(TSXV: HEO) – H2O Innovation Inc. (“H2O
Innovation” or the “Corporation”) is pleased to announce the
pricing of its previously announced overnight marketed public
offering (the “Public Offering”), whereby it will enter today into
an underwriting agreement (the "Underwriting Agreement") with a
syndicate of underwriters co-led by Desjardins Capital Markets and
Canaccord Genuity Corp. (the “Co-Lead Underwriters”) and including
Acumen Capital Finance Partners Limited, Beacon Securities Limited,
Industrial Alliance Securities Inc. and Haywood Securities Inc.
(collectively, the “Underwriters”) to sell 13,335,000 subscription
receipts of the Corporation (the “Subscription Receipts”) at a
price of $1.05 per Subscription Receipt for an aggregate gross
proceeds of approximately $14.0 M, exclusive of the Over-Allotment
Option described below.
Further, the Corporation is also pleased to
confirm the firm commitment of certain institutional shareholders
and insiders of the Corporation participating in the equity
offering on a brokered private placement basis for an aggregate
gross proceeds of approximately $8.0 M under the same terms and
conditions as the Subscription Receipts issued under the Public
Offering (the “Concurrent Private Placement” and, collectively with
the Public Offering, the “Offerings”). The 7,647,619 Subscription
Receipts to be issued in the Concurrent Private Placement (and any
underlying securities) will be subject to a four (4) month hold
from the closing date of the Offerings. No change of control will
occur as a result of the Offerings.
The Subscription Receipts shall be exchangeable
into units (the “Units”) of the Corporation on a one-for-one basis
without additional payment or further action on the part of the
holders thereof. Each Unit shall be composed of one (1) common
share in the capital of the Corporation (a “Common Share”) and one
half of one (0.5) common share purchase warrant (each whole common
share purchase warrant, a “Warrant”). Each Warrant shall entitle
the holder to purchase an additional Common Share at an exercise
price of $1.40 at any time for a period of 24 months following the
closing date.
The Corporation has also granted the
Underwriters an option to purchase up to an additional 952,380
Subscription Receipts under the Public Offering at the Offering
Price, exercisable in whole or in part at the sole discretion of
the Co-Lead Underwriters, at any time up to thirty (30) days after
the closing date (the “Over-Allotment Option”), for additional
gross proceeds of up to $ 1.0 M.
The Corporation will file today an amended and
restated preliminary short form prospectus in each of the provinces
of Canada amending and restating the preliminary short form
prospectus filed on October 28, 2019 to reflect the terms of the
Offerings. There will not be any sale of Subscription Receipts
until a receipt for the final short form prospectus has been
issued.
Proceeds
The Corporation intends to use the net proceeds
of the Offerings to partially finance the purchase price of the
previously announced acquisition of Genesys Holdings Limited,
Genesys Manufacturing Limited, Genesys International Limited and
Genesys North America, LLC (collectively “Genesys”), a group of
privately-owned companies based in the United Kingdom that develop,
manufacture and distribute speciality reverse osmosis (RO) membrane
chemicals, antiscalants, cleaners, flocculants and biocides
(the “Acquisition”) and to pay the costs associated with the
Acquisition and the Offerings. The Acquisition is expected to close
on or about November 12, 2019 upon satisfaction of the customary
conditions set out in the sale and purchase agreement entered into
on October 28, 2019.
The Acquisition and the costs associated with
the Acquisition and the Offerings will also be financed by such
amount needed to be drawn on the term loan made available in an
amount of $12 million to the wholly-owned UK subsidiary of the
Corporation (the “Term Loan”) pursuant to the previously announced
amended and restated credit agreement of the Corporation entered
into on October 28, 2019 with an arm-length lender. The Term Loan
shall be reimbursed by the Corporation by way of quarterly
installment on annual amortization of 12.5 % of the principal
amount over a period of 3 years. The first instalment shall be due
on December 31, 2019.
