Progressive Planet Solutions Inc (TSX-V:PLAN) said it has arranged a private placement that will reduce its bank debt and advance its growth strategy, offering four million non-brokered units at a price of 25 cents per unit for gross proceeds of $1 million.
Each unit in the offering will consist of one common share and one full warrant exercisable at 25 cents per share for a period of one year from issuance. The warrants will be subject to acceleration if the company's shares trade above 35 cents for 10 business days after the four-month hold expires.
The company said it may, in its discretion, increase the offering by an additional one million units (for additional proceeds of $250,000) prior to the closing of the financing.
"Our strategy is to increase our product margins," said Progressive Planet chief executive officer Steve Harpur in a statement. "In this inflationary period, with the current interest rate uncertainty, we feel it is prudent to quickly pay down all of our high-interest, short-term legacy debt with the proceeds of this share offering."
The proceeds from the private placement, along with current cash reserves, specifically, will be used to pay down $1.37 million in two high-interest bank loans.
Insiders have indicated they will participate in at least 45% of the financing ($450,000). Progressive Planet employees have also indicated they will participate in approximately 10% of the offering ($100,000), which will be closed on or before April 30, 2023.
Harpur added: "Upon completion of the placement, Progressive Planet's only remaining debt would be $6.65 million with a current interest rate of prime plus 75 basis points and with monthly interest and principal payments totalling approximately $63,000.”
“On the date of acquisition of Absorbent Products, Progressive Planet had $11 million in total debt. Upon completion of this placement and repayment of our two high interest loans, we will have $6.65 million in total long-term debt amortized over 24 years," he concluded.
Completion of the private placement is subject to regulatory approval, including the TSX Venture Exchange.
Progressive Planet is a well-established cleantech and manufacturing company based in Kamloops, British Columbia, in the heart of some of Canada's richest volcanic fields, which are the prime ingredient of its innovations. The company's products are in 10,000-plus retail stores across North America.
Contact the author at jon.hopkins@proactiveinvestors.com