Cielo Waste Solutions Corp. (TSXV:CMC; OTCQB:CWSFF)
(
“Cielo” or the
“Company”), a
waste-to-fuel environmental technology company, is pleased to
announce that it has initiated planning and third-party discussions
with regard to its first commercial facility (the “
First
Commercial Facility”), anticipated to be located in
Dunmore, Alberta. Cielo is also pleased to provide an update with
respect to the Company’s previously announced proposed private
placement financing, initially proposed as an offering of
convertible debentures, and amended to units consisting of common
shares and warrants, with a designated affiliate or assignee of
Crestmont Investments, LLC (in either case referred to as
“
Crestmont”), a New York-based investment firm
focused on emerging opportunities in decarbonization, healthcare,
technology, and special situations, and a non-arm’s length party to
Cielo.
First Commercial Facility Planning
Efforts
In recent months, Cielo has been working toward
the construction and commissioning of its research and development
facility in Aldersyde, Alberta (the “R&D
Facility”), as previously announced. Management is pleased
to confirm that the majority of the commissioning of the R&D
Facility has been completed and a further operational update will
be provided in the coming days.
As a part of the Company’s commitment to
construct its First Commercial Facility, it has begun the process
of structuring and financing the venture through which the First
Commercial Facility will be held. Management has circulated a
request for proposal for project management services, to assist in
the initiation, design, and construction of the Facility. Cielo has
also been engaged in discussions with third parties, such as
Renewable U Energy Inc. (“Renewable U”), a private
Alberta corporation with whom Cielo had previously entered into
memorandums of understanding, (as previously disclosed), as well as
Crestmont, regarding the participation of such third parties in the
First Commercial Facility financing.
Following an intensive due diligence review of
Cielo completed by Crestmont, including its technology and
engineering plans, Crestmont has expressed an interest in
participating in the First Commercial Facility. Discussions between
Cielo and Crestmont have resulted in the amendment to the nature of
the financing to be provided by Crestmont (the
“Financing”) to one contemplating this
participation. The terms of the Financing (as detailed below),
involve the issuance by Cielo of a secured note (the
“Note”) in the coming weeks, with the intention
that the principal portion of the Note be exchanged for
participation (on terms to be determined) (the “Crestmont
Participation Interest”) in the First Commercial Facility,
once the structure has been determined and formed. Management
believes that this will result in minimizing the dilutive impact to
Cielo while unlocking significant value for potential partners
interested in participating directly in the First Commercial
Facility financing and reflects their collective confidence and
interest in supporting the Company’s path to commercialization.
David Beach, Principal of Crestmont, commented,
“After comprehensive due diligence, including a full review of
current proforma financial projections and related engineering
assumptions for the first commercial facility, Crestmont believes
that any immediate financing needs to coincide with the path to
commercialization. Our review included all engineering and
financial plans related to the plant and has resulted in our
commitment to support the Company’s launch of its first commercial
plant. These revised terms should be viewed as confidence in the
first commercial plant viability by our management and investment
partners.”
Ryan Jackson, CEO of Cielo, commented, “We are
excited to continue the construction planning for our first
full-scale facility with the addition of Crestmont as an investor
and partner, as well as to expand our discussions with other
potential investors. We are also appreciative of the extensive due
diligence completed by Crestmont, which we believe confirms the
potential of our technology and has allowed us to accelerate the
development of our first commercial facility in Dunmore.”
Benefits of Financing Process and
Revised Terms
Management believes that the revised structure
of the Financing, and the extended due diligence review process
with Crestmont that resulted in this revised structure, have been
beneficial to Cielo in acting as a catalyst for the planning of the
First Commercial Facility, including the establishment of a
strategic relationship with Crestmont and its affiliates providing
for a potential opportunity to access funding for the First
Commercial Facility. The revised terms of the Financing will allow
for immediate cash flow into Cielo, while facilitating Crestmont’s
participation in the First Commercial Facility (on terms to be
determined) as well as ultimately less dilution of Cielo at this
time (other than resulting from the Bonus Warrants as defined
below, if exercised).
Proposed Financing
Background
On December 19, 2022, the Company had announced
a proposed private placement of secured convertible notes to
Crestmont for an aggregate principal amount of up to CAD $5
million. Cielo and Crestmont had entered into a binding letter of
intent (the “Initial LOI”) setting out the terms
of the proposed financing. During the due diligence process (the
“Due Diligence”), Cielo and Crestmont had
previously agreed to change the structure of the proposed financing
from a convertible debt offering to an equity offering and had
entered at that time into an Amended and Restated Letter of Intent
(the “Amended and Restated LOI”) setting out the
proposed amended terms, as announced on February 13,
2023.
