MPXI:CC - MPX International Announces Additional Draw Down of Short-Term Bridge Loan Financing Extension of Maturity Date of Debentures Until Calendar Year End 2023 and Further Amendments to Debenture and Warrant Indentures
(TheNewswire)
TORONTO, ONTARIO - TheNewswire - May 9, 2022 – MPX International Corporation (“ MPXInternational ”, “ MPXI ” or the“ Corporation ”) (CSE:MPXI )( OTC:MPXOF), amultinational diversified cannabis company, ispleased to announce that it has drawn down on additional loan proceedspursuant to the terms of the Revised Bridge Loan previously announcedon January 7, 2022 and has negotiated revisions with its debentureholders to effectively defer any principal obligations until December31, 2023.
“These amendments to the Debenture Indenture offerthe Corporation the opportunity to commit management attention,capital and cash flows to the further development of its growingoperations in Canada, Malta, Switzerland, Thailand and South Africawhere progress was negatively impacted by the extended Covidpandemic,” said W. Scott Boyes, Chairman, President and ChiefExecutive Officer of MPXI. “Simultaneously, and as previouslyannounced on October 5, 2022, the Special Committee of the Boardcontinues to explore potential restructuring, sale or mergeropportunities for its European and Canadian businesses.”
To date, the Corporation has received approximatelyC$5,372,000 (US$3,950,000) from lenders advancing funds pursuant tothe Revised Bridge Loan and the Corporation has issued 39,496,000 common share purchase warrants (the“ Bonus Warrants ”) as a bonus for advancing such funds as well as 1,974,858options (the “ SIMOptions ”) to acquire units of SalusInternational Management Ltd. (“ SIM ”) from theCorporation. Each common share purchase warrant (the “ Bonus Warrants ”)shall be exercisable for a period of sixty (60) months from the dateof issuance and enables the holder thereof to purchase one commonshare in the capital of the Corporation (a “ Common Share ”) atan exercise price equal to C$0.065 per Common Share. Each SIM Optionwill allow the holder to acquire one (1) unit (a“ SIM Unit ”) of Salus International Management Ltd. (“ SIM ”) from theCorporation for each US$2.00 of Bridge Loan funds advanced by theholder. Such option shall be exercisable at a price of US$1.00 per SIMUnit for a period of sixty (60) months from the Closing Date. Each SIMUnit will be comprised of one (1) common share (the “ SIM Shares ”) in thecapital of SIM and one-half (0.5) common share purchase warrant toacquire an additional SIM Share at an exercise price of US$1.50 perSIM Share until May 8, 2023.
The Corporation will use the proceeds from the loan tofund product and facility development and for general corporate andworking capital purposes.
The Revised Bridge Loan will mature 6 months from thedate of issuance (the “ Maturity Date ”) and is convertible at a 10%premium into the non-brokered private placement offering of units (the“ Units ”) whereby the Corporation raised C$15,355,760 (US$11,291,000)between June 30, 2020 and August 31, 2021 (the “ Offering ”) pursuant to: (a) the debentureindenture dated June 30, 2020 entered into between theCorporation and AST Trust Company (Canada) (the “ Debenture Trustee ”) as amended by the supplemental debentureindenture dated September 16, 2020, the second supplemental debentureindenture dated December 18, 2020 and the third supplemental debentureindenture dated June 24, 2021 (as amended, supplemented or otherwisemodified from time to time) providing for the issuance of 12% securedconvertible debentures of the Corporation (each, an “ SCD ”) in theaggregate principal amount of up to C$12,000,000 (US$7,500,000) (the“ DebentureIndenture ”); and (b) the warrant indenturedated June 30, 2020 entered into between the Corporation and AST TrustCompany (Canada) (the “ Warrant Agent ”) as amended by thesupplemental warrant indenture dated September 16, 2020, the second supplemental warrant indenture dated December18, 2020 and the third supplemental warrant indenture dated June 24,2021 (as amended, supplemented or otherwise modified from time totime) providing for the issuance of up to 84,000,000 common sharepurchase warrants (each, an “ SCD Warrant ”) (the “ WarrantIndenture ”).
Pursuant to the terms of the Bridge Loan, theCorporation has obtained the approval from SCD holders to amend the Debenture Indenture by way of a4 th supplementary debenture indenture substantially as follow:
(a) increase the maximum principalamount by up to US$10,000,000;
(b) amend the definition of“Conversion Price” such that the dollar amount for which eachCommon Share may be issued upon the conversion of SCDs in accordancewith the provisions of the Debenture Indenture, shall, subject toadjustment as provided for herein, be C$0.03 per CommonShare;
(c) amend the definition of“Maturity Date” such that the date of maturity for the SCDs, shallbe December 31, 2023
(d) provide that the payment ofinterest payable in respect of the Coupon Dates of September 30, 2021,December 31, 2021 and March 31, 2022 shall be rolled into the RevisedBridge Loan;
(e) provide that the payment ofinterest payable in respect of the Coupon Dates of June 30, 2022,September 30, 2022 and December 31, 2022 may be satisfied, at the soleoption of the Corporation, through the issuance of Units; and
(f) all such other revisions oramendments to the Debenture Indenture as the Corporation may deemnecessary or advisable to give full effect to or to carry out theintent of the foregoing amendments.
In addition, the Corporation has obtained the approvalfrom SCD Warrant holders to amend the Warrant Indenture by way of a4 th supplementary warrant indenture substantially as follows:
(a) amend the second preamble such that each Unitconsists of one 12% SCD and, prior to September 1, 2021, 7,000Warrants and on or after September 1, 2021, 10,000 Warrants;
(b) amend the definition of “Exercise Price”such that at any time the price at which a Common Share may bepurchased by exercise of a Warrant is $0.20 per Common Share forWarrants issued prior to September 1, 2021 and $0.065 per Common Sharefor Warrants issued on or after September 1, 2021, payable inimmediately available Canadian funds, subject to certain provisions ofthe Warrant Indenture; and
(c) increase the maximum number of SCD Warrantsby up to 100,000,000 Warrants; and
(d) all such other revisions or amendments to theWarrant Indenture as the Corporation may deem necessary or advisableto give full effect to or to carry out the intent of the foregoingamendments.
