VANCOUVER, April 10, 2018 /PRNewswire/ - UrtheCast Corp.
(TSX: UR) ("UrtheCast" or the "Company") is pleased to announce
that it has been advised by Clarus Securities Inc. and Canaccord
Genuity Corp. (the "Agents") that investors have committed to
purchase CAD$35 million (or approximately US$27.3 million) of subscription receipts (the
"Subscription Receipts") in connection with its previously
announced brokered private placement (the "Subordinated Capital
Financing"). The Agents have provided the Company with confirmation
of commitments in excess of CAD$35
million, which are intended to satisfy a condition precedent
to the closing of the previously announced US$142 million senior secured facility for the
UrtheDaily™ Constellation (the
"UrtheDaily™ Senior Secured Facility").
As announced on April 3, 2018, the
purchase price for each Subscription Receipt is CAD$0.35. Each Subscription Receipt will be
convertible into a non-interest bearing, unsecured convertible note
in the principal amount of CAD$0.35
(the "Notes"), such Notes convertible at a conversion price of
CAD$0.32 (the "Original Conversion
Price") for a period of six years following issuance of the Notes
and a number of Common Share purchase warrants (the "Warrants")
equal to 50% of the number of Common Shares the holder would
receive if the Note were converted at the Original Conversion
Price, such Warrants exercisable at an exercise price equal to
CAD$0.48 for a period of five years
following issuance of the Warrants.
The Subordinated Capital Financing remains subject to completion
and execution of definitive documentation satisfactory to the
Agents and the Company, each acting reasonably and in good faith,
and receipt of all required consents and approvals. The
UrtheDailyTM Senior Secured Facility remains subject to
the completion and execution of definitive documentation for the
Subordinated Capital Financing satisfactory to the senior lenders
and the Company, and finalization of definitive documentation for
the UrtheDaily™ Senior Secured Facility, which is
ongoing. The Subordinated Capital Financing will enable the Company
to meet its immediate financing requirements. The
UrtheDaily™ Financing (as defined below) remains
subject to TSX approval for reliance by the Company on the
financial difficulty exemption set out below.
Details of the UrtheDaily™ Financing
Subordinated Capital Financing
As announced on April 3, 2018, the
Company has agreed to use commercially reasonable efforts to file
and obtain a receipt for a final prospectus within 45 days of
closing to qualify the Notes and Warrants issuable on the
conversion of the Subscription Receipts, such that the Common
Shares underlying the Notes and Warrants become freely
tradeable.
The proceeds of the Subordinated Capital Financing will be
placed into escrow to be released upon the execution of finalized
documentation for the UrtheDaily™ Senior Secured
Facility and the qualification of the Notes and the Warrants
issuable on the conversion of the Subscription Receipts under a
prospectus. The Company will use the proceeds of the Subordinated
Capital Financing to help finance the
UrtheDaily™ Constellation and for general
corporate purposes, with at least 50% of the proceeds being used
for the UrtheDaily™ Constellation.
From the date of closing of the Subordinated Capital Financing
until the later of (i) the eighteen month anniversary of the
closing date and (ii) the date on which no Notes remain
outstanding, the holders of the Notes will have the right to
participate in any offering of equity securities by the Company to
permit the holders of the Notes to maintain their percentage
ownership interest of equity securities in the Company as at the
date immediately prior to such offering.
The UrtheDaily™ Senior Secured
Facility
The UrtheDaily™ Senior Secured Facility will make
available to the Company US$142
million in two equal drawdowns subject to such finalized
documentation and upon satisfaction of the conditions precedents
described below. Details of the arrangement fee and payment terms
of the UrtheDaily™ Senior Secured Facility, including
a gross revenue royalty and warrants payable to the senior lenders,
are set out in our news release of April 3,
2018.
As a condition precedent to the UrtheDaily™ Senior
Secured Facility closing, the Company was required to raise
subordinated capital of at least US$25
million. The Subordinated Capital Financing is intended to
satisfy this condition. In addition, prior to drawdown the Company
will be required to refinance an existing credit facility and may
be required to raise additional subordinated capital financing to
facilitate that refinancing. We continue to be in discussions
regarding a conditional backstop commitment to support any such
subordinated financing. There can be no assurance that the
conditional backstop commitment will be completed.
The availability of the first and second drawdowns will also be
subject to the Company maintaining certain maximum leverage and
total contracted value ratios, as ordinarily required of debt
financing facilities of this type.
The Company expects to be in line to close the facility over the
next two weeks, although there can be no assurance that the
transaction will be closed on the terms described in the Company's
April 3, 2018 release or on any other
terms. On closing of the transaction, a copy of the credit
agreement will be filed and will be available for viewing and
download on SEDAR (www.sedar.com) and readers are encouraged to
review it in its entirety.
