Electra fully finances cobalt refinery through refi

Executive Summary

• Electra Battery Materials Corp. has closed a $34.5-million (U.S.) private placement financing and a $40-million (U.S.) debt equityization/restructuring, fully funding the construction and commissioning of North America's first cobalt sulphate refinery in Temiskaming Shores, Ontario.
• The debt restructuring reduces total debt from $67-million (U.S.) to $27-million (U.S.) by exchanging senior secured convertible notes for equity and new term loans, while significantly simplifying the capital structure and removing lender board appointment rights.
• The company secured $82-million (U.S.) total capital (including government commitments) to advance the refinery, which is expected to produce up to 6,500 tonnes of battery-grade cobalt sulphate annually, supporting North American supply chain resilience.

Key Details

• Private Placement Financing:
  • Gross proceeds: $34.5-million (U.S.).
  • Units issued: 46 million units (inclusive of full exercise of overallotment option).
  • Price: $0.75 per unit.
  • Agents: Cantor Fitzgerald Canada Corp. and ECM Capital Advisors Ltd.
  • Commission paid to agents: $1,851,331.52 (cash) plus 2,416,884 non-transferable warrants.
  • Warrant Terms: Each unit includes one warrant to purchase one common share at $1.25/share, exercisable 60 days post-closing until Oct. 22, 2028.
  • Insider Participation: CEO Trent Mell, CFO Marty Rendall, and other directors/officers purchased units; constitutes a related party transaction.
  • Use of Proceeds: Complete construction/ramp-up of cobalt refinery, black mass recycling program, repayment of $2-million (U.S.) unsecured promissory notes, restructuring expenses, and working capital.
• Debt Restructuring & Equityization:
  • Total Debt Reduction: Reduced from $67-million (U.S.) to $27-million (U.S.).
  • Exchange Terms (60% of Senior Secured Convertible Notes + Accrued Interest): Exchanged for units at a deemed price of $0.75 per unit.
  • Exchange Terms (40% of Senior Secured Convertible Notes + Accrued Interest): Exchanged for a new term loan and common shares at a deemed price of $0.90 per share.
  • New Term Loan Terms: 8.99% interest if paid in cash, or 11.125% if paid in kind; matures Oct. 22, 2028.
  • Prefinanced Warrants: Issued 31,735,657 prefinanced warrants to lenders to avoid exceeding 9.90% beneficial ownership thresholds; exercisable at $0.0001/share indefinitely.
  • Total Securities Issued to Lenders: 27,128,396 common shares, 55,041,712 warrants, and 31,735,657 prefinanced warrants.
  • Cancellation: 3,835,378 existing lender warrants cancelled.
  • Royalty Agreement Amendment: Extended royalty period from 5 to 7 years post-commercial production; increased aggregate cap from $6-million (U.S.) to $10-million (U.S.).
  • Redemption: $2-million (U.S.) unsecured 90-day promissory notes redeemed for $2.04-million (U.S.).
  • Board Rights: Lenders no longer have the right to appoint board members.
• Operational & Strategic Updates:
  • Refinery Capacity: Up to 6,500 tonnes of cobalt sulphate annually (enough for ~1 million vehicles).
  • Pipeline Projects: Expansion of Idaho cobalt project (Iron Creek), black mass recycling program, and evaluation of nickel sulphate refining capacity in North America.
  • Board Appointments: Added David Stetson, Gerard Hueber, and Jody Thomas to the board.
  • Corporate Engagement: Engaged Epstein Research for $7,500 (3-month period) for social media and content creation.
  • Investor Status: Whitebox Advisors, Highbridge Capital, and O'Connor/UBS ceased being joint actors.