Loyalist Group Limited ("Loyalist" or the "Company") (TSX VENTURE:LOY) announces that the Company has completed the first stage closing of its non-brokered private placement (the "Offering") for approximately $2.1 million, appointed Shant Poladian as Chairman and Chief Restructuring Officer, appointed Salim Maherali to the Board of Directors (the "Board"), and has accepted resignations from each of Martin Bernholtz and Rehan Huda as independent directors. The first stage closing and the changes to senior management and the Board are effective as of July 3, 2015.
"We are pleased to have completed the first stage closing of our non-brokered private placement for $2.1 million and look forward to closing $0.7 million of firm orders during the second stage this week. This $2.8 million financing was a key condition of the forbearance agreement with Bank of Montreal, our senior lender. Shant and Salim are well-qualified additions to our Board, with extensive backgrounds in capital markets and strategy, respectively. They are also significant investors in the first tranche of the Offering. Their appointment is part of our various initiatives to put Loyalist back on sound footing and rebuild confidence with all parties," said Shawn Klerer, Chief Executive Officer.
Under the first tranche of the Offering, the Company issued 211,500 units, with each unit consisting of one first preferred share, Series A (each, a "Preferred Share") and 83.33 common share purchase warrants (each, a "Warrant"), for a total of 17,624,295Warrants. Each whole Warrant will entitle the holder to acquire one common share of the Company at a price of $0.12 per share for a period of 24 months following the closing of this tranche of the Offering. If at any time following July 3, 2016 the closing price (or the average of the 'bid' and the 'ask', if not traded) of the common shares of the Company exceeds $0.25 per share for a period of 20 consecutive trading days, the Company may in its sole discretion elect to accelerate the expiry of the Warrants issued under this tranche of the Offering to the date that is 20 trading days after the date of issuance of a news release announcing the new expiry date.
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During the period of forbearance with the Company's senior lender, the Board has unanimously determined that it is in the best interests of the Company and its stakeholders to appoint Shant Poladian as Chief Restructuring Officer.
Shawn Klerer, Chief Executive Officer, and Frank Salvati, Chief Financial Officer, will report directly to the Chief Restructuring Officer. Mr. Poladian's former appointment as Division President, Student Housing of the Company will be placed on hold during the forbearance period. Mr. Poladian is expected to return to his former position following completion of the Company's recapitalization and restructuring activities.
The primary purpose of the newly created CRO role is to oversee key aspects of the recapitalization and restructuring of the Company in order to allow the CEO and CFO to focus on normal course business operations. This new CRO role is intended to ensure a proper flow of communication between internal and external parties and to limit the number of possible distractions which would otherwise impede the abilities of the CEO and the CFO to dedicate their time and energy to the essential day to day activities of the Company.
"Over the past several weeks, I have worked closely with our new senior management team and Board on the recapitalization initiatives. Shawn and Frank have been strong partners during this important timeframe and it would not have been possible to execute the forbearance agreement without their focus on the tasks at hand. By formalizing my new role as CRO, we will continue to work as partners, while ensuring that the normal duties of our CEO and CFO are not compromised by the additional workload as a result of our recapitalization and restructuring," said Mr. Poladian, Chairman and Chief Restructuring Officer.
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Is restructuring a good word here? Could scare some people, but then again, the current predicament is scary already. The expiry of the warrants can be accelerated by a higher SP than $0.25 for 20 consecutive days.