The Corporation haspaid in cash to the Revised Bridge Loan lenders a non-refundable cash origination fee in the amount equal to 2% of Revised Bridge Loan fundsadvanced.
The Corporation is now in the process of converting alloutstanding Bridge Loan amounts into the Offering at a conversionpremium equal to ten percent (10%) of their principal amount.
In connection with the closing of the Revised Bridge Loan, the Corporationwill pay aggregate finder's fees of approximately C $79,152 (US$58,200) and issue an aggregate of 582,500 compensation warrants(the “ CompensationWarrants ”) to eligible finders. EachCompensation Warrant entitles the holder to purchase one Common Shareat a price of C $0.065 for a period of 24months from the applicable closing date of the Revised Bridge Loan .
Insider Participation
As previously announced, the Revised Bridge Loan can beconsidered a Related Party Transaction for certain regulatorypurposes. The aggregare participation by certain insiders in theRevised Bridge Loan was for a total of C$1,606,000 (US$1,250,000), anorigination fee of C$34,000 (US$25,000), 12,500,000 Bonus Warrants and625,000 SIM Options.
It is important to note that the Revised Bridge Loan isexempt from valuation and minority approval requirements which mightotherwise result from the participation by insiders due to: (1) theCorporation, as a CSE issuer, not being listed on a designated market;and (2) the fair market value of the Revised Bridge Loan, insofar asthe Revised Bridge Loan involves such interested parties, is less thanC$2,500,000.
To the knowledge of the Corporation, after reasonableinquiry, none of the related parties have knowledge of any materialinformation concerning the Corporation or its securities that has notbeen generally disclosed.
The sole independent director to the transactions (the“ SpecialCommittee ”) reviewed the Revised Bridge Loanand determined that as a CSE issuer MPXI is not listed on a specifiedmarket and the fair market value of the Revised Bridge Loan, in so faras it involves related parties, is not more than $2,500,000. TheSpecial Committee recommended that the board of directors of theCorporation (the “ Board ”) approve the Revised Bridge Loan.Accordingly, the Revised Bridge Loan is exempt from minorityshareholder approval and formal valuation requirements of MI 61-101.
The Revised Bridge Loan is closing in less than 21 daysdue to the limited number of investors to the Revised Bridge Loan, allinvestment agreements being properly completed and received, and allloan proceeds having been forwarded, which shorter period isreasonable in the circumstances. MI 61-101 requires if a materialchange report is filed less than 21 days before the expected date ofthe closing of the transaction, an explanation is to be provided whythe shorter period is reasonable or necessary in the circumstances.
About MPX InternationalCorporation
MPX International Corporation is a multinational diversified cannabis company focused on developing and operating assets across theinternational cannabis industry with an emphasis on cultivating, manufacturing and marketing products whichinclude cannabinoids as their primary active ingredient. With currentoperations spanning four continents in Canada, Switzerland, SouthAfrica, Malta and Thailand as well as evolving partnership anddistribution opportunities in other jurisdictions, MPXI continues toposition itself as an emergent global participant in the cannabisindustry.
Cautionary Statement RegardingForward-Looking Information
This news release includes certain“forward-looking statements” under applicable Canadian securitieslegislation that are not historical facts. Forward-looking statementsinvolve risks, uncertainties, and other factors that could causeactual results, performance, prospects, and opportunities to differmaterially from those expressed or implied by such forward-lookingstatements. Forward-looking statements in this news release include,but are not limited to, MPX International’s objectives andintentions. Forward-looking statements are necessarily based on anumber of estimates and assumptions that, while considered reasonable,are subject to known and unknown risks, uncertainties and otherfactors which may cause actual results and future events to differmaterially from those expressed or implied by such forward-lookingstatements. Such factors include, but are not limited to: generalbusiness, economic and social uncertainties; litigation, legislative,environmental and other judicial, regulatory, political andcompetitive developments; delay or failure to receive board,shareholder or regulatory approvals; the Corporation’s ability toeffectively deal with the restrictions, limitations and health issuespresented by the COVID-19 pandemic; future cannabis pricing; cannabiscultivation yields; costs of inputs; its ability to market productssuccessfully to its anticipated clients; reliance on key personnel andcontracted relationships with third parties; the regulatoryenvironment in Australia, Canada, Malta, South Africa, Switzerland,Thailand and other international jurisdictions; the ability tocomplete any future potential transactions and the terms andconditions thereof; the application of federal, state, provincial,county and municipal laws; and the impact of increasing competition; those additional risks setout in MPX International’s public documents filed on SEDARat www.sedar.com , including its audited annualconsolidated financial statements for the financial years endedSeptember 30, 2021 and 2020, and the corresponding management’sdiscussion and analysis; and other matters discussed in this newsrelease. Although MPX International believes that the assumptions andfactors used in preparing the forward-looking statements arereasonable, undue reliance should not be placed on these statements,which only apply as of the date of this news release, and no assurancecan be given that such events will occur in the disclosed time framesor at all. Except where required by law, MPX International disclaimsany intention or obligation to update or revise any forward-lookingstatement, whether as a result of new information, future events, orotherwise.
For further information about MPXI,please contact:
MPX International Corporation
W. Scott Boyes, Chairman, President andCEO
T: +1-416-840-4703
E: info@mpxinternationalcorp.com
or visit one our websites:
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