Banxa Holdings Inc revealed that it has forged a C$3.5 million convertible security funding agreement with Lind Global Fund II LP, an entity managed by Lind Partners, a New York-based institutional fund manager.
The Toronto-based Web3 payments and on-and-off ramp solutions provider said it plans to use the funding for licensing, technology, and as general working capital.
In a statement, Banxa CEO Holger Arians said, "We highly appreciate the confidence demonstrated by Lind since 2020 and we are excited about the opportunity this growth capital affords Banxa.”
READ: Banxa sells three non-core domain names and associated website assets for AU$3M
“Upon closing, Banxa will have over AU$12 million in cash and equivalents giving us well over 12 months of operational cash runway based on our current transaction volumes. We also have a clear line to profitability in the current financial year and we are confident of weathering the current crypto winter like we have done over the past eight years."
Phillip Valliere, a managing director at Lind Partners, noted that Lind has been a pre-IPO investor in Banxa back in 2020, and is “very pleased” to reinvest in the company and expand its relationship with Banxa’s growth-oriented management team.
"We look forward to working with them as they further expand and penetrate into new markets," added Valliere.
Funding agreement
Following the funding agreement, Lind has agreed to make an investment of C$3.5 million, less a closing fee of C$105,000, in exchange for a convertible security with a face value of C$4,200,000, representing a principal amount of C$3.5 million and a pre-paid interest amount of C$700,000 based on an implied interest rate of 10% per annum.
Starting seven months from closing, Banxa will begin repaying the convertible security in C$194,444 monthly installments. The firm said the pre-paid interest will accrue over a period of 24 months from closing and be calculated at the end of each calendar month. Once accrued, Lind will have the option, once every 90 days, to convert accrued pre-paid interest into common shares of Banxa at a conversion price equal to 85% of the market closing price of the shares on the TSX Venture Exchange on the day immediately prior to conversion.
Lind will be restricted from selling shares it receives in connection with the convertible security for a period of 4 months and one day after the closing. Lind will have the right to convert any portion of the principal amount into common shares at a price of $1.27 per share.
Banxa said it has the option to buy back the remaining outstanding convertible security at any time after the date which is 30 days after the lock-up period. If Banxa exercises the buy-back option, Lind will have the option to convert up to 33.3% of the outstanding principal amount into common shares at the conversion price, and 100% of the then accrued pre-paid interest into shares at the conversion price. During the term of the funding agreement, Lind and its affiliates will not short-sell the shares, noted Banxa.
In conjunction with the closing, Lind will receive 2.67 million common share purchase warrants. Each warrant allows the holder to buy one share at a price of $1.27 per share for a period of 24 months after the date of issuance.
Through its extensive network of local payment solutions paired with the required crypto licenses, Banxa gives its partners and projects access to global audiences with higher conversions.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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