MPXOF - MPX International Announces New Bridge Loan Financing
(TheNewswire)
TORONTO, ONTARIO – TheNewswire- January 7, 2022 – MPX International Corporation (“ MPXInternational ”, “ MPXI ” or the“ Corporation ”) (CSE:MPXI )(CNSX:MPXI.CN) ( OTC:MPXOF), a multinational diversifiedcannabis company, is pleased to announce that it isexpanding and revising the terms of its short-term loan financingannounced on October 5, 2021 (the “ 2 nd BridgeLoan ”). To date, the Corporation raisedC$2,485,173 (US$1,827,333) under the terms of the previously announcedterms. Pursuant to the revised terms, MPXI has arranged for a furthershort-term loan financing (the “ Revised Bridge Loan ”) of upto approximately C$3,800,000 (US$3,000,000) from a group of currentinvestors to be drawn down in several tranches. Initially, theCorporation will draw down on approximately C$1,193,626 (US$877,666)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 Revised Bridge Loanwill mature 6 months from the date of issuance (the “ Maturity Date ”) andbear interest at a rate of 12% per annum calculated in arrears andpayable in cash on the earlier of the Maturity Date or concurrentlywith the conversion of the Revised Bridge Loan at a 10% premium intothe 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 andDecember 31, 2021 coupon dates into the Revised BridgeLoan as well as an amount that allows forthe optional participation of deferred salaries into the RevisedBridge Loan. Further, the Corporation may increase the aggregateprincipal amount of the Revised Bridge Loan by up to 20% with the written approval of holders representing at least60% of the aggregate principal amount of the Revised Bridge Loan thenoutstanding.
The Corporation shall also issue common share purchasewarrants (the “ BonusWarrants ”) to Revised Bridge Loan lenders onthe basis of 10 Bonus Warrants for each C$1.36 (US$1.00) of principal.Each Bonus Warrant shall be exercisable for a period of sixty (60)months from the date of issuance and enable the holder thereof topurchase one Common Share at an exercise price equal to C$0.065 percommon share.
In further consideration for advancing their Revised Bridge Loan funds , the Corporation shall grant to the holder an option (the“ SIM Options ”) to acquire one (1) unit (a “ SIM Unit ”) of SalusInternational Management Ltd. (“ SIM ”) from theCorporation for each US$2.00 of Revised Bridge Loan funds advanced bythe holder. Such option shall be exercisable at a price of US$1.00 perSIM Unit for a period of sixty (60) months from the Closing Date. EachSIM Unit will be comprised of one (1) common share (the“ SIM Shares ”) in the capital of SIM and one-half (0.5) common sharepurchase warrant to acquire an additional SIM Share at an exerciseprice of US$1.50 per SIM Share until May 8, 2023. To date, theCorporation has issued 2,413,667 SIM Options.
Pursuant to the terms of the Revised Bridge Loan, theCorporation will immediately seek the approval from SCD holders to amend the DebentureIndenture by way of a 4 th supplementary debenture indenturesubstantially as follow:
(a) increase the maximumprincipal amount by up to US$10,000,000;
(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$0.05; 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$0.05 or convertible securities at a conversion price or exerciseprice less than C$0.05, the Conversion Price for the SCD’s issued onor after March 1, 2021 shall be reduced to such lowerprice ;
(c) provide that thepayment of interest payable in respect of the September 30, 2021Coupon Date shall be rolled into the Revised Bridge Loan;
(d) provide that the payment of interest payable in respect ofthe December 31, 2021 Coupon Date shall be rolled into the RevisedBridge Loan;
(e) provide that the interest payable in respect of the March 31,2022 Coupon Date be satisfied by the issuance of Units, subject to theminimum subscription price of US$1,000 ; and
all such other revisions or amendments to the DebentureIndenture as the Corporation may deem necessary or advisable to givefull effect to or to carry out the intent of the foregoingamendments.
The Corporation will also immediately seek 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 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;
(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 $0.065 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
(c) increase the maximum numberof SCD Warrants by up to 100,000,000 Warrants; and
(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 Revised Bridge Loan lendersa non-refundable cash origination fee in the amount equal to 2% of Revised Bridge Loan fundsadvanced.
Following the entering into of the 4 th supplementarydebenture indenture to the Debenture Indenture and the 4 th supplementarywarrant indenture to the Warrant Indenture, the principal amount ofthe Revised Bridge Loan shall automatically convert in the Offering ata conversion premium equal to ten percent (10%) of their principalamount.
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 any representation or warranty made by theCorporation pursuant to which the loan was issued was false orinaccurate in any material respect when made.
In connection with the closing of the Revised Bridge Loan, the Corporationwill pay an aggregate finder's fees of approximately C $37,944 (US$27,944) and issue an aggregate of 279,000 compensation warrants(the “ CompensationWarrants ”) to eligible finders. EachCompensation Warrant entitles the holder to purchase one Common Shareat a price of C $0.05 for a period of 24 monthsfrom the applicable closing date of the Revised Bridge Loan .
Insider Participation
The Revised Bridge Loancan be considered a Related Party Transaction for certain regulatorypurposes. The participation by certain insiders in the Revised BridgeLoan was for a total of C$566,666 (US$416,666), 4,166,667 BonusWarrants and 208,333 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.
Appointment of New Director
The Corporation is also pleased to announce that it hasappointed Timothy E. Childs to its board of directors.
Mr. Childs is an experienced investor and entrepreneuracross a range of sectors. He was a founder, Chairman and ChiefExecutive of Gatehouse Leasing Limited (“ Gatehouse ”), aDublin based lease finance company, which was subsequently sold to aninvestment group and, in turn, acquired by the Bank of Scotland. Timserved as Managing Director of Private Equity Investor plc, aninvestment trust fund of technology funds from 2000 to 2004. He alsoserved as C.E.O of St Peter Port Capital, a closed ended investmentcompany between 2007 and 2014. Since disposing of Gatehouse leasing in1990, he has invested in hundreds of private companies in multiplesectors, including biotechnology, information technology, materialscience, mining, oil & gas and cannabis. Many of these companieshave progressed to become publicly listed or have been acquiredyielding substantial returns for shareholders. Mr. Childs has providedmany of his portfolio companies with advice and guidance as they havedeveloped and progressed through their stages to deliver excitingreturns for investors.
The securities issued pursuant tothe Offering and the Revised 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 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
info@mpxinternationalcorp.com
or visit one our websites:
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