Conditions to Completion of the
Offerings
In the event the closing of the Acquisition
occurs concurrently with the closing of the Offerings, the
Corporation will issue Units instead of Subscription Receipts.
The issuance of the Subscription Receipts (and
underlying Units, underlying Common Shares and underlying Warrants)
is subject to customary approvals of applicable securities
regulatory authorities, including the TSX Venture Exchange. The
Offerings are expected to close on or about November 12, 2019. The
Public Offering and the Concurrent Private Placement are
conditional upon each other. The Offerings are also conditional
upon there being no termination of the Acquisition or announcement
of such termination prior to the closing of the Offerings.
United States Offerings
The Subscription Receipts may be placed
privately in the United States or to U.S. persons (as defined under
Regulation S under the United States Securities Act of 1933, as
amended (the “Act”)) only to persons that are Qualified
Institutional Buyers under Rule 144A, in transactions exempt from
the registration requirements of the U.S. Securities Act, under
Rule 144A and under exemptions from registration or qualification
under applicable U.S. state securities laws. The securities being
offered have not and will not be registered under the Act, as
amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements. This news release shall not constitute an offer to
sell or the solicitation of an offer to buy securities nor shall
there be any sale of the securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful.
Prospective disclosures
Certain statements set forth in this press
release regarding the Acquisition, the terms of the Offerings, the
successful completion of the Acquisition, the successful marketing
and completion of the Offerings, the Corporation’s anticipated use
of proceeds under the Offerings, the expected timing for closing of
the Acquisition, the expected timing for closing of the Offerings,
the expected synergies and benefits of the Acquisition and the
operations and the activities of H2O Innovation as well as
other communications by the Corporation to the public that describe
more generally management objectives, projections, estimates,
expectations or forecasts may constitute forward-looking statements
within the meaning of securities legislation. Forward-looking
statements concern analysis and other information based on forecast
future results, performance and achievements and the estimate of
amounts that cannot yet be determined. Forward-looking statements
include the use of words such as “anticipate”, “if”, “believe”,
“continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”,
“potential”, “predict”, “project”, “should” or “will”, and other
similar expressions, as well as those usually used in the future
and the conditional. Those forward-looking statements, based on the
current expectations of management, involve a number of risks and
uncertainties, known and unknown, which may result in actual and
future results, performance and achievements of the Corporation to
be materially different than those indicated. Factors that could
cause or contribute to such differences include, but are not
limited to, failure to obtain TSX Venture Exchange approval of the
Offering, failure to satisfy the Escrow Release Conditions prior to
the Termination Time and those risk factors discussed in the Annual
Information Form of the Corporation dated
September 24, 2019 available on SEDAR (www.sedar.com).
Certain of the forward-looking statements included in this press
release may be considered “financial outlook” for purposes of
applicable Canadian provincial and territorial securities laws.
Readers are cautioned that such financial outlook information
contained in this press release should not be used for the purposes
other than for which it is disclosed herein or therein, as the case
may be. Unless required to do so pursuant to applicable securities
legislation, H2O Innovation assumes no obligation to update or
revise forward-looking statements contained in this press release
or in other communications as a result of new information, future
events and other changes.
About H2O Innovation
H2O Innovation designs and provides
state-of-the-art, custom-built and integrated water treatment
solutions based on membrane filtration technology for municipal,
industrial, energy and natural resources end-users. The
Corporation’s activities rely on three pillars which are
i) water and wastewater projects and services;
ii) specialty products, which include a complete line of maple
equipment and products, specialty chemicals, consumables and
specialized products for the water treatment industry; and
iii) operation and maintenance services for water and
wastewater treatment systems and utilities. For more information,
visit www.h2oinnovation.com.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Source:
H2O Innovation Inc. www.h2oinnovation.com
Contact:
Marc Blanchet +1 418-688-0170
marc.blanchet@h2oinnovation.com
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