Burcon NutraScience Corp (TSX:BU, NASDAQ:BRCN) said it has struck a $10 million loan agreement with Large Scale Investments Limited to power joint venture operations and commercialization efforts in the plant-based food space.
Large Scale Investments is a wholly-owned subsidiary of Firewood Elite Limited, which is owned by Burcon director Alan Chan.
"We are pleased to have arranged this non-dilutive financing with a major shareholder of Burcon," said Peter Kappel, Burcon's interim CEO and chairman of the board. "We've laid the groundwork for additional strategic partnerships and with this support, we can continue our commercialization efforts."
READ: Burcon NutraScience inks term sheet with biggest shareholder for a proposed $10M credit facility
Burcon, which develops technology for plant-based proteins for foods and beverages, said it will use additional proceeds for partnering discussions for its plant-based protein technologies, continued research and development of Burcon's protein extraction and purification technologies, work on its intellectual property portfolio and for other general corporate purposes.
The loan amount will be available in two tranches of $5 million each. The first tranche, which is currently available to the company, has a maturity date of July 1, 2024 and the second tranche will have a maturity date that is 24 months from the closing date of such tranche.
Large Scale Investments will be paid a commitment fee of 1% of the undrawn amount of the loan amount under each tranche on the closing date of such tranche, and each annual anniversary of the closing date of such tranche, according to a statement.
The drawn portion of the loan amount will bear interest at a rate of 8% per annum. Interest on the principal balance will accrue monthly, not in advance, and will be payable on the maturity date of the applicable tranche.
Firewood currently indirectly holds 22,866,574 shares of Burcon, representing approximately 21.03% of the outstanding shares. The loan agreement was approved by the independent members of Burcon’s board of directors, with Alan Chan abstaining from the vote.
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