VANCOUVER, Jan. 14, 2019 /CNW/ - UrtheCast Corp. (TSX: UR)
("UrtheCast" or the "Company") is pleased to provide an update with
respect to closing the acquisition of Geosys Technology Holding
LLC, securing a US$12 million term
loan and other corporate updates.
Closing of Geosys Acquisition
UrtheCast is pleased to announce the acquisition (the "Geosys
Acquisition") of Geosys Technology Holding LLC ("Geosys") from Land
O' Lakes, Inc. ("Land O'Lakes"). The total purchase price for the
Geosys Acquisition is US$20 million
payable in three installments. The first installment of
US$5 million was paid to Land O'Lakes
on the closing of the Geosys Acquisition today, US$5 million is payable on October 14, 2019 and the balance of US$10 million is payable upon the transfer of
certain intellectual property from Land O'Lakes prior to
April 13, 2021. As part of the first
closing, UrtheCast entered into a new 13-year agreement to provide
Land O'Lakes with certain services currently provided by Geosys to
Land O'Lakes with total annual fees payable to UrtheCast in excess
of US$10 million per year, and an
increased rate at such time as the UrtheDaily Constellation is
operational.
Don Osborne, CEO of UrtheCast,
commented, "We are excited to expand our data services and
analytics business by adding the proven capabilities of Geosys to
UrtheCast. By unifying these companies, UrtheCast will be
well positioned as the leader in fully integrated geoanalytics
solutions for agriculture." UrtheCast's Vice President of
Analytics, Dave Gebhardt, adds
"Significant customer value is now created by more tightly
integrating imagery data and the analytics that exploit the data
for insights. We can now more effectively innovate and
prepare to deliver unique insights to the agribusiness industry
from the analytics-ready data of the UrtheDaily constellation. The
combination of UrtheDaily's resolution, revisit, and data quality
opens the door to machine learning and AI opportunities never
before seen in agriculture."
US$12 Million Term Loan
The indirectly wholly-owned subsidiary of UrtheCast that
acquired Geosys (the "Borrower") has entered into a US$12 million term loan (the "Term Loan") with a
group of lenders led by Bolzano Investments
Limited ("Bolzano") and 1112099
B.C. Ltd. ("1112099"). The Term Loan (i) accrues interest at
a rate of 14% per annum; (ii) has a maturity date of one year; and
(iii) is secured by all of the Geosys assets owned by the Borrower.
The proceeds of the Term Loan will be used as follows: (i) repay
existing debt (including, as required by the lenders, the
previously issued demand promissory note dated September 28, 2018 issued by UrtheCast in favour
of 1112099 in the principal amount of US$5
million (the "Existing Note"); (ii) fund the first
installment for the Geosys Acquisition; and (iii) for general
corporate purposes.
In satisfaction of conditions required by the lenders, Bolzano
has appointed Mr. Pirmin Lüönd as a director of UrtheCast pursuant
to a board appointment right granted by UrtheCast to Bolzano,
subject to customary approval from the Toronto Stock Exchange (the
"TSX"). Mr. Lüönd held various managerial positions at leading
European banks such as Credit Suisse AG for more than 15 years,
primarily focused around wealth management for ultra high net worth
clients. Since 2012, he has been focusing his efforts on private
equity investment opportunities across industries and
jurisdictions. Mr. Lüönd holds a Bachelor in Business
Administration with a Major in Banking and Finance from
Zurich University of Applied Sciences.
In satisfaction of conditions required by the lenders: (i) the
Borrower agreed to pay Bolzano a finance fee in the amount of
US$180,000 and UrtheCast agreed to
issue to Bolzano 19,800,000 common share purchase warrants of
UrtheCast having a maturity date of May 25,
2023 and an exercise price of $0.48 per common share, subject to approval from
the TSX; (ii) each UrtheCast director agreed to defer cash
compensation from January 1, 2019 to
June 30, 2019; and (iii) certain
UrtheCast directors and executives agreed to contribute a minimum
aggregate principal amount of US$700,000, including other funds sourced by such
directors and executives from investors acceptable to the
lenders, on substantially the same terms as the Term Loan or
on such other terms acceptable to the lenders in consideration for
a number of common share purchase warrants of UrtheCast
proportionate to the number of common share purchase warrants that
UrtheCast has agreed to issue to Bolzano, subject to approval from
the TSX.
