TORONTO, ONTARIO - TheNewswire - May 9, 2022 – MPX International Corporation ("MPX International", "MPXI" or the "Corporation") (CSE:MPXI) (OTC:MPXOF), a multinational diversified cannabis company, is pleased to announce that it has drawn down on additional loan proceeds pursuant to the terms of the Revised Bridge Loan previously announced on January 7, 2022 and has negotiated revisions with its debenture holders to effectively defer any principal obligations until December 31, 2023.
"These amendments to the Debenture Indenture offer the Corporation the opportunity to commit management attention, capital and cash flows to the further development of its growing operations in Canada, Malta, Switzerland, Thailand and South Africa where progress was negatively impacted by the extended Covid pandemic," said W. Scott Boyes, Chairman, President and Chief Executive Officer of MPXI. "Simultaneously, and as previously announced on October 5, 2022, the Special Committee of the Board continues to explore potential restructuring, sale or merger opportunities for its European and Canadian businesses."
To date, the Corporation has received approximately C$5,372,000 (US$3,950,000) from lenders advancing funds pursuant to the Revised Bridge Loan and the Corporation has issued 39,496,000 common share purchase warrants (the "Bonus Warrants") as a bonus for advancing such funds as well as 1,974,858 options (the "SIM Options") to acquire units of Salus International Management Ltd. ("SIM") from the Corporation. Each common share purchase warrant (the "Bonus Warrants") shall be exercisable for a period of sixty (60) months from the date of issuance and enables the holder thereof to purchase one common share in the capital of the Corporation (a "Common Share") at an exercise price equal to C$0.065 per Common Share. Each SIM Option will allow the holder to acquire one (1) unit (a "SIM Unit") of Salus International Management Ltd. ("SIM") from the Corporation for each US$2.00 of Bridge Loan funds advanced by the holder. Such option shall be exercisable at a price of US$1.00 per SIM Unit for a period of sixty (60) months from the Closing Date. Each SIM Unit will be comprised of one (1) common share (the "SIM Shares") in the capital of SIM and one-half (0.5) common share purchase warrant to acquire an additional SIM Share at an exercise price of US$1.50 per SIM Share until May 8, 2023.
The Corporation will use the proceeds from the loan to fund product and facility development and for general corporate and working capital purposes.
The Revised Bridge Loan will mature 6 months from the date of issuance (the "Maturity Date") and is convertible at a 10% premium into the non-brokered private placement offering of units (the "Units") whereby the Corporation raised C$15,355,760 (US$11,291,000) between June 30, 2020 and August 31, 2021 (the "Offering") pursuant to: (a) the debenture indenture dated June 30, 2020 entered into between the Corporation and AST Trust Company (Canada) (the "Debenture Trustee") as amended by the supplemental debenture indenture dated September 16, 2020, the second supplemental debenture indenture dated December 18, 2020 and the third supplemental debenture indenture dated June 24, 2021 (as amended, supplemented or otherwise modified from time to time) providing for the issuance of 12% secured convertible debentures of the Corporation (each, an "SCD") in the aggregate principal amount of up to C$12,000,000 (US$7,500,000) (the "Debenture Indenture"); and (b) the warrant indenture dated June 30, 2020 entered into between the Corporation and AST Trust Company (Canada) (the "Warrant Agent") as amended by the supplemental warrant indenture dated September 16, 2020, the second supplemental warrant indenture dated December 18, 2020 and the third supplemental warrant indenture dated June 24, 2021 (as amended, supplemented or otherwise modified from time to time) providing for the issuance of up to 84,000,000 common share purchase warrants (each, an "SCD Warrant") (the "Warrant Indenture").
Pursuant to the terms of the Bridge Loan, the Corporation has obtained the approval from SCD holders to amend the Debenture Indenture by way of a 4th supplementary debenture indenture substantially as follow:
(a) increase the maximum principal amount by up to US$10,000,000;
(b) amend the definition of "Conversion Price" such that the dollar amount for which each Common Share may be issued upon the conversion of SCDs in accordance with the provisions of the Debenture Indenture, shall, subject to adjustment as provided for herein, be C$0.03 per Common Share;
(c) amend the definition of "Maturity Date" such that the date of maturity for the SCDs, shall be December 31, 2023
(d) provide that the payment of interest payable in respect of the Coupon Dates of September 30, 2021, December 31, 2021 and March 31, 2022 shall be rolled into the Revised Bridge Loan;
(e) provide that the payment of interest payable in respect of the Coupon Dates of June 30, 2022, September 30, 2022 and December 31, 2022 may be satisfied, at the sole option of the Corporation, through the issuance of Units; and
(f) all such other revisions or amendments to the Debenture Indenture as the Corporation may deem necessary or advisable to give full effect to or to carry out the intent of the foregoing amendments.
