Forward Water Technologies Corp (TSX-V:FWTC) and Fraser Mackenzie Accelerator Corp have finalized a definitive agreement for their merger and concurrent financing, significantly revising initial terms to include a $1 million investment from an arm's length lead investor.
The updated agreement revises the initial terms set out in their previous joint announcements on May 14 and June 18, 2024.
The transaction will serve as FMAC's qualifying transaction under TSX Venture Exchange policies, with Forward Water Technologies becoming the resulting issuer.
As per the new term sheet, the transaction will follow a 10-for-1 consolidation of FWTC common shares. FMAC shareholders will receive approximately 0.95 FWTC shares for every FMAC share on a post-consolidation basis.
As a result of the exchange, 19,547,931 FWTC shares will be issued on a post-consolidation basis, reflecting the current 20,571,000 FMAC shares outstanding. Additionally, FMAC options and warrants will be converted into equivalent FWTC securities, with adjustments made according to the new exchange ratio.
In a concurrent financing, FMAC aims to raise between $1.4 million and $1.9 million through the sale of subscription receipts priced at $0.107 each. Each receipt will convert into one FMAC share and one-half of an FMAC warrant, allowing the holder to purchase FMAC shares at $0.15 per share within three years.
If FWTC secures up to $200,000 in bridge financing before the transaction, the target amounts for the concurrent financing will be proportionally reduced.
FMAC has also advanced a total of $175,000 to FWTC as part of a secured loan arrangement. The loan, bearing a 20% interest rate starting 120 days after the agreement date, will mature on December 31, 2024. TSXV has approved FMAC to lend up to $250,000 to FWTC.