Charbone enters $10M term sheet with RiverFort

Executive Summary

• Charbone Hydrogen Corp. has entered into a term sheet for a secured convertible loan facility of up to $10 million with RiverFort Global Capital Ltd., marking a key milestone in its growth and financing strategy.
• The facility includes an initial $2.15 million drawdown at closing, with subsequent tranches of up to $3 million and $4.85 million available subject to mutual agreement and customary conditions.
• Proceeds will be used to advance hydrogen production capacity investments, specifically accelerating the Sorel-Tracy project, and to pursue industrial gases growth, while the loan is secured by a first-rank mortgage on the project.

Key Details

• Facility Size & Structure: Up to $10 million secured convertible loan, structured in multiple drawdowns over a three-year term.
• Initial Drawdown: $2.15 million payable at closing of the definitive agreement (subject to TSX Venture Exchange approval).
• Subsequent Drawdowns: Up to $3 million may be advanced within six calendar months of the first drawdown; the remaining $4.85 million will be available during the loan term, subject to mutual agreement.
• Conversion Terms (First Drawdown): Lender's option to convert into units (1 common share + 0.3 warrant) at a conversion price of $0.15 per unit.
• Conversion Terms (Subsequent Drawdowns): Lender's option to convert into common shares at a 25% premium to the five-day volume-weighted average price (VWAP) of the common shares immediately preceding the drawdown date.
• Warrant Terms: Each whole warrant issued with the first drawdown is exercisable to acquire one common share at $0.195 per share for 48 months (maximum five years from closing).
• Interest & Repayment: 12% annual interest payable in cash every four months. Each drawdown is repayable over 18 months. If not converted, 10% of the first drawdown is repaid at six months, 20% at 12 months, and 70% at maturity.
• Fees: 5% implementation fee on the first drawdown payable in cash at closing; $20,000 non-refundable due diligence fee already paid.
• Security: Secured by a first-rank universal mortgage on Charbone Hydrogen Quebec Inc. (Sorel-Tracy project).
• Hold Period: Securities issued upon conversion are subject to the statutory four-month hold period in Canada.
• Use of Proceeds: Growth capital to advance hydrogen production capacity investments, accelerate development timelines, and pursue industrial gases growth.
• Additional Corporate Action: Partial conversion of the September 2025 convertible replacement debentures (originally announced Oct. 1, 2025) totaling $1.15 million.

Notable Quotes

• Benoit Veilleux, CFO & Corporate Secretary: "This first step in establishing a strategic financing with RiverFort represents a transformative step for Charbone. It not only provides the capital to accelerate our hydrogen production projects, including our Sorel-Tracy project, but also gives us the flexibility to pursue industrial gases growth. With this long-term partner and a strengthened balance sheet, we are well positioned to execute our growth strategy and create sustainable shareholder value."