good natured Products Inc. (the “Company” or “good natured®”)
(TSX-V: GDNP), a North American leader in earth-friendly
plant-based products, today announces it has filed a preliminary
short form prospectus with the securities regulatory authorities in
all provinces of Canada except Quebec, in connection with an
anticipated offering (the "
Offering") of $15
million aggregate principal amount of convertible unsecured
subordinated debentures maturing October 31, 2026 (the
“
Debentures”). The Offering is being conducted on
an overnight marketed basis by a syndicate of underwriters (the
“
Underwriters”) led by National
Bank Financial Inc. (“
NBF”) and
Beacon Securities Limited (“
Beacon”).
The Company also announces that it has received a committed term
sheet from National Bank of Canada (“National
Bank”) and is negotiating a credit agreement that
contemplates up to $35.8 million in financing, including a
revolving working capital facility, capital expenditure financing,
mortgage and a $10 million accordion facility, which is available
at the discretion of National Bank (collectively, the
“Senior Credit Facility” and together with the
Offering, the
"Financing").
The completion of the Financing would reduce the Company’s
annual combined interest rate across all its debt facilities by
2.37%, reduce principal payments by over $8 million through the end
of 2024, and increase the Company’s net working capital to between
$25 million and $30 million. The resulting asset to liability ratio
would become approximately 1.4x post completion of the Financing
compared to 1.0x at December 31, 2020. The completion of the
Financing would also consolidate four existing lenders into one
senior secured debt financing partner.
"We’re extremely pleased to announce these new funding
agreements designed to strengthen our working capital position
while providing the Company with additional fire power to execute
our acquisition strategy,” stated Paul Antoniadis, CEO of good
natured®. “This Financing, once completed, will decrease the
blended average interest rate on our debt and materially reduce our
principal payments over the next three years, providing the Company
with access to additional cash assets to fund organic initiatives,
including the commercial relationship we are announcing
concurrently."
The completion of the financing under the Senior Credit Facility
is contingent on the successful closing of the Offering, and the
completion of the Offering remains subject to various terms and
conditions, including agreement on favorable pricing terms between
the Company and the Underwriters. There is no guarantee the Company
will complete the Financing or any individual aspect thereof.
Commercial Agreement with Large US Food
ProducerThe Company has commenced shipping
commercial quantities of product to a large US food producer that
is replacing petroleum-based packaging with multiple Bio-PET
packaging products. The Company expects to sign a commercial
agreement, which would outline a multi-year relationship that,
based on a framework of open purchase orders, would produce
approximately USD$13 million in revenue in the first year.
The OfferingThe Company has
filed a preliminary short form prospectus with the securities
regulatory authorities in all provinces of Canada except Quebec in
connection with an anticipated offering of the Debentures. The
Company will grant to the Underwriters an option (the
“Over-Allotment Option”),
exercisable in whole or in part at the sole discretion of the
Underwriters at any time up to 30 days following the closing of the
Offering, to sell up to an additional principal amount of the
Debentures representing up to 15% of the Offering for market
stabilization purposes and to cover over-allotments.
The Offering will be priced in the context of the market with
final terms of the Offering to be determined at the time of
pricing. The Company anticipates issuing $15 million aggregate
principal amount of Debentures in denominations of $1,000 with a
maturity date of October 31, 2026 (the “Maturity
Date”) at a price of $1,000 per Debenture. The
Debentures will bear interest at a rate of 7.00% per annum payable
semi-annually in arrears on April 30 and October 31 of each year,
commencing April 30, 2022. The Debentures will be convertible at
the holder’s option into fully-paid common shares of the Company
(“Shares”) at any time prior to the earlier of
5:00pm Eastern Time on the Maturity Date and the business day
immediately preceding the date fixed for any redemption. The
conversion price will be determined at the time of pricing and will
be subject to adjustment in certain circumstances.
The Debentures will not be redeemable by the Company at any time
on or before October 31, 2024, except upon the occurrence of a
change of control of the Company in accordance with the terms of
the debenture indenture to be entered into with respect to the
Offering. After October 31, 2024 and prior to October 31, 2025, the
Debentures will be redeemable by the Company on not more than 60
days and not less than 30 days prior notice at a price payable
equal to $1,000 per Debenture plus accrued and unpaid interest,
provided that the volume weighted average trading price of the
Shares on the TSX-V for the 20 consecutive trading days ending five
trading days prior to the applicable date on which the notice of
redemption is given exceeds 125% of the conversion price. On or
after October 31, 2025 and prior to the Maturity Date, the
Debentures will be redeemable by the Company on not more than 60
days and not less than 30 days prior notice at a price payable
equal to $1,000 per Debenture plus accrued and unpaid interest.
The Debentures will be direct, unsecured obligations of the
Company, subordinate to all other liabilities of the Company.
Subject to specified conditions, the Company will have the right
to repay the outstanding principal amount of the Debentures, on
maturity or redemption, through the issuance of Shares.
The net proceeds of the Offering will be used to fund the
redemption of the Company’s indebtedness under its existing credit
facilities, in conjunction with the new Senior Credit Facility. In
addition to this, proceeds will be available for the Company to
pursue growth initiatives and working capital requirements.
