V.CHMoney in the bank?
Charbone closes $2.1-million convertible debt tranche
2024-12-04 18:47 ET - News Release
Mr. Dave Gagnon reports
CHARBONE HYDROGEN SECURES INITIAL TRANCHE OF US$6 MILLION IN CONVERTIBLE NOTES
Charbone Hydrogen Corp. has closed a $2.1-million ($1.5-million (U.S.)) unsecured convertible debt tranche to accelerate the funding of the construction of its first two green hydrogen production facilities located in Sorel-Tracy, Que., and Detroit, Mich., including orders of two electrolyzers for a total capacity of 5.0 megawatts (MW).
The Sorel-Tracy facility will serve as Charbone's flagship green hydrogen production site, with operations scheduled to begin in the coming weeks, following delivery of a preordered electrolyzer in Q1 2025. Additionally, the implementation of a second green hydrogen project site is slated to be confirmed in the Detroit vicinity in the near future. In total, Charbone plans to build and deliver a network of 16 green hydrogen production facilities across North America by 2030.
The first tranche of the financing includes $1.5-million (U.S.) ($2.1-million) in gross proceeds through unsecured convertible notes with a 36-month term at a 12-per-cent annual interest rate, led by its United States banker, maturing in December, 2027, or convertible earlier, offered to one arm's-length investor.
"Our ability to attract this significant investment solidifies Charbone's position as a first mover and leader in the North American green hydrogen market," said Dave Gagnon, chief executive officer and chairman of the board.
"With production at Sorel-Tracy imminent, we are focused on generating near-term revenue, delivering value to shareholders and advancing our vision of a modular green hydrogen network. This funding ensures we can execute our aggressive growth strategy while meeting industrial best practices and stakeholder expectations."
The funds will be allocated to capital expenditures for engineering, equipment, infrastructure and project management costs for the Sorel-Tracy and Detroit facilities.
Charbone has placed $1-million (U.S.) in deposits for two 2.5 MW electrolyzers from a leading global manufacturer with 17 years of experience and a proven record. This industry leader, specializing in Alkaline and PEM technologies, has delivered over 300 units across five continents and holds more than 60 patents, with an annual production capacity exceeding five GW (gigawatts).
Note offering details
The note offering closing of $1.5-million (U.S.) ($2.1-million) is part of a private placement led by its U.S. banker of an aggregate principal amount up to $6-million (U.S.) unsecured convertible notes for 36 months which shall bear interest at a rate of 12 per cent per annum, accrued until maturity or conversion and where the principal amount is convertible into common shares of the company (common shares) at a conversion price of the greater of A) 10 cents (or U.S. dollar equivalent) or B) a price per share representing a discount of 20 per cent to i) the share price reserved for a capital raise conducted by the issuer, ii) the market price at the time of change of control notice or iii) the market price at the time of maturity, per common share, led by its U.S. banker.
Charbone did pay a placement agent cash fee of 10 per cent (10.00 per cent; $150,000 (U.S.)) as well as five-year, equity warrants for common shares equal to 10 per cent (10.00 per cent; 1.5 million warrants) exercisable at an exercise price of 10 cents per common share or U.S. dollar equivalent in connection with the private placement. The debentures and warrants are subject to a restrictive legend expiring after four months and one day, as required by applicable securities laws and the policies of the TSX Venture Exchange. The private placement is subject to final acceptance by the TSX Venture Exchange and other customary closing conditions. The company intends to close a second tranche in the coming days, but no later than Jan. 3, 2025.
Update on the amendment to terms of convertible debentures
Further to its news release dated June 10, 2024, announcing the agreement of principles to amend certain terms of the secured convertible debentures of the company that were issued by the company in connection with the private placement of debentures of an aggregate principal amount of $1.2-million of 14 per cent secured convertible debentures, the company is pleased to announce that it has met all requirements to request the final approval from TSX Venture Exchange to amend and issue the new debentures.
About Charbone Hydrogen Corp.
Charbone is an integrated green hydrogen company focused on creating a network of modular green hydrogen production facilities across North America. Using renewable energy, Charbone produces eco-friendly dihydrogen (H2) for industrial, institutional, commercial and future mobility users. Charbone is currently the only publicly traded pure-play green hydrogen company.