The terms of the Subordinated Capital Financing and the
UrtheDaily™ Senior Secured Facility (together,
the "UrtheDaily™ Financing") were negotiated on an
arm's length basis. The Subordinated Capital Financing will not
materially affect the control of the Company. No insiders will
participate in the Subordinated Capital Financing. Upon closing of
the UrtheDaily™ Financing, SMF Investments
Limited or its affiliate ("SMF") may become an insider of
the Company, as SMF will be issued CAD$10,001,250 principal amount of Notes and
15,626,953 Warrants, which upon the respective conversion and
exercise thereof, would result in SMF holding 46,880,859 Common
Shares (representing 27.85% of the issued and outstanding Common
Shares on a non-diluted basis assuming no participants in the
UrtheDaily™ Financing convert or exercise their Notes
or Warrants; provided, however, that SMF will be restricted from
converting its Notes and exercising its Warrants if such conversion
or exercise would result in a new aggregate holding of more than
19.9% of the Common Shares of the Company).
Securities Issuable and Expected Shareholdings after
Completion of the UrtheDaily™ Financing
Subordinated Capital Financing
The Notes will not bear any interest and will be convertible
into Common Shares at the option of the holder, at any time prior
to the six-year anniversary of the issuance of the Notes at the
Original Conversion Price of CAD$0.32, which represents 99% of the volume
weighted average price of the Common Shares for the five trading
days (the "5-day VWAP") ending on April 2,
2018 (the date prior to announcement of the
transaction). The conversion price of the Notes will be
adjusted down if the Company issues Common Shares (other than
issuances in connection with its stock option plan or in the
ordinary course of business) below the then-existing conversion
price to such lower issuance price, provided that the conversion
price may not be adjusted below CAD$0.24 (which represents 74.26% of the 5-day
VWAP ending on April 2, 2018). The
Notes will also be subject to other customary anti-dilution
protections.
Assuming the completion of the Subordinated Capital Financing
for CAD$35 million, the Company will
issue CAD$35 million of Notes,
convertible into (i) 109,375,000 Common Shares (representing 90.06%
of the issued and outstanding Common Shares as of the date hereof),
assuming conversion at the Original Conversion Price; and (ii)
145,833,333 Common Shares (representing 120.09% of the issued and
outstanding Common Shares as of the date hereof), assuming
conversion at CAD$0.24.
Each whole Warrant will be exercisable by the holder to purchase
one Common Share at an exercise price equal to CAD$0.48, which represents 148% of the 5-day VWAP
as at April 2, 2018 (the "Original
Exercise Price") for a period of five years following issuance of
the Warrants. The exercise price of the Warrants will be adjusted
down in the event that the Company issues Common Shares (other than
issuances in connection with its stock option plan or in the
ordinary course of business) below the then-existing exercise price
to such lower issuance price, provided that the exercise price may
not be adjusted below the Original Conversion Price. The Warrants
will also be subject to other customary anti-dilution protections.
The Warrants will be subject to early exercise, at the election of
the Company, if the 5-day VWAP exceeds 250% of the Original
Exercise Price for a period of at least 20 consecutive trading
days. The Warrants will not be listed on any exchange.
Assuming the completion of the Subordinated Capital Financing
for CAD$35 million, the Company will
issue Warrants equal to 50% of the number of Common Shares the
holder would receive if the Notes were converted at the Original
Conversion Price, being 54,687,500 Warrants exercisable into
54,687,500 Common Shares (representing 45.03% of the issued and
outstanding Common Shares as of the date hereof).
The UrtheDaily™ Senior Secured
Facility
Under the UrtheDaily™ Senior Secured Facility, the
Company will issue Senior Lender Warrants to the Senior Lenders, on
substantially similar terms and conditions as the Warrants, as is
equal to 5% of the issued and outstanding Common Shares immediately
after completion of the Subordinated Capital Financing, calculated
by assuming that the Notes have been converted at the Original
Conversion Price and the Warrants have been exercised.
Assuming the Company enters into the UrtheDaily™
Senior Secured Facility, the Company will issue approximately
14,275,172 Senior Lender Warrants exercisable into 14,275,172
Common Shares (representing approximately 11.75% of the issued and
outstanding Common Shares as of the date hereof).
UrtheDaily™ Financing
Assuming completion of the UrtheDail™ Financing,
including completion of the Subordinated Capital Financing for
CAD$35 million, the Company will
issue CAD$35 million of Notes,
convertible, in the aggregate, into (i) 109,375,000 Common
Shares (representing 90.06% of the issued and outstanding Common
Shares as of the date hereof), assuming conversion at the Original
Conversion Price; and (ii) 145,833,333 Common Shares (representing
120.09% of the issued and outstanding Common Shares as of the date
hereof), assuming conversion at CAD$0.24.
