Comet Industries obtains $2M loan from private lenders

Executive Summary

• Comet Industries Ltd. has secured a $2-million non-dilutive debt financing to fund the ongoing development of its Iron Mask project in Kamloops, B.C.
• The loan is a one-year term loan (maturity Jan. 9, 2027) with a 10% annual interest rate, secured by a first-ranking mortgage over the Kamloops subdivision project lands.
• Proceeds are strictly restricted to completing environmental remediation, obtaining compliance certificates, and paying trade creditors/contractors for subdivision and construction activities.

Key Details

• Principal Amount: $2,000,000 CAD.
• Loan Structure: Secured, non-revolving term loan.
• Interest Rate: 10% per annum, calculated semi-annually not in advance.
• Repayment Terms: Monthly interest-only payments; maturity date of January 9, 2027.
• Prepayment: Allowed prior to maturity subject to payment of all accrued interest over the full term and the commitment fee.
• Commitment Fee: $20,000 added to the principal amount, accruing interest at the same 10% rate.
• Use of Proceeds:
  • Completion of environmental remediation work.
  • Obtaining a certificate of compliance from the Ministry of Environment and Parks.
  • Payment of trade creditors, contractors, subcontractors, and material suppliers related to subdivision and construction.
• Security: First-ranking mortgage over the lands comprising the Kamloops subdivision project, assignment of rents, assignment of project documentation, and a first-ranking general security agreement over all personal property related to the project (registered under BC Personal Property Security Act).
• Collateral/Security Details: The loan is secured by a first-ranking mortgage over the lands comprising the company's Kamloops subdivision project, together with an assignment of rents, an assignment of project documentation and a first-ranking general security agreement over all personal property related to the project.
• Repayment Source: Company anticipates repaying the principal using proceeds from the sale of lots in phase 1 of the Iron Mask project.
• Dilution: The loan is non-dilutive; it is not convertible into company securities without prior approval from the TSX Venture Exchange. No bonus securities, finder's fees, or other compensation were provided to lenders.
• Counterparties: Syndicate of four private lenders; all are arm's-length parties.

Notable Quotes

• "This financing provides Comet with the necessary capital to advance phase 1 of the subdivision while addressing environmental obligations and settling outstanding trade accounts," said management of Comet.
• "The structure allows the company to move forward efficiently with critical project milestones while preserving flexibility in a challenging capital markets environment," said Mike O'Reilly, president and chief executive officer of Comet.