Vicinity Motor Corp. (TSX-V:VMC) said it has received commitments for a non-brokered private placement of unsecured convertible debentures for gross proceeds of C$3.6 million.
"This private placement - supported by strategic investors with a lead order from Focus Asset Management - will accelerate production and deliveries, allowing us to monetize our US$150 million order backlog sooner," said William Trainer, founder and chief executive officer of Vicinity Motor in a statement.
"This capital injection, paired with our recent credit arrangements with RBC and the near-term start of production at our Ferndale facility, positions us for a breakout year. Our plan is now funded, and I look forward to updating investors with further details on our execution strategy on our fourth quarter 2022 earnings conference call in late March,” he added.
READ: Vicinity Motor commences operations in Ferndale, Washington
The company said the private placement is expected to close on or about March 24, 2023.
The convertible debentures are issued in denominations of C$1,000, bear interest at 15% a year, and mature 18 months from the closing date. Interest payments on the debentures have been deferred to the 12-month anniversary and/or maturity.
Each debenture is convertible at the holder's option into units of the company at any time prior to maturity at a conversion price of C$1.45. Upon conversion, each unit will consist of one common share of the company and 0.2 common share purchase warrants. Each warrant is exercisable into one common share of the company at an exercise price of C$1.45 for a period of 36 months following the closing of the private placement.
All securities issued under the private placement have a hold period of four months and a day from closing. The private placement is subject to final TSX Venture Exchange approval. In connection with the private placement, Vicinity will pay cash commissions to eligible finders in accordance with TSX Venture Exchange policy.
Vicinity Motors said certain insiders of the company are expected to participate in the private placement. This constitutes a related party transaction, which the company considers would be exempt from the formal valuation and minority shareholder approval requirements of Multilateral Instrument 61-101, as the fair market value of the debentures subscribed for by the insiders and the consideration paid would not exceed 25% of the company's market capitalization.
The convertible debentures issued pursuant to the private placement have not, nor will they be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, US persons in the absence of US registration or an applicable exemption from the US registration requirements.
Vicinity Motor is a North American supplier of electric vehicles for both public and commercial enterprise use. The company leverages a dealer network and close relationships with world-class manufacturing partners to supply its flagship electric, CNG and clean-diesel Vicinity buses, as well as the VMC 1200 electric truck to the transit and industrial markets.
Contact the author at jon.hopkins@proactiveinvestors.com