MONTREAL, QUEBEC–(Marketwired – April 27, 2016) – Orbite Technologies Inc. (TSX:ORT)(OTCQX:EORBF) (“Orbite” or the “Company”) today announces that it has entered into a letter of intent with Investissement Québec, acting as mandatory of the Government of Québec, whereby Investissement Québec has agreed to provide the Company with an aggregate financing of $15 million (the “Financing”). The Financing is expected to be comprised of the purchase of 10% convertible non-secured debentures (the “Debentures”) in the principal amount of $5 million, the purchase of class A shares of the Company in the amount of $5 million, together with the grant of a $4.9 million bridge loan secured by the Company’s 2016 refundable investment tax credits (“ITC”).
“These funds, as we receive them, will allow us to reaccelerate our activities at Cap-Chat towards completion of our HPA plant,” stated Glenn Kelly, CEO of Orbite. “Commissioning activities, which have been ongoing these past weeks, continue to meet expectations, and we will be providing updates on plant start-up timing as we close the various tranches of the financing. We are grateful to Investissement Québec, who have proven to be a stable and supportive partner, for their continued support and commitment. We are also pleased with the structure of the financing, which limits dilution compared to alternative financing options.”
Each Debenture consists of $1,000 principal amount of convertible unsecured debentures (the “Debentures”) of the Company, which will mature five years from the closing date and will bear interest at a rate of 10% per annum payable monthly. The interest accrued during the first 2 years will be capitalized and payable in cash at the maturity date of the Debenture or convertible into shares at the then market price, at the sole option of the holder. Each Debenture (capital only) will be convertible, at the option of the holder at any time prior to the maturity date, into class A shares of the Company at a price of $0.241 per share.
The equity portion of the Financing will be comprised of the purchase of 20,746,888 class A shares of Orbite at a price of $0.241 per share, for total gross proceeds of $5 million. The $4.9 million bridge loan will bear interest rate of 3.5% over the prevailing prime lending rate, which currently stands at 2.7%, payable monthly, collateralized against the Company’s ITC receivables for the 2016 financial year and repayable upon receipt by the Company of ITC payments for the 2016 financial year from tax authorities, but in no event later than July 23, 2018. Investissement Québec’s participation in the shares of Orbite together with that of its subsidiaries is currently below 10%, such that it is not an insider of the Company. Following the equity investment, and assuming no disposition of shares currently owned, Investissement Québec and its subsidiaries will collectively own approximately 13% of the issued and outstanding shares of the Company.
The above referenced Financing is conditional on receipt of final approval by the Government of Québec, due diligence review of the Company, regulatory approvals including from the Toronto Stock Exchange, and other customary conditions. In addition, Orbite will need to secure final approval from its lenders under its credit agreements. Securities issued pursuant to the Debenture and equity portion of the Financing are subject to a four month hold period from their respective date of issuance. Completion of the Financing will be staggered over the next weeks as approvals are obtained, and net proceeds will be used to finalize construction of Orbite’s HPA production facility and used as general working capital.
As part of the Financing, the Company has agreed to amend the terms of the 17,857,143 outstanding warrants issued to Ressources Québec inc., a subsidiary of Investissement Québec, in May 2014 as part of a private placement of 35,714,286 units, each comprised of one class A share and one-half of a warrant. The warrants will now be exercisable into shares of the Company at a price of $0.241 per share (instead of $0.33) and will expire on May 2, 2019 (instead of May 27, 2017). These amendments will become effective on the 10th business day from the date of this press release.
Orbite Technologies Inc. is a Canadian cleantech company whose innovative and proprietary processes are expected to produce alumina and other high-value products, such as rare earth and rare metal oxides, at one of the lowest costs in the industry, and in a sustainable fashion, using feedstocks that include aluminous clay, kaolin, nepheline, bauxite, red mud, fly ash as well as serpentine residues from chrysotile processing sites. Orbite is currently in the process of commercializing its first HPA Plant in Cap-Chat. The Company’s portfolio contains 16 intellectual property families, including 32 patents and 101 pending patent applications in 11 different countries and regions. The first intellectual property family is patented in Canada, USA, Australia, China, Japan and Russia. The Company also operates a state of the art technology development center in Laval, Québec, where its technologies are developed and validated.
Certain information contained in this document may include “forward-looking information”. Without limiting the foregoing, the information and any forward-looking information may include statements regarding projects, costs, objectives and future returns of the Company or hypotheses underlying these items. In this document, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. Forward-looking statements and information are based on information available at the time and/or the Company management’s good-faith beliefs with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Company’s control. These risks uncertainties and assumptions include, but are not limited to, those described in the section of the Management’s Discussion and Analysis (MD&A) entitled “Risk and Uncertainties” as filed on March 30, 2016 on SEDAR, including those under the headings “Recent increase in budgeted capital costs will require additional financing and may adversely impact our prospects”, “We will need to raise capital to continue our growth” and “Development Goals and Time Frames”.
The Company does not intend, nor does it undertake, any obligation to update or revise any forward-looking information or statements contained in this document to reflect subsequent information, events or circumstances or otherwise, except as required by applicable laws.