/NOT FOR DISSEMINATION IN THE UNITED STATES OR
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TORONTO, Aug. 23, 2021 /CNW/ - First Cobalt Corp.
(TSXV: FCC) (the "Company") is pleased to announce that it has
arranged a combined secured convertible debt and brokered equity
financing package with an aggregate value of approximately
US$45 million to finance the
construction of its wholly-owned hydrometallurgical refinery (the
"Refinery") located in Ontario,
Canada.
The financing consists of the following components:
- An offering of US$37.5 million
principal amount of 6.95% senior secured convertible notes due
December 1, 2026 (the "Notes")
led by Cantor Fitzgerald & Co. ("CF&Co") (the
"Note Offering"); and
- An overnight-marketed public offering of common shares in the
capital of the Company (the "Offered Shares") led by BMO
Capital Markets for gross proceeds of approximately C$9.5 million (approximately US$7.5 million), at a price per Offered Share to
be determined in the context of the market (the "Equity
Offering").
"This is one of our most important catalysts for the year, as
this financing will allow us to advance construction of our
Canadian battery material refinery," said President & CEO
Trent Mell. "Every director and
officer is participating in the financing, underlining our
confidence in our business strategy and strengthening our alignment
with shareholders.
"Our vision is to be the most sustainable producer of battery
materials, starting with North
America's only domestic supply of battery grade cobalt.
Longer term, we are pursuing the creation of a Battery Park around
our refinery, which would include battery recycling, nickel sulfate
production and lithium-ion battery precursor manufacturing. We
intend to capitalize on this first-mover advantage and leverage our
position as an ultra-low carbon operation."
The Company intends to use the aggregate net proceeds of the
Note Offering and the Equity Offering for capital expenditures
associated with the expansion and recommissioning of the Refinery,
including buildings, equipment, infrastructure, and other direct
costs, as well as engineering and project management
costs.
The Note Offering and Equity Offering announced today will
replace the debt financing process announced by the Company on
March 31, 2021. The Company's
management and board of directors determined that the financing
terms and covenants of the financing described herein are superior
to the debt financing the Company was previously pursuing.
Upon completion of this financing, the Company will advance
discussions on a non-dilutive working capital facility to cover (i)
a minimum liquidity requirement of US$5M, and (ii) cobalt hydroxide feed purchases
through to the time of sale of cobalt sulfate to market.
Convertible Note Offering
The Company engaged CF&Co to act as sole placement agent for
the Note Offering, which is being conducted on a private placement
basis. The Note Offering consists of the issuance of US$37.5 million principal amount of 6.95%
convertible senior secured notes due December 1, 2026 (subject to an option to
increase, as described below). The Company has entered into
convertible note subscription agreements dated August 23, 2021 with certain investors to
purchase the entire initial principal amount of Notes under the
Note Offering. A note indenture (the "Indenture") will be
entered into between the Company and Global Loan Agency Services
Limited ("GLAS"), as trustee for the Notes (the
"Trustee"), as well as other customary associated security
documentation, upon closing of the Note Offering.
Holders of Notes ("Noteholders") will have an option to
require the Company to issue to the Noteholders a pro rata
amount of an aggregate additional US$7.5
million principal amount of Notes, issued at par, for 60
days from the date hereof. The Notes, including any aforementioned
additional Notes, will bear interest at 6.95% per annum, payable in
cash semi-annually in arrears in February and August of each year
and will mature December 1, 2026. The
Company will be the borrower under the Notes, and the obligations
will be guaranteed by the Company's Canadian, United States, and Australian subsidiaries, as
well as any other subsidiary that guarantees the Company's
obligations from time to time, subject to certain customary
exclusions.
The Notes will be secured by a first priority security interest
(subject to customary permitted liens) in substantially all of the
Company's assets, and the assets and/or equity of the secured
guarantors. Security against the Company's Iron Creek Project in
Idaho will be released upon
achieving certain refinery commissioning thresholds.
The Notes will be convertible into common shares in the capital
of the Company ("Common Shares") at 125% of the reference
price per Common Share at any time until the close of business on
the second trading day immediately preceding the maturity date.
Such reference price will be equal to the price per share of the
Equity Offering. Converting Noteholders will be entitled to an
interest make-whole payment, which, subject to the prior approval
of the TSX Venture Exchange ("TSXV"), may be satisfied in
Common Shares. The Company sought and obtained a waiver from the
maximum period conversion period requirements under TSXV Policies,
such that the conversion period of the Notes may be up to 45 days
from the issuance date of any additional Notes.
Should the Company achieve a third-party green bond designation
during the term of the Indenture, the interest rate on future
payments shall be reduced by 1/8 to 6.825% per year.
The Indenture will contain certain positive and negative
covenants in favour of the Trustee for the benefit of the
Noteholders. The Company will be obligated to make an offer to
repurchase the Notes at par in certain circumstances. After the
third anniversary of the issue date of the Notes, the Company may
mandate the conversion of the Notes at its option in the event the
trading price of the Common Shares exceeds 150% of the Conversion
Price for at least 20 trading days, whether consecutive or not,
during any consecutive 30 trading day period.
