Progressive Planet Solutions Inc (TSX-V:PLAN) (PLAN) announced that it has engaged the Bank of Montreal (BMO) to underwrite the debt component of its proposed acquisition of Absorbent Products Ltd (APL).
The company said it has received terms from BMO to provide C$8,683,000 in total new secured debt under three separate loan facilities including: $723,000 loan facility at prime plus 1.75% for a period of six years; $990,000 loan facility at prime plus 1.25% for a period of five years; and $6,970,000 loan facility at prime plus 0.75% for a period of 25 years.
“Today marks another important milestone for Progressive Planet, having engaged Bank of Montreal to underwrite the debt component of the consideration,” Progressive Planet CEO Steve Harpur said in a statement.
READ: Progressive Planet inks binding share purchase agreement to acquire Absorbent Products Ltd
Progressive Planet also noted that completion of the underwriting and provision of the debt is subject to, among other things, the following terms and conditions:
- Payment of a non-refundable underwriting fee of $50,000. This $50,000 fee has been paid effective January 28, 2022;
- Completion of personal guarantees by three insiders of PLAN for an aggregate of $3 million for a period of three years; and,
- Registration of typical security interests associated with corporate lending, including but not limited to general security interests to be granted by PLAN and APL over their respective assets, and the registration of indebtedness mortgages on the five long-term industrial leases owned by APL.
It added that personal guarantees will be provided by the following individuals:
- George David Richardson to personally guarantee $1.25 million of the total debt for a period of three years;
- Peter Lacey to personally guarantee $1.25 million of the total debt for a period of three years; and,
- Chris Halsey-Brandt to personally guarantee $500,000 of the total debt for a period of three years.
“I wish to personally thank Dave, Peter, and Chris for undertaking these personal guarantees which enabled PLAN to borrow money at the terms outlined in this news release. We are truly grateful to have such commitment from key shareholders,” Harpur added.
In consideration for these personal guarantees, Progressive Planet said it intends to issue warrants to each of the guarantors as loan bonuses in the following amounts:
- George David Richardson – 3,472,222 warrants giving the right to purchase shares of PLAN at $0.36 per share for period of three years.
- Peter Lacey – 3,472,222 warrants giving the right to purchase shares of PLAN at $0.36 per share for period of three years.
- Chris Halsey-Brandt – 1,388,888 warrants giving the right to purchase shares of PLAN at $0.36 per share for period of three years.
As well, Progressive Planet reported that it has received written commitments in excess of the 13.5 million units announced in the private placement announced on December 24, 2021, and said it intends to rely on the overallotment option to complete the private placement.
The company added that it is now working on formalizing the terms and conditions to complete the debt financing and is also working to complete the terms and conditions to procure TSX Venture exchange’s final approval of the APL purchase transaction.
Progressive Planet is an emerging technology company providing innovative circular solutions and earth-friendly micronized minerals that naturally unlock sustainability benefits across the construction and agriculture industries.
Contact Sean at sean@proactiveinvestors.com