Cielo Announces Private Placement of Convertible Debenture Units for up to $5.0 Million to Advance Renewable Fuel Projects, Confirms Final Credit Facility Draw and Magazine Feature
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CALGARY, Alberta, Feb. 22, 2024 (GLOBE NEWSWIRE) -- Cielo Waste Solutions Corp. (TSXV:CMC; OTCQB:CWSFF) (“Cielo” or the “Company”), a renewable fuel company leveraging market ready licensed technology to produce low carbon fuel from wood by-products, is pleased to announce that it proposes to undertake a non-brokered private placement offering of unsecured convertible debenture units of the Company (collectively, the "Convertible Debenture Units") at a price of $1,000 per Convertible Debenture Unit for targeted gross proceeds of up to $5,000,000 (the "Private Placement").
The Private Placement and a concurrent final draw from Cielo’s existing secured credit facility, as described below, represent an important shift in the Company’s financing strategy to utilize convertible instruments versus traditional forms of debt. This financing strategy is expected to improve alignment between the Company’s capital structure and the advanced nature and status of its renewable fuel projects and is supported by its current secured lender, who has indicated its intention to participate in the Private Placement.
In addition, Cielo is also pleased to share that the Company has been featured in the Winter 2024 edition of Canadian Biomass Magazine, with further details provided below.
“By focusing on the structure of our capital stack for project development, and incorporating convertible instruments, we believe Cielo is afforded an improved ability to manage dilution and lower the cost of capital, all of which are critical as we accelerate to revenue,” said Ryan Jackson, CEO of Cielo. “Following our recent share consolidation, the Company has evolved its strategy to leveraging debt financing for revenue producing projects.”
Convertible Debenture Unit Offering
Each Convertible Debenture Unit will be comprised of: (i) one unsecured convertible debenture (each, a "Convertible Debenture") in the principal amount of $1,000.00 (the "Principal Amount") convertible into common shares of the Company (the "Common Shares" and each such Common Share, a "Conversion Share"); and (ii) 2,500 detachable share purchase warrants (each, a "Warrant") exercisable into Common Shares (each such Common Share, a “Warrant Share”). The minimum subscription amount will be C $20,000.
The Principal Amount of the Debentures, together with any accrued and unpaid interest, will mature and become due and payable in cash on the date that is 24 months from the date of issue of the Convertible Debenture Units (“Issue Date”), subject to earlier conversion or redemption (the "Maturity Date"). The Principal Amount owing under the Debentures will accrue interest from the date of issuance at 12.0% per annum on a 30/360 calendar basis, payable every six (6) months in cash, except the first payment will be made in November 2024 and will consist of interest accrued from and including the Issue Date. As the Convertible Debentures will be unsecured debt obligations of the Company, each Convertible Debenture will rank subordinate to all secured debt obligations of the Company.
The Principal Amount may be converted, for no additional consideration, into Conversion Shares at the option of the holder of a Convertible Debenture (each, a “Holder”) at any time after the Issue Date at a conversion price (the “Conversion Price”) of $0.40 per Conversion Share. However, the Company may force the conversion of the Convertible Debentures (the “Forced Conversion”), at the Conversion Price, in the event that the volume weighted average price of the Common Shares on the Exchange is greater than C $1.00 for any ten (10) consecutive trading days. In the event of a Forced Conversion, the Company will provide notice to Holders by issuing a news release announcing the details of the Forced Conversion, including the date upon which the Forced Conversion will occur. In addition, the principal amount of the Convertible Debentures may be redeemed by the Company at any time without penalty.
Each Warrant will entitle the holder thereof to purchase one Warrant Share at a price of $0.70 per Warrant Share for a period of 24 months from the Issue Date. However, the Company may accelerate the expiry of the Warrants (the “Warrant Term Acceleration”) in the event that the volume weighted average price of the Common Shares on the Exchange is greater than C $1.00 for any ten (10) consecutive trading days. In the event of a Warrant Term Acceleration, the Company will provide notice to holders of the Warrants by issuing a news release announcing the details of the Warrant Term Acceleration, including the accelerated expiry date of the Warrants.
The Company anticipates using the net proceeds of the Private Placement for the continued advancement of its renewable fuel projects, namely the wood byproduct to Bio-SynDiesel® Project in Carseland, Alberta (the “Carseland Project”), which is currently undergoing front-end engineering and design, and the Company’s railway tie to Bio-Syndiesel® project in Dunmore, Alberta (the “Dunmore Project”), as well as general working capital and corporate growth purposes. The Carseland Project will be situated adjacent to an existing synthetic fuel facility owned and operated by Rocky Mountain Clean Fuels Inc. (“RMCFI”), which deploys patented technology developed by Expander Energy Inc. (“Expander”).
The Company intends to close the Private Placement in one or more tranches throughout February and early March. Completion of the Private Placement is subject to the receipt of all required regulatory approvals, as applicable, including the approval of the Exchange. Finder's fees of cash and/or non-transferrable warrants may be paid in connection with the Private Placement in accordance with applicable laws. The Debentures and Warrants, as well as Conversion Shares and Warrant Shares, will be subject to a statutory hold period expiring on the date that is four months and one day after the corresponding Issue Date.
Credit Facility Update
As noted above, the Private Placement represents the Company’s intention to streamline the capital structure going forward by utilizing convertible instruments rather than traditional debt. With its final draw of $110,000 made under the previously announced senior secured loan with First Choice Financial Incorporated (“FCF”), Cielo’s aggregate outstanding balance will not exceed a principal amount of $2.6 million. Proceeds from the credit facility draw will be used primarily for general corporate purposes that support advancement of the Company’s projects in Carseland and Dunmore.
Magazine Feature
In concert with Expander, Cielo is very pleased to confirm that the two companies have been featured by Canadian Biomass Magazine within an article appearing in the Winter 2024 edition. Canadian Biomass Magazine is Canada’s premiere business media providing comprehensive coverage of the emerging Canadian biomass, bioenergy and bio-products markets, and is published six times per year by Canada’s largest independent business-to-business publisher, Annex Business Media, who serves over 60 markets.
None of the securities offered in the Private Placement have been or will be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.