TORONTO, ONTARIO--(Marketwired - Nov. 22, 2016) - MBAC Fertilizer Corp. (TSX VENTURE:MBC) (MBAC or the Company) is pleased to announce a non-brokered private placement (the Private Placement) to Zaff LLC (Zaff) of 5,374,800 shares of the Company (the Shares) at an offering price of $2.50 per Share, for aggregate proceeds of $13,437,000. The net proceeds of the Private Placement shall be used primarily for the re-commissioning and ramp-up of the Company's Itafs Arraias SSP Operations and working capital purposes. Completion of the Private Placement is subject to the approval of the TSX Venture Exchange (the TSXV). Closing of the Private Placement is anticipated to occur on or about November 28, 2016.
As Zaff is an insider of the Company, the Private Placement constitutes a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Investments (MI 61-101) and TSXV Policy 5.9. The Company is relying on the formal valuation exemption in section 5.5(a) of MI 61-101 and the minority approval exemption in section 5.7(a) of MI 61-101 on the basis that neither the fair market value of the Shares to be distributed nor the consideration to be received for the Shares exceeds 25% of the Company's market capitalization.
Mr. Brent de Jong, a director of MBAC, is a related party of Zaff and, as such, declared his interest to the board of directors of the Company in connection with the Private Placement. The directors reviewed the Private Placement and concluded that it is in the best interests of the Company. The Company did not file a material change report at least 21 days prior to the anticipated date of completion of the Private Placement due to the Company's determination that it is in the best interests of the Company to avail itself of the proceeds and complete the Private Placement in an expeditious manner.
Zaff currently beneficially owns, or controls or directs, directly or indirectly 50,198,869 Shares, representing 96.25% of the issued and outstanding Shares (on an undiluted basis) as of the date hereof. Upon completion of the Private Placement, Zaff would beneficially own, or control or direct, directly or indirectly 55,573,669 Shares, representing 96.60% of the issued and outstanding Shares (on an undiluted basis).
The Shares have not been and will not be registered under the United States Securities Act of 1993, as amended (the U.S. Securities Act), or any state securities laws and may not be offered or sold unless an exemption from registration is available. The Shares will be issued on a private placement basis pursuant to an exemption from registration provided by Regulation D under the U.S. Securities Act.
All Shares issued under the Private Placement shall be subject to a hold period of four months and one day from the date of issuance of the Shares pursuant to the policies of the TSXV.