CoTec Holdings closes $12M convertible debenture private placement

CoTec Holdings Corp. (TSXV: CTH)(OTCQX: CTHCF) has completed an initial closing of a non-brokered private placement of unsecured convertible debentures totaling $12,059,000 in aggregate principal amount, according to a company statement.

The debentures carry an interest rate of 12.5% per annum, calculated and payable semi-annually in arrears, with the first payment due February 28, 2027. The debentures mature September 10, 2031 and are convertible at the holder's option into common shares of the company. Interest is payable only in cash.

CoTec said it intends to use the net proceeds to fund equipment purchases for its HyProMag USA permanent magnet recycling joint venture, as well as for working capital and general corporate purposes.

The company expects to complete an additional closing of the offering, subject to regulatory approvals including from the TSX Venture Exchange. Kings Chapel International Ltd., an existing insider and control person of CoTec, has agreed to backstop up to $5 million in debentures at the additional closing to the extent third-party subscriptions fall short. Kings Chapel is also eligible to receive a 2% cash finder fee on gross proceeds from third-party investors for the backstopped portion. Julian Treger, CoTec's chief executive officer and a director, is a beneficiary of a family trust associated with Kings Chapel.

In connection with the initial closing, CoTec paid cash fees and compensation warrants to several finders, including $275,000 and 157,143 warrants to FM Global Markets Inc., $217,990 and 129,023 warrants to Integrity Capital Group Inc., $7,800 to Kernaghan & Partners Ltd., and $27,100 and 15,486 warrants to Richmond Partners GmbH.

Insider participation in the transaction classified it as a related-party transaction under Multilateral Instrument 61-101. CoTec said it is relying on exemptions from formal valuation and minority shareholder approval requirements, as the transaction value does not exceed 25% of the company's market capitalization.

Securities issued are subject to a statutory hold period of four months plus one day from the issuance date under Canadian securities law.

You May Also Be Interested In

• BMO Capital Starts HCA Healthcare Inc (HCA) at Outperform
• Four companies sign MoU to deploy BWRX-300 reactors in Europe and UK
• DelphX launches private placement to raise up to C$56,000