Amended Terms
As noted above, Cielo and Crestmont have now
agreed to amend the terms of the proposed financing (the
“Financing”). The parties have executed a second
amended and restated binding letter of intent (the “Second
Amended and Restated LOI”), which provides for the
issuance of the Note by Cielo in favour of Crestmont, for a minimum
amount of CAD $3 million and up to CAD $5 million. The Note will
mature 24 months from the date of issuance (the “Maturity
Date”), however it’s the intention of the parties that the
Note be exchanged for the Crestmont Participation Interest, on
terms to be determined, on or prior to the Maturity Date. Once
Cielo has determined the First Commercial Facility structure, and
proposes the terms of the Crestmont Participation Interest,
Crestmont will have the option to exchange the Note for the
Crestmont Participation Interest. Although the parties anticipate
the foregoing to occur, in the event that Crestmont does not agree
to the proposed terms of the Crestmont Participation Interest, the
Note will be repayable by Cielo on the Maturity Date in cash,
however Cielo will have the right to prepay the Note at any time
prior to the Maturity Date, without penalty. Crestmont will also be
granted a pre-emptive right to participate in Cielo’s second
commercial facility proportionate to the amount of the Crestmont
Participation Interest.
The Company’s property in Aldersyde, Alberta
will be used to secure the Note for up to a maximum of CAD $3
million, with any excess of up to CAD $5 million to be secured
against the Company’s property in Fort Saskatchewan,
Alberta.
Due Diligence, Net Proceeds and Closing
The Due Diligence period was extended and is now
anticipated to be completed this week, with closing of the
Financing to be completed during the month of April 2023. Cielo had
previously agreed to pay an amount equal to CAD $100,000 to
Crestmont for the purposes of completing the Due Diligence review,
to cover Crestmont’s associated, third party, out-of-pocket costs
(the “Due Diligence Fee”). As the Due Diligence
review was more extensive than initially anticipated, Cielo has
agreed to increase the Due Diligence Fee to USD $100,000, and has
paid said fees in full.
The net proceeds of the Financing are expected
to be used for the R&D Facility and general working capital.
The Financing is subject to customary closing conditions, including
the approval of the TSX Venture Exchange (the
“TSXV”). The Note will also include customary
terms and conditions, as well as any other conditions and covenants
as agreed by Cielo and Crestmont.
Crestmont is a non-arm’s length party under the
policies of the TSXV as a director of Cielo is also an Associate,
insider or Control Person of Crestmont (as those terms are defined
in the policies of the TSXV). No fees or commissions will be
payable by Cielo to Crestmont or any other party in connection with
the Financing other than the Bonus Warrants, if approved.
Bonus Warrants
The Second Amended and Restated LOI also
provides for the issuance of loan bonus warrants (the
“Bonus Warrants”), subject to the
approval of the TSXV. The number of the Bonus Warrants to be issued
will be calculated by dividing the amount of the Note by the
Exercise Price, which is hereby defined as the greater of: a) $0.14
per common shares; and b) the lowest price approved by the
TSXV.
All securities issued in connection with the
Financing will be subject to statutory hold periods in accordance
with applicable securities legislation.
Webinar
The Company’s CEO, Ryan Jackson, and CFO,
Jasdeep K. Dhaliwal, along with EVP of Operations, Ryan Carruthers,
will be presenting an overview of current operations and an update
on upcoming milestones, while sharing excerpts of the Company’s
most recent investor presentation. We invite all investors and
other interested parties to register for the webinar at the link
below.
Date: Wednesday, April 26,
2023Time: 1pm ETRegister: Webinar
Registration
HAVE QUESTIONS? Management will
be available to answer your questions following the presentation on
the webinar platform. You may submit your question(s) beforehand in
the registration form or by email at: cielo@rbmilestone.com.
This press release shall not constitute
an offer to sell or the solicitation of an offer to buy securities
of the Company in the United States nor shall there be any sale of
securities of the Company in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The securities described
herein have not been, and will not be, registered under the United
States Securities Act of 1933, as amended, or the securities laws
of any state of the United States. Accordingly, any of the
securities described herein may not be offered or sold in the
United States or to U.S. persons unless an exemption from
registration is available.
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.
ABOUT CRESTMONT
Crestmont Investments is a sponsor and placement
agent for private and public companies that seek direct investments
from family offices and select private investment firms, with a
primary focus on emerging stories in decarbonization, healthcare,
technology, and special situations. As a secondary focus, Crestmont
is opportunistic and driven by the investment interests of our
network of private investors.
