I like seeing the standby guarantee. Sounds like the owners are on standby to kick in funds needed to meet fund target - can this be tajen as good news - owners confidence in comoany ? Still would be nice to see what potentials are expected, as in contract potentials, imagine if this was incorporated in the news, it would be a buying frenzy... Right ?
Tekmodo arranges $2.17-million rights offering
2017-05-19 07:52 ET - News Release
Mr. Marc LaCounte reports
TEKMODO ANNOUNCES RIGHTS OFFERING
Tekmodo Industries Inc. has filed a rights offering circular and related notice of rights offering with the securities regulatory authorities in each of the provinces and territories of Canada in connection with an offering of rights to acquire units of the company for gross proceeds of a minimum of $2-million and a maximum of approximately $2.17-million. These documents will be available at www.sedar.com.
Pursuant to the Rights Offering, each eligible registered holder of common shares of the Company ("Common Shares") as at the close of business on May 25, 2017 (the "Record Date") will receive one (1) Right for each Common Share held. Each Right will entitle the holder to subscribe for one unit of the Company (a "Unit") at a subscription price of C$0.015 per Unit.
A share consolidation on the basis of one (1) new Common Share for every two and one-half (2.5) existing Common Shares will occur immediately after closing of the Rights Offering and the number of Common Shares, the Common Shares issuable upon exercise of the Warrants and the exercise price of the Warrants will be adjusted accordingly.
Each Unit purchased at $0.015 will consist of one pre-consolidated Common Share and one share purchase warrant (a "Warrant"). Each Warrant will be exercisable into one pre-consolidated Common Share for a period of 5 years from the issuance date of the Units, at a pre-consolidation price of $0.025 per Common Share. As noted, however, the Common Shares issuable upon exercise of the Warrants and the exercise price of the Warrants will be adjusted to reflect the consolidation.
As a result of the foregoing, a shareholder holding 1,000 pre-consolidation Common Shares will receive 1,000 Rights. If such shareholder exercises all of its Rights, the shareholder will receive the securities in Column B, based on the pre-Consolidation figures in Column A:
A Pre-Consolidation B Post-Consolidation 1,000 Common Shares 400 Common Shares 1,000 Warrants each entitling the holder to 400 Warrants each entitling the holder to purchase 1,000 additional Common Shares at purchase 400 additional Common Shares at an exercise an exercise price of $0.02 5per Common Share price of $0.0625 per Common Share
The Rights issued under the Rights Offering will be evidenced by transferable rights certificates (each, a "Rights Certificate"), and will expire at 5:00 p.m. (Toronto time) on June 26, 2017 (the "Expiry Date"), after which time unexercised Rights will be void and of no value. The Rights Offering includes an additional subscription privilege under which eligible holders of Rights, who fully exercise their Rights, will be entitled to subscribe, on a pro rata basis with other shareholders who participate in the oversubscription, for Units that have not been purchased under the Rights Offering
The Common Shares will trade on the TSX Venture Exchange ("TSXV") on an "ex-rights" basis. The Rights will be listed for trading on the TSXV under the symbol "TEK.RT" commencing on May 23, 2017 and will be de-listed from the TSXV at 12:00 noon (Toronto time) on the Expiry Date.
The Notice of Rights Offering and related Rights Certificates will be mailed to all registered holders of Common Shares in a province or territory of Canada as of the close of business on the Record Date. Eligible registered shareholders, as described in the Rights Offering Circular, who wish to exercise their Rights must forward a completed Rights Certificate, together with the applicable funds, to TSX Trust Company, the rights agent of the Company, on or before the Expiry Date. Shareholders who own their Common Shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary.
Standby Guarantee
In connection with the Rights Offering, the Company has entered into a standby guarantee agreement (the "Standby Guarantee") for C$2 million with Jake Vogel and John Proust (the "Standby Purchasers"). Under the Standby Guarantee, the Standby Purchasers have agreed to subscribe for, and the Company has agreed to issue, all Units offered under the Rights Offering that are not otherwise purchased by the Company's shareholders, up to the amount of $2 million. The Standby Guarantee has been approved by the independent directors of the Company. As consideration for the Standby Guarantee, the Company has agreed to issue 25,121,887 bonus warrants to the Standby Purchasers as permitted under TSXV Policies. Each bonus warrant will be exercisable for five years from the date of issuance, into one pre-consolidated Common Share at a price of $0.025 per Common Share. On a post-consolidation basis the Standby Purchasers will receive 10,048,755 bonus warrants with an exercise price of $0.0625.
Loan Agreements
As previously announced, in order to ensure that TekModo can meet its short term capital requirements, the Standby Purchasers have agreed to lend the Company up to C$2 million, which will allow the Company to seamlessly continue its operations until the launch and closing of the Rights Offering. The loans are unsecured, mature on the earlier of the completion of the Rights Offering or September 30, 2017 and bear interest at a rate of 8% per annum.
The acquisition cost of any Units acquired by the Standby Purchasers pursuant to the exercise of Rights, either under the Standby Guarantee or as holders of Rights, will be satisfied by the reduction of the amounts payable to the Standby Purchasers under the loan agreements.
The loans constitute "related party transactions" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") because funds have been provided by two directors of the Company. MI 61-101 has been adopted by the TSX Venture Exchange as Policy 5.9 Protection of Minority Security Holders in Special Transactions. The Company is relying on the exemptions from the formal valuation and minority approval requirements contained in Sections 5.5(c) and 5.7(1)(b) of MI 61-101, on the basis that the transaction constitutes a distribution of securities for cash and the consideration received does not exceed $2,500,000.
We seek Safe Harbor.
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