Approximately US$7.7 million of
the Term Loan was advanced today, with approximately US$5 million used to repay the Existing Note and
US$2.5 million used to fund the first
installment for the Geosys Acquisition. The balance of the Term
Loan will be advanced upon the satisfaction of certain conditions
required by the lenders, including the completion of definitive
documentation relating to the security of the Term Loan and the
lenders' conditions described above, which is expected to occur on
or about January 18, 2019.
Corporate Update
UrtheCast has been expanding revenue across its business
segments as follows:
- UrtheCast's wholly-owned subsidiary, Deimos Imaging, S.L.U.
("Deimos Imaging"), has invoiced and collected €2.8 million of
revenue for the first tranche of earth observation data supplied
under the previously announced multi-million Euro contract with the
European Commission and the European Space Agency.
- UrtheCast has also been awarded a new data purchase order from
a government customer from India
for high resolution satellite imagery from Deimos-2 and other
partner satellites valued at over US$850,000, with all data to be delivered during
January and February 2019.
- UrtheCast has been awarded approximately $1.75 million of new non-repayable grants which
reimburse development costs that are eligible under the Government
of Canada Defence Innovation Research and LOOKNorth programs.
UrtheCast has been continuing its ongoing efforts to preserve
cash, secure access to growth capital and strengthen the balance
sheet as follows:
- UrtheCast is pursuing alternative sources of financing in order
to finance the UrtheDaily Constellation on the most expeditious and
favourable terms and has determined to allow the forbearance
agreement dated October 25, 2018
among UrtheCast, Deimos Imaging, UrtheDaily Funding L.P. and U.S.
Bank National Association to expire. As a result, the lender is
entitled to terminate the credit agreement (the "Credit Agreement")
dated as of May 18, 2018 among the
parties. No amount is outstanding under the Credit Agreement and
any termination of the Credit Agreement would not impede or
adversely impact UrtheCast's ability to service its current
customers. With our binding contractual commitments, management
believes that UrtheCast's business case, including for the
UrtheDaily Constellation, has been validated. Consequently, access
to alternative sources of funding under favorable conditions has
been augmented and several alternative financing opportunities are
being pursued.
- UrtheCast entered into an amendment to the previously announced
escrow release and amending agreement pursuant to which a debenture
holder extended the date by which UrtheCast must meet the first
drawdown conditions under the Credit Agreement from December 31, 2018 until February 28, 2019 in consideration for a payment
of $50,000.
- UrtheCast's Imaging, S.L.U. ("UrtheCast Imaging"), a
wholly-owned subsidiary of UrtheCast, successfully obtained a
waiver from its lender, Banco de Sabadell S.A. ("Sabadell"), under
its €25 million senior secured term loan dated December 11, 2015 (the "Sabadell Loan") in
relation to certain financial covenants for the financial year
ended December 31, 2018. In addition,
Sabadell agreed to a partial (€2.5 million) deferral of UrtheCast
Imaging's principal repayment obligations under the Sabadell Loan
until January 31, 2019.
However, there can be no assurance that adequate alternative or
additional financing will be available on terms acceptable to
UrtheCast or at all, which creates a material uncertainty that
could have an adverse impact on UrtheCast's financial condition and
may cast doubt on UrtheCast's ability to continue as a going
concern.
