TIC Arranges $1.5 million in Loan Financing
itanium Corp. arranges $1.5-million in loans
2015-10-13 08:42 ET - News Release
Mr. Scott Nelson reports
TITANIUM CORPORATION ANNOUNCES LOAN AGREEMENTS
Titanium Corp. Inc. has entered into loan agreements with Mossco Capital Inc., an affiliated Canadian resident corporation controlled by Moss Kadey, and with David Macdonald, two of its independent directors pursuant to which the lenders agreed to lend to Titanium the aggregate principal amount of up to $1.5-million.
"We are very pleased to have the continued support of two of our major shareholders in arranging these flexible credit facilities to assist in funding the commercialization phase of our company's technology," commented Scott Nelson, Titanium's president and chief executive officer. "Our technology offers a ready-to-implement solution to both environmental and cost structure challenges that the oil sands industry is facing during this period of low prices."
The loans, when drawn, are repayable in full by Titanium to the lenders on Oct. 9, 2017. Titanium may permanently repay all or part of the loans at any time without notice or penalty. Mossco agreed to advance up to $1-million and Mr. Macdonald agreed to advance up to $500,000. The proceeds from the loans are to be used for general corporate purposes as approved by the company's board of directors in its annual budget.
Interest accrues on the loans at the rate of 12 per cent per annum from the date of advance, standby fees at the rate of 3 per cent per annum on any undrawn balances of the loans (both payable monthly) and drawdown fees of 2.0 per cent at the time of each advance of $500,000.
Titanium's obligations in respect of the loans will be secured by a general security agreement granted by Titanium to each lender under which Titanium will grant security interests over all of its present and afteracquired personal property and a floating charge over all of its real property. Titanium and the lenders will also enter into an intercreditor agreement to confirm the pari passu ranking of the loans and security, including the right to payment, priority of security and realization in respect of security.
The lenders' obligations to advance the loans are subject to customary conditions precedent, including a requirement that Titanium has less than $500,000 cash on hand on the date of the borrowing notice issued to the lenders, and that there will have been no adverse material change in the business, operations, assets or ownership of Titanium since the date of the loan agreements. The loan agreements contain Titanium representations and warranties, covenants, and events of default customary for transactions of this nature.
In connection with the loans, Titanium issued 750,000 non-transferable common shares purchase warrants of Titanium to the lenders, which were allocated proportionally to the lenders on the basis of their committed amounts under the loans. Each warrant entitles the holder to acquire one common share of Titanium at a price of $1.35 per common share prior to Oct. 9, 2017. At the time of issuance, the exercise price of the warrants was equal to the closing price of the common shares on the TSX Venture Exchange on the date of execution of the loan agreements. The warrants, and underlying common shares, are subject to a four-month hold period from the date of issuance, which expires on Feb. 9, 2016.
The terms and conditions of the loan agreements and related agreements were reviewed and unanimously approved by all of the independent directors of Titanium, other than the lenders. The company received legal advice of its outside legal counsel in connection with entering into of the loan agreements, related agreements and the issuance of the warrants, but did not engage a financial adviser.
The transactions contemplated by the loan agreements and related agreements and the issuance of the warrants have been conditionally accepted by the TSX Venture Exchange and constitute related-party transactions under Multilateral Instrument 61-101. In entering into the transactions, Titanium relied upon the exemptions from the formal valuation and minority approval requirements of MI 61-101 under sections 5.5(b) and 5.7(1)(a), respectively, of MI 61-101.
The loans and related issuance of the warrants remain subject to the final approval of the TSX-V. Closing of the transactions contemplated by the loan agreements and related agreements, including the warrants, occurred simultaneously with the execution and delivery of such documents. Titanium considered a simultaneous signing and closing to be reasonable given that third party approvals, other than the conditional acceptance of the TSX-V, were not required.
We seek Safe Harbor.