Crestmont Investment’s management and advisors
have sourced, evaluated, and led hundreds of millions worth of
investments across a variety of industries, with investment
partners who collectively represent billions of dollars in
sophisticated private capital from around the world. In addition to
structured investments, the firm provides guidance to its deal
partners, while drawing on deep industry and financial
relationships in an attempt to contribute to the successful
financing of strategic partnership plans - all within Crestmont’s
mandate of structuring and arranging direct investments with family
offices and select private firms.
ABOUT CIELO
Cielo Waste Solutions Corp. was incorporated
under the Business Corporations Act (British Columbia) on February
2, 2011. Cielo is a publicly traded company with its shares listed
to trade on the TSX Venture Exchange (“TSXV”)
under the symbol “CMC,” on the Frankfurt Exchange
(“DAX”) under the symbol “C36”, as well as on the
OTC Venture Market (“OTCQB”), under the symbol
“CWSFF.” The Company’s strategic intent is to become a leading
waste-to-fuel company using economically sustainable technology
while minimizing the environmental impact. Cielo has a patented
process that can convert waste feedstocks, including organic
material and wood derivative waste, to fuel. Having demonstrated
its ability to produce diesel and naphtha from waste, Cielo’s
business model is to construct additional processing facilities.
Cielo’s objective is to generate value by converting waste to fuel,
while fueling the sustainable energy transition.
For further information please
contact:
Cielo Investor RelationsPhone:
(403) 348-2972Email: investors@cielows.com
RB Milestone Group
LLC Email:
cielo@rbmilestone.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This news release contains certain
forward-looking statements and forward-looking information
(collectively referred to herein as “forward-looking statements”)
within the meaning of applicable Canadian securities laws. All
statements other than statements of present or historical fact are
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as
“anticipate”, “achieve”, “could”, “believe”, “plan”, “intend”,
“objective”, “continuous”, “ongoing”, “estimate”, “outlook”,
“expect”, “may”, “will”, “project”, “should” or similar words,
including negatives thereof, suggesting future outcomes.
Forward-looking statements are subject to both
known and unknown risks, uncertainties, and other factors, many of
which are beyond the control of the Company, that may cause the
actual results, level of activity, performance, or achievements of
the Company to be materially different from those expressed or
implied by such forward looking statements. Cielo is making forward
looking statements, with respect to, but not limited to: planning
of the First Commercial Facility; the location of the First
Commercial Facility; the ability of the Company to provide an
operational update and the timing thereof; the structure, terms and
timing of the Financing, including the use of the Company’s
properties in Aldersyde and Fort Saskatchewan to be used as
security thereof, the timing of the completion of the Due Diligence
review, and the issuance of the Bonus Warrants, including the terms
thereof and the hold period thereon, and the terms to be included
in the Note; the intended exchange of the Note for the Crestmont
Participation Interest and the timing thereof, including the
intention of Cielo to propose the terms thereof to Crestmont, and
the anticipated result if Crestmont does not wish to exchange the
Note; the continuation of discussions with third parties regarding
the participation by third parties, including Crestmont and
Renewable U, in the First Commercial Facility, including the
financing thereof; the anticipated benefits and impact of the
amended structure of the Financing and the Crestmont Participation
Interest, including the minimization of the dilutive impact to
Cielo while unlocking significant value for potential partners,
immediate cash flow for Cielo, the acceleration on the development
of the First Commercial Facility, and the potential opportunity to
access funding for the First Commercial Facility; the use of the
net proceeds of the Financing; the non-payment of fees related to
the Financing, other than the Bonus Warrants, if approved; the
webinar and the timing, content and speakers thereof as well as
log-in/call-in details.
Investors should continue to review and consider
information disseminated through news releases and filed by the
Company on SEDAR. 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.
Forward-looking statements are not a guarantee
of future performance and involve a number of risks and
uncertainties, some of which are described herein. Such
forward-looking statements necessarily involve known and unknown
risks and uncertainties, which may cause the Company’s actual
performance and results to differ materially from any projections
of future performance or results expressed or implied by such
forward-looking statements. Any forward-looking statements are made
as of the date hereof and, except as required by law, the Company
assumes no obligation to publicly update or revise such statements
to reflect new information, subsequent or otherwise. Neither the
TSXV nor its Regulation Services Provider (as that term is defined
in the policies of the TSXV), nor OTCQB nor WKN, have reviewed, and
do not accept responsibility for the adequacy or accuracy of, the
content of this news release.
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