OTTAWA, ON, Nov. 15, 2021 /CNW/ - Enablence Technologies Inc.
("Enablence" or the "Company") (TSXV: ENA), a
supplier of optical components and subsystems, is pleased to
provide an update on its previously-announced recapitalization
transaction (the "Recapitalization Transaction"). Notably,
the Shares-for-Debt Settlements and Consolidation (each as defined
below) are expected to close prior to the end of November 2021. In addition, Enablence has agreed
to amend and restate its existing loan agreement with a related
party to allow for further advances of up to C$2 million to the Company to cover operating
costs through the closing of the Recapitalization Transaction and
while discussions continue with potential investors relating to
additional equity investments into the Company.
Shares-for-Debt Settlements
As previously announced, the Company entered into debt
settlement agreements with certain unsecured creditors holding an
aggregate of C$41,397,844.11 of the
total unsecured debt of the Company (collectively, the "Existing
Debt Settlements"), representing approximately 95% of the total
balance of debts proposed to be settled as part of the
Recapitalization Transaction. The remaining unsettled debts held by
unsecured creditors total C$1,955,863.59 (collectively, the "Remaining
Debt"). As of the date hereof, the holders of the Remaining
Debt have not agreed to enter into a Shares-for-Debt Settlement
with the Company.
Certain major creditors who have agreed to Shares-for-Debt
Settlements have a closing condition in their favour requiring that
100% of the Remaining Debt enter into a Shares-for-Debt Settlement
with the Company to convert such Remaining Debt on the same terms
noted above (the "Closing Condition"). The Company is
pleased to announce that it has obtained the necessary waivers by
such major creditors of the Closing Condition.
In addition, as part of the Recapitalization Transaction, the
Company will settle (i) C$1,000,000.00 in amounts due under a
Shares-for-Services agreement, and (ii) C$1,020,000.00 in principal amounts advanced
under the previously announced demand promissory note (the
"Original Grid Note"). All amounts owing by the Company
pursuant to items (i) and (ii) will be settled on the same terms
and conditions as the Existing Debt Settlements (the "Additional
Debt Settlements"). No additional advances will be made under
the Original Grid Note following the date hereof.
In aggregate, the Existing Debt Settlements and Additional Debt
Settlements total C$43,417,844.11.
All settlements are expected to close prior to the end of
November 2021.
Consolidation
As previously announced, the Company has obtained the necessary
shareholder approvals to consolidate (the "Consolidation")
the issued and outstanding common shares of the Company (the
"Common Shares"). The Board of Directors of the Company has
resolved to complete the Consolidation on the basis of one (1) new
post-Consolidation Common Share in exchange for each one hundred
and twenty (120) pre-Consolidation Common Shares (the
"Consolidation Ratio").
The Company currently has 641,927,418 Common Shares
issued and outstanding and, following completion of the
Consolidation, it is expected there will be approximately
5,349,395 Common Shares issued and outstanding (subject
to rounding), prior to the completion of the Shares-for-Debt
Settlements described above. After giving effect to the
Shares-for-Debt Settlements and the Consolidation, 17,845,261
Common Shares are expected to be issued and outstanding (subject to
rounding) on a pro forma basis, of which (i)
5,349,395 Common Shares (or 30%) are expected to be
held by the existing shareholders of the Company, and (ii)
12,495,866 Common Shares (or 70%) are expected to be held by the
creditors who have agreed to receive Common Shares pursuant to
Shares-for-Debt Settlements. An additional 1,577,844 share purchase
warrants issued as part of the Shares-for-Debt Settlements (subject
to rounding) will also be outstanding following closing.
The Company will not issue any fractional post-Consolidation
Common Shares. Instead, each fractional share remaining after
conversion will be rounded down to the nearest whole
post-Consolidation Common Share. Completion of the Consolidation is
subject to, among other things, approval of the TSX Venture
Exchange. The Company will not be changing its name or trading
symbol in connection with the Consolidation.