The Notes will also be subject to customary events of default,
dilution protection, limitations on beneficial ownership, and
registration rights in certain circumstances.
The Note Offering is expected to close on or about September 1, 2021, concurrently with the Equity
Offering. Closing of the Note Offering is subject to customary
closing conditions, including the approval of the Note Offering and
the listing of the underlying Common Shares by TSXV . The
completion of the Note Offering is also conditional on completion
of the Equity Offering.
Equity Offering
The Equity Offering will be led by BMO Capital Markets as sole
agent (the "Agent"). In connection with the Equity Offering,
the Company intends to enter into an agency agreement with the
Agent (the "Agency Agreement").
The Company expects to file a prospectus supplement (the
"Prospectus Supplement") to its previously filed short form
base shelf prospectus dated November 26,
2020 (the "Base Shelf Prospectus") in connection with
the Equity Offering by no later than August
26, 2021.
The Offered Shares are being offered (i) to the public in each
of the provinces of Canada, other
than Quebec, and (ii) in such
other international jurisdictions, as permitted.
The Prospectus Supplement, when filed, will contain important
additional information about the Company, the Note Offering and the
Equity Offering. Prospective investors should read the Prospectus
Supplement and the Base Shelf Prospectus, including the documents
incorporated by reference therein, and the other documents the
Company has filed on SEDAR before making an investment decision.
Copies of the Base Shelf Prospectus, and, when filed, the
Prospectus Supplement to be filed in connection with the Equity
Offering, can be found on SEDAR at www.sedar.com.
The Equity Offering is scheduled to close on or about
September 1, 2021 and is subject to
customary closing conditions including the receipt of all necessary
regulatory approvals, including the approval of the TSXV. The
completion of the Equity Offering is also conditional on completion
of the Note Offering.
Termination of the Company's At-the-Market Program
In the context of arranging for the financing package, on
August 23, 2021, the Company provided
notice to Cantor Fitzgerald Canada Corporation ("CFCC") of the
Company's intention to terminate its at-the-market offering program
(the "ATM Program"), effective as of September 2, 2021. The ATM Program was
established on February 22, 2021,
allowing the Company to issue Common Shares with a value of up to
C$10 million from treasury to the
public from time to time, at the Company's discretion.
Distributions of the Common Shares through the ATM Program were
made pursuant to the terms of an equity distribution agreement
between the Company and CFCC dated February
22, 2021. The Company raised a total of C$686,274.10 under the ATM Program. All sales
under the ATM Program have been suspended.
The securities offered have not been, and will not be,
registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act"), or any applicable U.S.
state securities laws, and may not be offered or sold in
the United States absent
registration or an available exemption from the registration
requirement of the U.S. Securities Act and applicable U.S. state
securities laws. This press release shall not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be
any sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
About First Cobalt
First Cobalt's mission is to be the most sustainable producer of
battery materials. In 2022, the Company plans to commission
North America's only cobalt
sulfate refinery, a critical asset in the development and
manufacturing of batteries for electric vehicles. First Cobalt also
owns the Iron Creek cobalt-copper project in Idaho, USA as well as several significant
cobalt and silver properties in the Canadian Cobalt Camp.
On behalf of First Cobalt Corp.
Trent Mell
President & Chief Executive Officer
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy
of this release.
Cautionary Note Regarding Forward-Looking
Statements
This news release may contain forward-looking statements and
forward-looking information (together, "forward-looking
statements") within the meaning of applicable securities laws and
the United States Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, are
forward-looking statements. Specifically, statements with respect
to the completion of the Note Offering and Equity Offering and the
timing thereof, the filing of the Prospectus Supplement and the
timing thereof, the use of proceeds of the Note Offering and Equity
Offering, the development of the Refinery, and other matters
ancillary or incidental to the foregoing are forward-looking
statements. Generally, forward-looking statements can be identified
by the use of terminology such as "plans", "expects', "estimates",
"intends", "anticipates", "believes" or variations of such words,
or statements that certain actions, events or results "may",
"could", "would", "might", "occur" or "be achieved".
Forward-looking statements involve risks, uncertainties and other
factors that could cause actual results, performance and
opportunities to differ materially from those implied by such
forward-looking statements. Factors that could cause actual results
to differ materially from these forward-looking statements are set
forth in the management discussion and analysis and other
disclosures of risk factors for First Cobalt, filed on SEDAR at
www.sedar.com, and are included in the Base Shelf
Prospectus and will be included in the Prospectus Supplement.
Although First Cobalt believes that the information and assumptions
used in preparing the forward-looking statements are reasonable,
undue reliance should not be placed on these statements, which only
apply as of the date of this news release, and no assurance can be
given that such events will occur in the disclosed times frames or
at all. Except where required by applicable law, First Cobalt
disclaims any intention or obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
SOURCE First Cobalt Corp.