Mr. David Deacon reports
SEMCAN INC. ANNOUNCES ADDITIONAL DEBT TO EQUITY CONVERSION OF $240,756 AND SUMMARY OF $6,481,961 FINANCIAL RESTRUCTURING
Semcan Inc. has converted $240,756 of debt into 641,736 common sharesat a deemed price of approximately 28 cents per share and 200,000 commonshares at a deemed price of 30 cents per share. On April 15, 2011, thecompany announced the conversion of $3,743,363 of debt into commonshares. The total conversion of debt to shares accomplished as part ofthe recent financial restructuring is $3,984,119. The common shares aresubject to a four-month hold period from the date of issuance.
Summary of $6,481,961 financial restructuring
On April 27, 2011, the company announced the closing of the second andfinal tranche of a financing for gross proceeds of $2,497,842 through aprivate placement to accredited investors of a secured convertible loan.The total effect of the financing provided by the loan and the debtconversion is as displayed in the table.
Number of shares
Average share issued on
Source of financing Amount price conversion
Loan
.14
$2,497,842 (at time of 17,841,729
(new funding) conversion) (potential)
Debt conversion $3,984,119
.3629
(conversion of (average for all 10,980,009
existing debt) conversions) (issued)
Total $6,481,961
.2249 28,821,738
David Deacon, Semcan's chief executive officer, commented: "The closingof the loan and debt conversion transactions represent an enormousimprovement in the company's working capital position and debt load. Wehave effectively raised approximately $6.5-million at an average priceof nearly 22.5 cents per share at a time when the company's shares weretrading at 14 cents per share. In addition, the future exercise of thewarrants available to the lenders could add in excess of $1.2-million ofadditional equity with no incremental transaction costs."
The terms of the loan provide that upon the exercise of the conversionprivilege, the lenders would receive 8,920,865 common share purchasewarrants exercisable into common shares at 14 cents per share. Theexercise of these warrants would provide the company with an additional$1,248,921 of financing, and bring the average share price relating tothe restructuring as a whole to 20.48 cents per share. At the time ofthe announcement of the loan, the quoted price of the company's commonshares was 14 cents on a consolidated basis.
We seek Safe Harbor.