MPXOF - MPX International Announces Bridge Loan Financing
(TheNewswire)
TORONTO, ONTARIO – TheNewswire- October 5, 2021 – MPX International Corporation (“ MPXInternational ”, “ MPXI ” or the“ Corporation ”) (CSE:MPXI )(CNSX:MPXI.CN) ( OTC:MPXOF), a multinational diversifiedcannabis company, is pleased to announce thatfollowing the successful bridge loan announced on April 16, 2021, ithas arranged for a further short-term loan financing (the“ Bridge Loan ”) of up to approximately C$3,800,000 (US$3,000,000) from agroup of current investors to be drawn down in several tranches.Initially, the Corporation will draw down on approximately C$1,224,000(US$900,000) of loan proceeds immediately.
The Corporation will use the proceeds from the loan tofund product and facility development and for general corporate andworking capital purposes.
The Bridge Loan willmature 6 months from the date of issuance (the “ Maturity Date ”) andbear interest at a rate of 12% per annum calculated in arrears and payable in cash on the earlier ofthe Maturity Date or concurrently with the conversion of the BridgeLoan 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 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 dentures of the Corporation (each, an “ SCD ”) in theaggregate principal amount of up to C$12,000,000 (US$7,500,000) (the“ DebentureIndenture ”) and the warrant indenture datedJune 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 secondsupplemental warrant indenture dated December 18, 2020 and the thirdsupplemental warrant indenture dated June 24, 2021 (as amended,supplemented or otherwise modified from time to time) providing forthe issuance of up to 84,000,000 common share purchase warrants (each,an “ SCD Warrant ”) (the“ WarrantIndenture ”) .
In addition, and subject to approval from holders ofSCDs, the Corporation may roll up the interest payable in respect of the September 30, 2021 CouponDate into the Bridge Loan and with thewritten approval of holders representing at least 60% of the aggregateprincipal amount of the Bridge Loan then outstanding increase theaggregate principal amount of the Bridge Loan by up to 20%
The Corporation shall also issue common share purchasewarrants (the “ BonusWarrants ”) to Bridge Loan lenders on the basisof 10 Bonus Warrants for each C$1.36 (US$1.00) of principal. EachBonus Warrant shall be exercisable for a period of sixty (60) monthsfrom the date of issuance and enable the holder thereof to purchaseone Common Share at an exercise price equal to C$0.12 per commonshare.
In further consideration for advancing their Bridge Loan funds , theCorporation shall grant to the holder an option (the “ SIM Options ”) toacquire one (1) unit (a “ SIMUnit ”) of Salus International Management Ltd.(“ SIM ”) from the Corporation for each US$2.00 of Bridge Loanfunds advanced by the holder. Such option shall be exercisable at aprice of US$1.00 per SIM Unit for a period of sixty (60) months fromthe Closing Date. Each SIM Unit will be comprised of one (1) commonshare (the “ SIMShares ”) in the capital of SIM and one-half(0.5) common share purchase warrant to acquire an additional SIM Shareat an exercise price of US$1.50 per SIM Share until May 8,2023.
Pursuant to the terms of the Bridge Loan, theCorporation will immediately seek the approvalfrom SCD holders to amendthe Debenture Indenture by way of a 4 th supplementarydebenture indenture substantially as follow:
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(a) increase the maximumprincipal amount by up to US$5,000,000;
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(b) amend the definition of “Conversion Price” such that: (i)the conversion price of the SCDs issued: (A) prior to March 1, 2021shall be equal to C$0.12; (B) on or after March 1, 2021 shall be equalto C$0.09; and (C) subject to the approval and policies of theCanadian Securities Exchange (the “ CSE ”), if theCorporation sells any capital stock to any other investor (other thanwith respect to the Offering) for cash at a price per share lower thanC$0.09 or convertible securities at a conversion price or exerciseprice less than C$0.09, the Conversion Price for the SCD’s issued onor after September 1, 2021 shall be reduced to such lowerprice ;
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(c) provide that the payment of interest payablein respect of the September 30, 2021 Coupon Date shall be rolled intothe Bridge Loan;
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(d) provide thatthe interest payable in respect of the December 31, 2021 Coupon Datebe satisfied by the issuance of Units, subject to the minimumsubscription price of US$1,000 ; and
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(e) 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.
The Corporation will also immediately seek the approval from SCD Warrant holders toamend the Warrant Indenture by way of a 4 th supplementarywarrant indenture substantially as follows:
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(a) amend the second preamblesuch that each Unit consists of one 12% SCD and, prior to September 1,2021, 7,000 Warrants and on or after September 1, 2021, 10,000Warrants;
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(b) amend the definition of“Exercise Price” such that at any time the price at which a CommonShare may be purchased by exercise of a Warrant is$0.20 per CommonShare for Warrants issued prior to September 1, 2021 and $0.12 perCommon Share for Warrants issued on or after September 1, 2021,payable in immediately available Canadian funds, subject to certainprovisions of the Warrant Indenture ; and
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(c) increase the maximum numberof SCD Warrants by up to 50,000,000 Warrants; and
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(d) all such other revisions oramendments to the Warrant Indenture as the Corporation may deemnecessary or advisable to give full effect to or to carry out theintent of the foregoing amendments.