In addition, the Corporation has obtained the approval from SCD Warrant holders to amend the Warrant Indenture by way of a 4th supplementary warrant indenture substantially as follows:
(a) amend the second preamble such that each Unit consists of one 12% SCD and, prior to September 1, 2021, 7,000 Warrants and on or after September 1, 2021, 10,000 Warrants;
(b) amend the definition of "Exercise Price" such that at any time the price at which a Common Share may be purchased by exercise of a Warrant is $0.20 per Common Share for Warrants issued prior to September 1, 2021 and $0.065 per Common Share for Warrants issued on or after September 1, 2021, payable in immediately available Canadian funds, subject to certain provisions of the Warrant Indenture; and
(c) increase the maximum number of SCD Warrants by up to 100,000,000 Warrants; and
(d) all such other revisions or amendments to the Warrant Indenture as the Corporation may deem necessary or advisable to give full effect to or to carry out the intent of the foregoing amendments.
The Corporation has paid in cash to the Revised Bridge Loan lenders a non-refundable cash origination fee in the amount equal to 2% of Revised Bridge Loan funds advanced.
The Corporation is now in the process of converting all outstanding Bridge Loan amounts into the Offering at a conversion premium equal to ten percent (10%) of their principal amount.
In connection with the closing of the Revised Bridge Loan, the Corporation will pay aggregate finder's fees of approximately C$79,152 (US$58,200) and issue an aggregate of 582,500 compensation warrants (the "Compensation Warrants") to eligible finders. Each Compensation Warrant entitles the holder to purchase one Common Share at a price of C$0.065 for a period of 24 months from the applicable closing date of the Revised Bridge Loan.
As previously announced, the Revised Bridge Loan can be considered a Related Party Transaction for certain regulatory purposes. The aggregare participation by certain insiders in the Revised Bridge Loan was for a total of C$1,606,000 (US$1,250,000), an origination fee of C$34,000 (US$25,000), 12,500,000 Bonus Warrants and 625,000 SIM Options.
It is important to note that the Revised Bridge Loan is exempt from valuation and minority approval requirements which might otherwise result from the participation by insiders due to: (1) the Corporation, as a CSE issuer, not being listed on a designated market; and (2) the fair market value of the Revised Bridge Loan, insofar as the Revised Bridge Loan involves such interested parties, is less than C$2,500,000.
To the knowledge of the Corporation, after reasonable inquiry, none of the related parties have knowledge of any material information concerning the Corporation or its securities that has not been generally disclosed.
The sole independent director to the transactions (the "Special Committee") reviewed the Revised Bridge Loan and determined that as a CSE issuer MPXI is not listed on a specified market and the fair market value of the Revised Bridge Loan, in so far as it involves related parties, is not more than $2,500,000. The Special Committee recommended that the board of directors of the Corporation (the "Board") approve the Revised Bridge Loan. Accordingly, the Revised Bridge Loan is exempt from minority shareholder approval and formal valuation requirements of MI 61-101.
The Revised Bridge Loan is closing in less than 21 days due to the limited number of investors to the Revised Bridge Loan, all investment agreements being properly completed and received, and all loan proceeds having been forwarded, which shorter period is reasonable in the circumstances. MI 61-101 requires if a material change report is filed less than 21 days before the expected date of the closing of the transaction, an explanation is to be provided why the shorter period is reasonable or necessary in the circumstances.
About MPX International Corporation
MPX International Corporation is a multinational diversified cannabis company focused on developing and operating assets across the international cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient. With current operations spanning four continents in Canada, Switzerland, South Africa, Malta and Thailand as well as evolving partnership and distribution opportunities in other jurisdictions, MPXI continues to position itself as an emergent global participant in the cannabis industry.
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, MPX International's objectives and intentions. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; the Corporation's ability to effectively deal with the restrictions, limitations and health issues presented by the COVID-19 pandemic; future cannabis pricing; cannabis cultivation yields; costs of inputs; its ability to market products successfully to its anticipated clients; reliance on key personnel and contracted relationships with third parties; the regulatory environment in Australia, Canada, Malta, South Africa, Switzerland, Thailand and other international jurisdictions; the ability to complete any future potential transactions and the terms and conditions thereof; the application of federal, state, provincial, county and municipal laws; and the impact of increasing competition; those additional risks set out in MPX International's public documents filed on SEDAR at www.sedar.com, including its audited annual consolidated financial statements for the financial years ended September 30, 2021 and 2020, and the corresponding management's discussion and analysis; and other matters discussed in this news release. Although MPX International believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, MPX International disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
For further information about MPXI, please contact:
MPX International Corporation
W. Scott Boyes, Chairman, President and CEO
or visit one our websites:
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