The start of something new, cash flow from analytics & more VANCOUVER, Jan. 14, 2019 /CNW/ - UrtheCast Corp. (TSX: UR) ("UrtheCast" or the "Company") is pleased to provide an update with respect to closing the acquisition of Geosys Technology Holding LLC, securing a US$12 million term loan and other corporate updates.
Closing of Geosys Acquisition
UrtheCast is pleased to announce the acquisition (the "Geosys Acquisition") of Geosys Technology Holding LLC ("Geosys") from Land O' Lakes, Inc. ("Land O'Lakes"). The total purchase price for the Geosys Acquisition is US$20 million payable in three installments. The first installment of US$5 million was paid to Land O'Lakes on the closing of the Geosys Acquisition today, US$5 million is payable on October 14, 2019 and the balance of US$10 million is payable upon the transfer of certain intellectual property from Land O'Lakes prior to April 13, 2021. As part of the first closing, UrtheCast entered into a new 13-year agreement to provide Land O'Lakes with certain services currently provided by Geosys to Land O'Lakes with total annual fees payable to UrtheCast in excess of US$10 million per year, and an increased rate at such time as the UrtheDaily Constellation is operational.
Don Osborne, CEO of UrtheCast, commented, "We are excited to expand our data services and analytics business by adding the proven capabilities of Geosys to UrtheCast. By unifying these companies, UrtheCast will be well positioned as the leader in fully integrated geoanalytics solutions for agriculture." UrtheCast's Vice President of Analytics, Dave Gebhardt, adds "Significant customer value is now created by more tightly integrating imagery data and the analytics that exploit the data for insights. We can now more effectively innovate and prepare to deliver unique insights to the agribusiness industry from the analytics-ready data of the UrtheDaily constellation. The combination of UrtheDaily's resolution, revisit, and data quality opens the door to machine learning and AI opportunities never before seen in agriculture."
US$12 Million Term Loan
The indirectly wholly-owned subsidiary of UrtheCast that acquired Geosys (the "Borrower") has entered into a US$12 million term loan (the "Term Loan") with a group of lenders led by Bolzano Investments Limited ("Bolzano") and 1112099 B.C. Ltd. ("1112099"). The Term Loan (i) accrues interest at a rate of 14% per annum; (ii) has a maturity date of one year; and (iii) is secured by all of the Geosys assets owned by the Borrower. The proceeds of the Term Loan will be used as follows: (i) repay existing debt (including, as required by the lenders, the previously issued demand promissory note dated September 28, 2018 issued by UrtheCast in favour of 1112099 in the principal amount of US$5 million (the "Existing Note"); (ii) fund the first installment for the Geosys Acquisition; and (iii) for general corporate purposes.
In satisfaction of conditions required by the lenders, Bolzano has appointed Mr. Pirmin Lnd as a director of UrtheCast pursuant to a board appointment right granted by UrtheCast to Bolzano, subject to customary approval from the Toronto Stock Exchange (the "TSX"). Mr. Lnd held various managerial positions at leading European banks such as Credit Suisse AG for more than 15 years, primarily focused around wealth management for ultra high net worth clients. Since 2012, he has been focusing his efforts on private equity investment opportunities across industries and jurisdictions. Mr. Lnd holds a Bachelor in Business Administration with a Major in Banking and Finance from Zurich University of Applied Sciences.
In satisfaction of conditions required by the lenders: (i) the Borrower agreed to pay Bolzano a finance fee in the amount of US$180,000 and UrtheCast agreed to issue to Bolzano 19,800,000 common share purchase warrants of UrtheCast having a maturity date of May 25, 2023 and an exercise price of $0.48 per common share, subject to approval from the TSX; (ii) each UrtheCast director agreed to defer cash compensation from January 1, 2019 to June 30, 2019; and (iii) certain UrtheCast directors and executives agreed to contribute a minimum aggregate principal amount of US$700,000, including other funds sourced by such directors and executives from investors acceptable to the lenders, on substantially the same terms as the Term Loan or on such other terms acceptable to the lenders in consideration for a number of common share purchase warrants of UrtheCast proportionate to the number of common share purchase warrants that UrtheCast has agreed to issue to Bolzano, subject to approval from the TSX.
Approximately US$7.7 million of the Term Loan was advanced today, with approximately US$5 million used to repay the Existing Note and US$2.5 million used to fund the first installment for the Geosys Acquisition. The balance of the Term Loan will be advanced upon the satisfaction of certain conditions required by the lenders, including the completion of definitive documentation relating to the security of the Term Loan and the lenders' conditions described above, which is expected to occur on or about January 18, 2019.