Assuming completion of the UrtheDaily™ Financing on
the terms described above, the Company will also issue
approximately 68,962,672 Common Share purchase warrants, consisting
of Warrants and Senior Lender Warrants, exercisable into 68,962,672
Common Shares, at each applicable exercise price, (representing
approximately 56.79% of the issued and outstanding Common Shares as
of the date hereof).
Assuming completion of the UrtheDaily™ Financing,
including completion of the Subordinated Capital Financing for
CAD$35 million of Notes, convertible,
in the aggregate, into 145,833,333 Common Shares, assuming
conversion at CAD$0.24, and the
issuance of approximately 68,962,672 Common Share purchase
warrants, consisting of Warrants and Senior Lender Warrants,
exercisable into 68,962,672 Common Shares, the total potential
number of Common Shares issuable under the UrtheDaily™
Financing is 214,796,005 (representing 176.87% of the issued and
outstanding Common Shares as of the date hereof).
Financial Difficulty Exemption
Under the TSX Company Manual (the "Manual"), shareholder
approval would be required for the UrtheDaily™
Financing as a result of (i) the number of Common Shares issuable
at a discount being greater than 25% of the currently issued and
outstanding Common Shares, and (ii) as a result of that fact that
the conversion price of the Notes may be adjusted downward to be
equal to CAD$0.24.
The Company has applied to the TSX under section 604(e) of the
Manual for an exemption from the requirement to obtain shareholder
approval for the UrtheDaily™ Financing. The Company's
Board of Directors, who are free from any interest in the
UrtheDaily™ Financing and unrelated to the parties
involved in the UrtheDaily™ Financing, have authorized
such application on recommendation of a special committee of the
Board and have concluded that the Company is in serious financial
difficulty, the UrtheDaily™ Financing is designed to
improve the Company's financial situation, and the terms of the
UrtheDaily™ Financing are reasonable for the Company
in the circumstances.
As a consequence of relying on the serious financial difficulty
exemption, the TSX has informed the Company that it will place the
Company under review for continued listing, which is standard
practice when a listed issuer seeks to rely on this exemption.
Each component of the UrtheDaily™ Financing is
conditional on the others, and there is no assurance that any of
the UrtheDaily™ Senior Secured Facility or the
Subordinated Capital Financing will be completed on the terms set
out herein, or at all. Further, there is no assurance that the TSX
will approve the UrtheDaily™ Financing, or any
component part or aspect thereof, or the Company's application to
rely on the serious financial difficulty exemption from the
requirement to obtain shareholder approval for the
UrtheDaily™ Financing.
The disclosure in this news release assumes an exchange rate of
US$/CAD$ of 1.282.
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. UrtheCast is developing a satellite
constellation designed to capture high-quality, medium- resolution
optical imagery of the Earth's entire landmass (excluding
Antarctica) every day, called
UrtheDaily™. UrtheCast is also developing the world's first
fully-integrated constellation of sixteen multispectral optical and
SAR satellites, called OptiSAR™. 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", "plan", "explore" and "expect",
statements that an action or event "may", "should" or "will" be
taken or occur, or other similar expressions and includes, but is
not limited to, statements relating to: UrtheCast's expected
completion of the UrtheDaily™ Financing on the terms
set out in this press release or at all; UrtheCast's ability to
satisfy the escrow release conditions in connection with the
issuance of the Subscription Receipts; UrtheCast's ability to
satisfy the escrow release conditions in connection with the
issuance of the Subscription Receipts; and UrtheCast's expectations
with respect to its ability to raise proceeds from a subordinated
capital or equity offering sufficient to satisfy the related
drawdown condition of the UrtheDaily™ Senior Secured
Facility in a timely manner. 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 as at the date of
this release, 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 enter into
definitive documentation relating to the UrtheDaily™
Financing; UrtheCast's inability to close the
UrtheDaily™ Financing on the terms set out in this
press release, the definitive documentation related thereto, or at
all; UrtheCast's inability to satisfy the escrow release conditions
in connection with the issuance of the Subscription
Receipts; and UrtheCast's inability to raise proceeds
from a subordinated capital or equity offering sufficient to
satisfy the related drawdown condition of the
UrtheDaily™ Senior Secured Facility in a timely manner
or at all; as well as those factors and assumptions discussed in
UrtheCast's annual information form dated April 3, 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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SOURCE UrtheCast Corp.