About UrtheCast
UrtheCast Corp. is a Vancouver-based technology company that serves
the rapidly evolving geospatial and geoanalytics markets with a
wide range of information-rich products and services. The Company
operates Earth Observation (EO) sensors in space, through its
subsidiary Deimos Imaging, including two satellites, Deimos-1 and
Deimos-2, to produce imagery data for partners and customers in
multiple markets. UrtheCast processes and distributes imagery data
and value-added products on behalf of the PanGeo Alliance, a
network of seven satellite operators with a combined 13 medium- and
high-resolution EO sensors. Additionally, UrtheCast is developing
and expects to launch the world's first fully-integrated
constellation of sixteen multispectral optical and SAR satellites,
called OptiSAR™, and a satellite constellation designed to capture
high-quality, medium- resolution optical imagery of the Earth's
entire landmass (excluding Antarctica) every day, called UrtheDaily™.
Common shares of UrtheCast trade on the Toronto Stock Exchange as
ticker "UR".
For more information, visit UrtheCast's website at
www.urthecast.com.
Forward Looking Information
This release contains certain information which, as
presented, constitutes "forward-looking information" or
"forward-oriented financial information" within the meaning of
applicable Canadian securities laws. Forward-looking information
involves statements that relate to future events and often
addresses expected future business and financial performance,
containing words such as "anticipate", "believe", "plan", "target",
"estimate", "expect" and "guidance", statements that an action or
event "may", "might", "could" or "will" be taken or occur, or other
similar expressions and includes, but is not limited to, statements
relating to: UrtheCast's ability to obtain alternative financing
for the UrtheDaily Constellation on similar terms or at all;
UrtheCast's expected completion of the Geosys acquisition on the
terms set out in this press release, the purchase agreement in
respect thereof or at all; UrtheCast's expectations with respect to
its ability to pay the aggregate purchase price; UrtheCast's
expectations with respect to the revenue to be generated by the
related services agreement; UrtheCast's expectations with respect
to repayment of the Term Loan and the deferred payments to the
directors and certain executives of UrtheCast; UrtheCast's
expectations of raising additional capital and continuing as a
going concern; UrtheCast's expectations with respect to the
satisfaction of its obligations under data purchase contracts;
UrtheCast's expectations with respect to the waiver granted by
Sabadell under the Sabadell Loan; and anticipated trends and
challenges in its business and the markets in which the Company
operates. Such statements reflect UrtheCast's current views with
respect to future events. Such statements are necessarily based
upon a number of estimates and assumptions that, while considered
reasonable by UrtheCast, are inherently subject to significant
uncertainties and contingencies. Many factors could cause
UrtheCast's actual results, performance or achievements to be
materially different from any future results, performance, or
achievements that may be expressed or implied by such
forward-looking statements, including, among others: UrtheCast's
inability to obtain alternative financing for the UrtheDaily
Constellation on similar terms or at all; UrtheCast's inability to
complete the Geosys acquisition on the terms set out in this press
release, the purchase agreement in respect thereof or at all;
UrtheCast's inability to pay the aggregate purchase price;
UrtheCast's inability to perform the services and its obligations
under the related services agreement; UrtheCast's inability to
repay the Term Loan and the deferred payments to the directors and
certain executives of UrtheCast; UrtheCast's inability to access
additional capital and continue as a going concern; UrtheCast's
inability to satisfy its obligations under data purchase contracts;
UrtheCast's inability to perform its obligations under the Sabadell
Loan; as well as those factors and assumptions discussed in
UrtheCast's annual information form dated April 2, 2018, which is available under
UrtheCast's SEDAR profile at www.sedar.com. UrtheCast cautions
readers that such factors and uncertainties are not exhaustive and
that should certain risks or uncertainties materialize, or should
underlying estimates or assumptions prove incorrect, actual
results, performance or achievements may vary significantly from
those expected. There can be no assurance that the actual
strategies, results, performance, events or activities anticipated
by the Company will be realized or, even if substantially realized,
that they will have the expected consequences to, or effects on,
the Company. UrtheCast undertakes no obligation to update
forward-looking statements except as required by Canadian
securities laws. Readers are cautioned against attributing undue
certainty to forward-looking statements.
SOURCE UrtheCast Corp.