Avant Brands to retire $1.77-million of debt

Executive Summary

• Avant Brands Inc. has entered into a debt settlement agreement to retire approximately $1.77 million of its unsecured convertible debenture through the issuance of 1.9 million units at $0.935 per unit.
• The transaction, expected to close in March, will significantly restructure the company's balance sheet, leaving a remaining debenture balance of ~$900,000 and a secured credit facility balance of ~$728,000.
• The deal eliminates quarterly principal and 10% cash interest payments on the retired amount, improves the debt-to-equity ratio, and includes a 19.99% beneficial ownership cap to prevent control changes.

Key Details

• Transaction Structure: Debt settlement with an institutional investor to permanently extinguish $1,776,500 of the amended and restated unsecured convertible debenture.
• Consideration & Quantity: Issuance of 1.9 million units at a deemed price of $0.935 per unit (non-cash debt settlement).
• Unit Composition: Each unit comprises one common share and one-half of one share purchase warrant.
• Warrant Terms: Each full warrant carries a 5-year term from closing, with an exercise price of $0.935. Includes an acceleration provision: warrants expire in 30 days if the TSX VWAP reaches or exceeds $1.75 for 10 consecutive trading days.
• Remaining Debt Profile: Debenture principal reduced from $3.9 million to ~$900,000; secured credit facility reduced from $3.5 million to ~$728,000.
• Capital Table Safeguards: Creditor is bound by a strict 19.99% beneficial ownership undertaking post-issuance to protect against creating a new control person under TSX policies.
• Regulatory & Hold Periods: Subject to TSX approval; shareholder approval not required; all issued securities subject to a 4-month and 1-day statutory hold period under Canadian securities laws.
• Expected Closing: During the month of March.
• Financial Impact: Eliminates quarterly cash outflows for principal and 10% interest on the retired debt, immediately improving the debt-to-equity ratio and optimizing capital efficiency.

Notable Quotes

• Norton Singhavon, Founder & CEO: "Following a fiscal year defined by record operational performance, strategically reducing our largest debt obligation is a key component of our capitalization strategy. Executing this retirement at a premium to market further optimizes our balance sheet efficiently, significantly reduces our quarterly cash outflow obligations and demonstrates the strong confidence our institutional partners have in Avant's long-term trajectory."