facilities
subject to such royalty, expected deployment and results of
deployment of CVW™ technologies, the adoption of CVW™ technologies
by industry participants, estimated recoveries, environmental
impacts, benefits and financial results from the implementation and
adoption of CVW™ technologies, the prospective terms of the
involvement of joint venture and the of the proposed joint venture
and all other statements regarding the benefits and implications of
the implementation of our technologies and the joint venture or
other statements that are not statements of fact. Forward-looking
statements are statements about the future and are inherently
uncertain, and actual achievements of the Company may differ
materially from those reflected in forward-looking statements due
to a variety of risks, uncertainties and other factors. For the
reasons set forth above, investors should not place undue reliance
on forward-looking statements. Important factors that could cause
actual results to differ materially from the Company's expectations
include: binding agreements in respect of the joint venture may
never be entered into or on the terms set forth in the non-binding
agreement; adoption or use of the Company's technologies by
industry participant; the ability to advance the technologies of
the Company on a timely basis or at all; reliance on estimates
prepared by third parties; current estimates and predictions being
based on certain assumptions about the industry in which the
Company operates and macroeconomic conditions generally;
uncertainties in the timing and receipt of regulatory and exchange
approvals; uncertainties involved in disputes and litigation;
fluctuations in interest rates, commodity prices, currency exchange
rates, and other financial conditions, and the resultant effect on
viability of investments; changes in the availability, and cost, of
technical labour required for our business; price escalation and/
or inflationary pressures affecting the cost of equipment and
material required to commercialize our projects; the uncertainty of
estimates of capital and operating costs; the need to obtain
additional financing and uncertainty as to the availability and
terms of future financing; the impact on the Company of increasing
inflation; and other risks and uncertainties disclosed in other
information released by the Company from time to time and filed
with the appropriate regulatory agencies.
All forward looking statements are based on the Company's
beliefs and assumptions which are based on information available at
the time these assumptions are made, and is necessarily based upon
a number of assumptions that, while considered reasonable by the
Company, are inherently subject to significant operational,
business, economic and regulatory uncertainties and contingencies.
The Company has made the following assumptions in relation to the
forward-looking statements in this press release: the successful
conclusion of the Offering on the terms as announced; the
Transaction and the Company's royalty investment strategy will be
successfully implemented and will create value for the Company,;
that there will be adoption by industry participants of the
Company's technologies; the expected environmental and economic
benefits to be achieved from CVW™ technologies; the ability of the
Company to successfully access various government funding programs;
reliance on economic estimations prepared and assumptions made by
third parties; that the Company will continue to be able to protect
its intellectual property and proprietary technologies; assumptions
as to various market and commercial opportunities for the Company
and its technologies; and the ability of the Company to continue to
develop and commercialize its technologies. The forward-looking
statements contained herein are as of the date set out above and
are subject to change after this date, and the Company assumes no
obligation to publicly update or revise the statements to reflect
new events or circumstances, except as may be required pursuant to
applicable laws.
Although management believes that the expectations
represented by such forward-looking information or statements are
reasonable, there is significant risk that the forward-looking
information or statements may not be achieved, and the underlying
assumptions thereto will not prove to be accurate. Actual results
or events could differ materially from the plans, intentions and
expectations expressed or implied in any forward-looking
information or statements, including the underlying assumptions
thereto, as a result of numerous risks, uncertainties and factors
including: failure to complete the Offering on the terms as
announced or at all; failure to derive benefits form the
Transaction and the Company's royalty investment strategy; failure
to receive regulatory approvals required for the transactions
described in this news release; failure to enter into agreements
with industry participants; ; the possibility that opportunities
will arise that require more cash than the Company has or can
reasonably obtain; dependence on key personnel; dependence on
corporate collaborations; potential delays; uncertainties related
to early stage of technology and product development; uncertainties
as to fluctuation of the stock market; uncertainties as to future
expense levels and the possibility of unanticipated costs or
expenses or cost overruns; and other risks and uncertainties which
may not be described herein.
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.
SOURCE CVW Cleantech Inc.
