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.
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.
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.
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