Itafos (TSX VENTURE: IFOS) (the “
Company”)
announced today that it has entered into a binding letter of intent
with CL Fertilizers Holding LLC (“
CLF”) for a
US$36,000,000 capital raise through a non-brokered private
placement financing of US$15,000,000 and an amendment to increase
the availability of a previously issued unsecured subordinated
promissory note by US$21,000,000. The proceeds of the capital raise
are expected to be used to fund general working capital and capital
expenditure needs of the Company and its subsidiaries.
Pursuant to the letter of intent, CLF will
subscribe for up to 38,076,923 shares in the capital of the Company
(the “Subject Shares”) at an offering price of
CAD$0.52 per share on a non-brokered private placement basis, for
aggregate gross proceeds of US$15,000,000 (equivalent to
approximately CAD$19,800,000) (the “Private
Placement”). No finder’s fees or commissions will be
payable in connection with the Private Placement.
Also pursuant to the letter of intent, the
Company and CLF will amend the convertible unsecured and
subordinated promissory note in favor of CLF that was issued by the
Company on September 11, 2019, to make the promissory note
non-convertible and increase the availability by US$21,000,000 (the
“Amended CLF Promissory Note” and together with
the Private Placement, the “Transaction”). At
closing, the Company intends to borrow US$5,000,000 of the
available US$21,000,000, with the balance of US$16,000,000
remaining available to be drawn by the Company at its sole
discretion through December 31, 2020. An availability fee of 4% per
year shall apply on undrawn amounts during the availability period
with such fee to be capitalized and added to principal on a
quarterly basis.
Other than the changes specified in this news
release, all other terms of the Amended CLF Promissory Note shall
remain unchanged. In this regard, the Amended CLF Promissory Note
shall (i) remain subordinate to the Company’s existing senior
credit facility and subject to the terms of subordination
incorporated thereunder, (ii) continue to accrue an interest rate
of 15% per year, (iii) continue to be payable on demand no earlier
than six months after the date on which the Company’s existing
senior credit facility is paid in full, and (iv) continue to add
interest to and increase the outstanding principal balance on a
quarterly basis.
Closing of the Transaction is subject to various
conditions, including, without limitation, satisfaction of any
regulatory requirements and receipt of the approval of the TSX
Venture Exchange.
Related Party Transaction
CLF is a “related party” to the Company under
Multilateral Instrument 61-101 - Protection of Minority
Security Holders in Special Transactions (“MI
61-101”) by virtue of CLF’s shareholdings being in excess
of 10% of the Company’s issued and outstanding share capital.
Accordingly, the completion of the Private Placement and the
entering into of the Amended CLF Promissory Note each constitute a
“related party transaction” under MI 61-101. The Transaction is
exempt from (i) the formal valuation requirements under Section 5.4
of MI 61-101 pursuant to Subsection 5.5(b) of MI 61-101; and (ii)
the minority approval requirements under Section 5.6 of MI 61-101
pursuant to Subsection 5.7(1)(a) as it relates to the Private
Placement and the amendment to make the Amended CLF Promissory Note
non-convertible and Subsection 5.7(1)(f) as it relates to the
increase in availability under the Amended CLF Promissory Note.
United States Securities
Legislation
In accordance with United States securities
legislation, the Subject Shares will be subject to resale
restrictions pursuant to a ‘distribution compliance period’ (as
defined in Regulation S under the United States Securities Act of
1933, as amended) of one year from the date the Subject Shares are
issued. Concurrently, in accordance with applicable Canadian
securities legislation, the Subject Shares will be subject to a
statutory hold period of four months plus a day from the date the
Subject Shares are issued.
This news release does not constitute an offer
of securities for sale in the US. The securities being offered have
not been, nor will they be, registered under the United States
Securities Act of 1933, as amended, and such securities may not be
offered or sold within the US absent US registration or an
applicable exemption from US registration requirements. Hedging
transactions involving the Shares may not be conducted unless in
compliance with the United States Securities Act of 1933, as
amended.
About Itafos
The Company is a vertically integrated phosphate
fertilizers and specialty products company with an attractive
portfolio of long-term strategic businesses and projects located in
key fertilizer markets worldwide.
The Company owns, operates and is developing the
following businesses and projects:
- Itafos Conda – a vertically
integrated phosphate mine and fertilizer business with production
and sales capacity of approximately 550kt per year of monoammonium
phosphate (“MAP”), MAP with micronutrients
(“MAP+”), superphosphoric acid
(“SPA”), merchant grade phosphoric acid
(“MGA”) and specialty products including ammonium
polyphosphate (“APP”) located in Idaho, US;
- Itafos Arraias – a phosphate
fertilizer business with production and sales capacity of
approximately 500kt per year of single superphosphate
(“SSP”), SSP with micronutrients
(“SSP+”), premium PK compounds and approximately
40kt per year of excess sulfuric acid located in Tocantins,
Brazil;
- Itafos Farim – a high-grade
phosphate mine project located in Farim, Guinea-Bissau;
- Itafos Paris Hills – a high-grade
phosphate mine project located in Idaho, US;
- Itafos Santana – a vertically
integrated high-grade phosphate mine and fertilizer plant project
located in Pará, Brazil;
- Itafos Mantaro – a large phosphate
mine project located in Junin, Peru; and
- Itafos Araxá – a vertically
integrated rare earth elements and niobium mine and extraction
plant project located in Minas Gerais, Brazil.
For more information, or to join the Company’s
mailing list to receive notification of future news releases,
please visit the Company’s website, www.itafos.com.
Forward-Looking Information
Certain information contained in this news
release constitutes forward-looking information. All information
other than information of historical fact is forward-looking
information. The use of any of the words “intend”, “anticipate”,
“plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”,
“should”, “would”, “believe”, “predict” and “potential” and similar
expressions are intended to identify forward-looking information.
Forward-looking information in this news release includes, but is
not limited to, statements with respect to: the intended use of
proceeds; the amount which the Company intends to borrow under the
Amended CLF Promissory Note; and the timing and conditions to
closing of the Transaction. This information involves known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking information. No assurance can
be given that this information will prove to be correct and such
forward-looking information included in this news release should
not be unduly relied upon.
Forward-looking information is subject to a
number of risks and other factors that could cause actual results
and events to vary materially from that anticipated by such
forward-looking information including, without limitation, not
obtaining the approval of the TSX Venture Exchange for the
Transaction. 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. Factors that may cause actual
results to differ materially from expected results described in
forward-looking statements include, but are not limited to, those
risk factors set out in the Company’s Management Discussion and
Analysis and other disclosure documents available under the
Company’s profile at www.sedar.com. Readers are cautioned that the
foregoing list of risks, uncertainties and assumptions are not
exhaustive. The forward-looking information included in this news
release is expressly qualified by this cautionary statement and is
made as of the date of this news release. Itafos undertakes no
obligation to publicly update or revise any forward-looking
information except as required by applicable securities laws.
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.
For further information, please
contact:
Itafos Investor
Relationsinvestor@itafos.comwww.itafos.com
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