Closing of the Offering is expected to occur on or about October
28, 2021 (the "Closing Date") or such other date
as the Company and the Underwriters may agree, and is subject to a
number of conditions, including without limitation, the receipt of
all necessary regulatory and stock exchange approvals, including
the approval of the TSX-V and the applicable securities regulatory
authorities.
The Debentures may also be offered by way of private placement
in the United States to Qualified Institutional Buyers pursuant to
Rule 144A of the U.S. Securities Act of 1933, as amended (the "U.S.
Securities Act"). This news release shall not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be
any offer, solicitation or sale of the securities in any province,
state or jurisdiction in which such offer, solicitation or sale
would be unlawful. The Debentures (and the Company common shares
issuable upon conversion of such Debentures) have not been and will
not be registered under the U.S. Securities Act and may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the U.S.
Securities Act and other applicable securities laws.
$35.8 million Senior Credit Facility with
National BankThe Company has received a committed
term sheet from National Bank and is negotiating a credit agreement
pursuant to which National Bank will provide up to $35.8 million in
additional funding subject to the successful close of the Offering,
and other customary conditions precedent. The secured Senior Credit
Facility would be comprised of:
- $15 million revolving working capital facility with a 2-year
term and an uncommitted $10 million accordion available at the
discretion of National Bank;
- $4 million revolving term credit facility to finance capital
expenditures, amortized over 84 months; and
- $6.755 million non-revolving term credit facility secured by a
first mortgage on the Company's Brampton, ON manufacturing facility
to replace the existing mortgage on such facility, with a 25-year
amortization.
The Senior Credit Facility would bear interest of the Canadian
Bankers’ Acceptance Rate plus 2.75% and be secured by all existing
and future subsidiaries of the Company.
The good natured® corporate profile can be found at:
investor.goodnaturedproducts.com and at on SEDAR (sedar.com) under
the Company's issuer profile.
About good natured Products
Inc.good natured® is passionately pursuing its
goal of becoming North America's leading earth-friendly product
company by offering the broadest assortment of eco-friendly options
made from plants instead of petroleum. We're all about making it
easy and affordable for business owners and consumers to switch to
better everyday products® made from renewable materials and free
from chemicals of concern.
Part of the sustainable consumer goods market, good natured®
offers over 400 products and services through wholesale and retail
channels, including our own e-commerce stores. From plant-based
home organization products to compostable food containers,
bioplastic industrial supplies and medical packaging, we're focused
on delivering a great customer experience and to make more
plant-based products readily accessible to more people as the path
to deliver meaningful environmental and social impact.
For more information:
goodnaturedproducts.com
On behalf of the Company:Paul Antoniadis – Executive Chair &
CEO Contact: 1-604-566-8466
Investor
Contact: Spencer
ChurchillInvestor Relations1-877-286-0617 ext.
113invest@goodnaturedproducts.com
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibilities for the adequacy or
accuracy of this release.
Cautionary Statement Regarding Forward-Looking
Information
Information regarding the Offering, the Senior Credit Facility
financing in negotiations, and the commercial agreement with a
large US food producer (the "Commercial Agreement") contained in
this news release constitutes forward-looking information within
the meaning of securities laws.
The forward-looking statements contained in this news release
are based on certain key expectations and assumptions made by the
Company, including expectations and assumptions regarding the
terms, timing and potential completion of the Offering,
satisfaction of regulatory requirements in various jurisdictions
and the use of the net proceeds of the Offering, and expectations
around concluding negotiations regarding the Senior Credit Facility
and Commercial Agreement. These assumptions, although considered
reasonable by the Company at the time of preparation, may prove to
be incorrect. Readers are cautioned that the closing of the
Offering and Senior Credit Facility, and the entry into the
Commercial Agreement is subject to a number of risks and
uncertainties, including risks that a definitive credit agreement
and/or the contemplated Commercial Agreement may not be executed,
risks relating to satisfaction of regulatory requirements in
various jurisdictions and general economic, market and business
conditions and could differ materially from what is currently
expected as set out above.
Other than as required under securities laws, we do not
undertake to update this information at any particular time.
Forward-looking information contained in this news release is
based on our current estimates, expectations and projections, which
we believe are reasonable as of the current date. The reader should
not place undue importance on forward-looking information and
should not rely upon this information as of any other date.
All forward-looking information contained in this news release is
expressly qualified in its entirety by this cautionary
statement.
Future-Oriented Financial Information
The future-oriented financial information set forth above with
respect to the Company's financial situation following completion
of the Financing are based on a review of the Company's historical
financial situation for certain metrics, taking into account the
expected outcomes of the Financing. The purpose of including this
information is to demonstrate certain positive aspects of the
potential completion of the Financing. Actual results could differ
from these preliminary results following the completion the
Financing and of ordinary quarter or year-end accounting
procedures, final adjustments and other developments arising
between now and the time that the Company's financial results are
finalized, and such changes could be material. The Company's
independent auditor, Deloitte LLP, has not audited, reviewed, or
performed any procedures with respect to the accompanying
future-oriented financial information and other data, and
accordingly does not express an opinion or any other form of
assurance with respect thereto. The future-oriented financial
information has been prepared by, and are the responsibility of,
the Company's management, and were approved by management on
October 11, 2021. They should not be viewed as a substitute for
audited financial statements prepared in accordance with
International Financial Reporting Standards and are not necessarily
indicative of the Company's results for any future period.
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