Poynt Corporation Secures Agreement for Debtor-In-Possession Financing and Receives New Extension to Creditor Protection
CALGARY, ALBERTA--(Marketwire - Aug. 30, 2012) - Poynt Corporation (TSX VENTURE:PYN) ("Poynt Corp." or the "Company"), a global leader in mobile local search and advertising, today announced that the Court of Queen's Bench of Alberta (the "Court") granted an order extending its creditor protection until September 10, 2012, and that an agreement has been made and approved by the Court for debtor-in-possession ("DIP") financing for two-hundred and twenty thousand Canadian dollars ($220,000.00 CDN) at an interest rate of 20% (the "DIP Financing").
The DIP Financing is secured against all of the Company's assets and is repayable at the lender's (the "DIP Lender") demand following an event of default. In any event, it will be repaid in full at the earliest of: (i) twelve months from August 30, 2012; (ii) the date on which Poynt Corp. successfully completes all requirements of the Company's Notice of Intention to Make a Proposal (the "Proposal Proceedings") under the Bankruptcy and Insolvency Act (Canada)("BIA"); (iii) the fifth business day following the date on which the stay of proceedings ordered in the Proposal Proceedings is terminated or lifted; or (iv) the completion by the Company of any debt or equity financing in excess of $1,000,000.
Subject to receipt of all required regulatory approvals, including the approval of the TSX Venture Exchange, the Company has agreed to issue 880,000 common shares to the DIP Lender as consideration for taking the risk of providing of the DIP Financing. The common shares will be subject to applicable hold periods or restricted periods and resale restrictions imposed under applicable securities laws, including, but not limited to, a hold period of four months and one day following the date of issuance of the common shares.
In addition, as consideration for the Company's first secured lender (the "Lender") consenting to the security granted by the Court to the DIP Lender ranking in priority to the security granted to the Lender and for further consenting to the DIP Financing and agreeing at this time not to realize on the Lender's security, the Company has agreed to pay the Lender a fee in the amount of CDN $60,000.
The DIP Financing will not be sufficient to fund the Company's operations past the September 10, 2012 stay extension date, however, the DIP Financing provides the Company with the opportunity to continue operations while working on the Proposal Proceedings and its long-term business plan. The Company will require additional DIP financing to successfully exit creditor protection.
Hardie & Kelly Inc. of Calgary, Alberta, is the trustee appointed for the Company's Proposal Proceedings under the BIA.