The Corporation shall pay in cash to the Bridge Loan lenders a non-refundable cash origination fee in the amount equal to 2% of BridgeLoan funds advanced.
Following the entering into ofthe 4 th supplementary debenture indenture to the Debenture Indentureand the 4 th supplementary warrant indenture to the WarrantIndenture, the principal amount of the BridgeLoan shall automatically convert in the Offering at a conversionpremium equal to ten percent (10%) of their principal amount.
Each of the following events constitutes an event ofdefault: (a) the Corporation fails to pay when due, after anyapplicable grace periods, any outstanding principal amount hereunderor any accrued and unpaid interest on such principal amount; (b) theCorporation shall not have complied with its covenants; and (c) if anyrepresentation or warranty made by the Corporation pursuant to whichthe loan was issued was false or inaccurate in any material respectwhen made.
In connection with the closing of the Bridge Loan, theCorporation will pay an aggregate finder's fees ofapproximately C $35,768(US$26,300) and issue an aggregate of263,000 compensation warrants (the “ Compensation Warrants ”) to eligible finders. Each Compensation Warrantentitles the holder to purchase one Common Share at a priceof C $0.12 for a period of 24 months from the applicable closing dateof the Bridge Loan .
Insider Participation
The Bridge Loan can beconsidered a Related Party Transaction for certain regulatorypurposes. The participation by certain insiders in the Bridge Loan wasfor a total of C$639,200 (US$470,000), 4,700,000 Bonus Warrants and235,000 SIM Options.
It is important to note that the Bridge Loan is exemptfrom 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 Bridge Loan, insofar as theBridge 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 Bridge Loan anddetermined that as a CSE issuer MPXI is not listed on a specifiedmarket and the fair market value of the Bridge Loan, in so far as itinvolves related parties, is not more than $2,500,000. The SpecialCommittee unanimously recommended that the board of directors of theCorporation (the “ Board ”) approve the Bridge Loan.Accordingly, the Bridge Loan is exempt from minority shareholderapproval and formal valuation requirements of MI 61-101.
The Bridge Loan is closing in less than 21 days due tothe limited number of investors to the Bridge Loan, all investmentagreements being properly completed and received, and all loanproceeds having been forwarded, which shorter period is reasonable inthe circumstances. MI 61-101 requires if a material change report isfiled less than 21 days before the expected date of the closing of thetransaction, an explanation is to be provided why the shorter periodis reasonable or necessary in the circumstances.
The Corporation also announces that it has engagedwith financial advisors in North America and Europe to assist theboard of directors (the “ Board ”) t o review,consider and evaluate opportunities that enhance shareholder value. These opportunities could include, among otherthings, an acquisition, a merger or other business combination, afinancing of the Corporation as a whole or one or more individualbusiness units / subsidiary level investments, a sale of assets orother forms of transactions that may be available to MPXI.
In conjunction with the strategic review, theCorporation’s Board has also formed a special committee to overseethe review process. The Board is committed to evaluating appropriateopportunities while concurrently supporting management and employeesin their delivery of services to customers and partners. The Boardbelieves that this course of action is in the best interests of theCorporation and its stakeholders.
The Board has not set a timetable for this process norhas it made any decisions related to any opportunities at this time.There can be no assurance that the exploration and review of suchopportunities will result in a transaction.
The securities issued pursuant tothe Offering and the Bridge Loan have not been, and will not be,registered under the United States Securities Act of 1933 , as amended, and may not be offered orsold in the United States or to, or for the account or benefit of,U.S. persons absent registration or an applicable exemption from theregistration requirements. This news release will not constitute anoffer to sell or the solicitation of an offer to buy nor will there beany sale of the securities in any State in which such offer,solicitation or sale would be unlawful .
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 which include cannabinoids astheir primary active ingredient. With current operations spanning fourcontinents in Canada, Switzerland, South Africa, Malta, Australia andThailand as well as evolving partnership and distributionopportunities in other jurisdictions, MPXI continues to positionitself 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 andother international jurisdictions; the ability to complete any futurepotential transactions and the terms and conditions thereof; theapplication of federal, state, provincial, county and municipal laws;and the impact of increasing competition; those additional risks set out in MPXInternational’s public documents filed on SEDAR at www.sedar.com , including its audited annualconsolidated financial statements for the financial years endedSeptember 30, 2020 and 2019, and the corresponding management’sdiscussion and analysis; and other matters discussed in this news release. Although MPXInternational believes that the assumptions and factors used inpreparing the forward-looking statements are reasonable, unduereliance should not be placed on these statements, which only apply asof the date of this news release, and no assurance can be given thatsuch events will occur in the disclosed time frames or at all. Exceptwhere required by law, MPX International disclaims any intention orobligation to update or revise any forward-looking statement, whetheras a result of new information, future events, or otherwise.
For further information about MPXI,please contact:
MPX International Corporation
W. Scott Boyes, Chairman, President andCEO
T: +1-416-840-4703
info@mpxinternationalcorp.com
or visit one our websites:
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