RE:RE:RE:RE:RE:RE:RE:Where is the CIBC wall this morning ??Here's some information on PPs.
Pricing
The TSXV requires that common shares issued in a private placement be issued at a price that is equal to or greater than the closing price of the shares on either the day before:
- the day the company announces a transaction; or
-
- the day the target files a price reservation form,
less a discount of up to 25% (where the price is $0.50 or less, subject to a minimum price per share of $0.05), 20% (where the price is between $0.51 and $2.00) or 15% (where the price is $2.00 or more).
The target selects which price it will use as a reference.
A price reservation form may be filed by the target at any time and lasts for 30 days. Price reservation forms may be renewed. The form does not need to state a proposed use of proceeds. The TSXV reserves the discretion to deny use of a reserve price depending on market activity after the form is filed. Insiders subscribing for more than 25% of the private placement cannot participate at the reserved price if a price reservation form is used – instead if those insiders want to be able to rely on any price reservation, the price reservation must be made through a comprehensive news release
Convertible notes, preferred shares or other convertible instruments must have a conversion price equal to the market price described above (no discount is allowed). Convertible securities can’t have a term of more than five years. They may be transferred without the need for TSXV consent, but may be subject to securities law transfer restrictions for securities sold on a private placement basis.
Warrants must be priced in the same way as convertibles and cannot have a term of more than five years. The number of shares issuable on the exercise of the warrants cannot exceed the total number of common shares issued (or issuable on exercise of the convertibles). Warrants on warrants are not permitted. Warrants may also be transferred without the need for TSXV consent, but may be subject to securities law transfer restrictions for securities sold on a private placement basis.
These rules become more restrictive if the investor agrees to provide (and prices) the funding at a time when the target is negotiating or has completed an acquisition or other material transaction which has not been disclosed (an Undisclosed Transaction).
In that case:
- the substantial placement must be integral to the Undisclosed Transaction;
-
- the market price (for the purpose of pricing the deal) is the closing price the day before announcement of the Undisclosed Transaction (a price reservation form cannot be used);
-
- the proceeds from the substantial placement must be specifically allocated and necessary for the Undisclosed Transaction (and the announcement needs to make this clear – a statement that proceeds are for general working capital purposes will not suffice); and
-
- any warrants issued as part of the placement must be exercisable at a premium to the market price - 50% (where the price is $0.50 or less), 25% (where the price is between $0.51 and $2.00) or 15% (where the price is $2.00 or more).