Senior Loan Agreement Amendments
The Company also wishes to announce that it has agreed with
Vortex ENA LP ("Vortex LP"), a non-arm's length party, to
amend and restate the terms of the Company's secured term loan
facility that was assigned to Vortex LP on August 20, 2021 (the "Senior Loan
Agreement") as announced on August 23,
2021. A copy of the amended and restated loan agreement will
be filed on SEDAR once it is closed, which is expected to occur on,
or prior to, December 24, 2021. Key
changes to the Senior Loan Agreement are expected to include:
- Vortex LP has agreed to accept the transfer of certain accounts
payable of the Company to it, totaling C$380,000 and US$235,000, with both amounts added to the loan
balance
- An additional advance amount of C$245,000 provided by Vortex LP to the Company
will be added to the loan balance
- Vortex LP will provide for up to C$2
million in additional loan advances under the Senior Loan
Agreement, subject to its sole discretion
The interest rate, maturity date and other key terms of the
Senior Loan Agreement will remain unchanged.
As Vortex LP is a "related party" of the Company, the amendment
of the Senior Loan Agreement 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"). The Company did not file a
material change report more than 21 days before agreeing to amend
and restate the Senior Loan Agreement, as the details of the
amendments were not settled until shortly prior to this
announcement. 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 Section
5.5(b) of MI 61-101 as the Company is not listed on a specified
market under MI 61-101. Additionally, the Company is exempt from
minority shareholder approval requirement in Section 5.6 of MI
61-101 in reliance on Section 5.7(f) of MI 61-101.
About Enablence Technologies Inc.
Enablence is a publicly traded company that designs,
manufactures and sells optical components and subsystems to a
global customer base. It utilizes its patented technologies,
including planar lightwave circuit intellectual property, in the
production of an array of photonic components and broadband
subsystems that deliver a key portion of the infrastructure for
current and next-generation telecommunication systems. The
Company's components are key elements in large optical network
infrastructure builds which enable global networking and
large-scale computing for businesses and individuals, including
data centers and 5G telecommunications networks. For more
information, visit www.enablence.com.
Forward-looking Statements
This news release contains forward-looking statements regarding
the Company based on current expectations and assumptions of
management, which involve known and unknown risks and uncertainties
associated with our business and the economic environment in which
the business operates. All such statements are forward-looking
statements under applicable Canadian securities legislation. Any
statements contained herein that are not statements of historical
facts may be deemed to be forward-looking statements. In
particular, this news release contains forward-looking statements
pertaining to the timing and ability of the Company to complete the
Consolidation, if at all; the ability of the Company to obtain
regulatory (including the TSX Venture Exchange) approvals of the
Consolidation and ancillary matters; the amendment of the
Senior Loan Agreement and the funds expected to be made available
as a result of such amendment; and the consolidation of its common
shares. By their nature, forward-looking statements require us to
make assumptions. Assumptions are based in part on the future
capital expenditure levels, the ability to fulfill the remaining
conditions precedent to the closing of the Shares-for-Debt
Settlements and the ability to secure regulatory approval. These
statements are based on current expectations that involve several
risks and uncertainties which could cause actual results to differ
from those anticipated. These risks include, but are not limited
to, risks relating to the Company failing to obtain the requisite
regulatory (including the TSX Venture Exchange) approvals of the
Consolidation and ancillary matters; the terms as described
hereof may be amended following the date hereof; the impact of
the evolving COVID-19 pandemic on the Company's business,
operations and sales; uncertainties relating to the ultimate
spread, severity and duration of COVID-19 and related adverse
effects on the economies and financial markets of countries in
which the Company operates; and the ability of the Company to
successfully implement its business continuity plans with respect
to the COVID-19 pandemic. Although the Company believes that the
expectations reflected in the forward looking statements contained
in this news release, and the assumptions on which such
forward-looking statements are made, are reasonable, there can be
no assurance that such expectations will prove to be correct. We
caution our readers of this news release not to place undue
reliance on our forward-looking statements as a number of factors
could cause actual results or conditions to differ materially from
current expectations. Additional information on these and other
factors that could affect the Company's operations are set
forth in the Company's continuous disclosure documents that can be
found on SEDAR (www.sedar.com) under Enablence's issuer profile.
Enablence does not intend, and disclaims any obligation, except as
required by law, to update or revise any forward-looking statements
whether as a result of new information, future events or
otherwise.
Neither 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 Enablence Technologies Inc.