Kadestone Capital arranges $5-million private placement

Executive Summary

• Kadestone Capital Corp. has arranged a non-brokered private placement of secured convertible notes and common share purchase warrants for aggregate gross proceeds of up to approximately $5.0 million.
• The transaction is expected to close in one or more tranches, subject to regulatory approvals, including TSX Venture Exchange approval.
• Proceeds will be used to pay down debt and for general corporate purposes.

Key Details

• Transaction Structure: Non-brokered private placement of secured convertible notes and common share purchase warrants.
• Gross Proceeds: Up to approximately $5.0 million.
• Convertible Notes Terms:
  • Maturity: 36 months after issuance, subject to acceleration upon default.
  • Interest Rate: 10% per annum, compounded monthly, payable on redemption or conversion.
  • Conversion Price: 50 cents per common share at the option of the holder on maturity.
  • Interest Conversion: Subject to prior approval of the TSX-V.
  • Automatic Conversion: Triggers upon closing of an equity financing of not less than $25 million or completion of a sale/disposition of substantially all assets.
  • Discount on Automatic Conversion: Principal and accrued interest convert at a 20% discount to the price per security in the qualifying transaction (subject to TSX-V approval).
  • Change of Control: Conversion price equals the standard conversion price (interest portion subject to TSX-V approval).
  • Repayment: Company may repay principal and accrued interest at any time without penalty upon notice.
• Warrant Terms:
  • Quantity: Equal to the principal amount of notes subscribed, divided by the conversion price (50 cents).
  • Exercise Price: 60 cents per common share.
  • Term: 36 months, subject to customary adjustments.
• Use of Proceeds: Pay down debt and for general corporate purposes.
• Related Party Transactions: Insiders are anticipated to subscribe. The company intends to rely on exemptions from formal valuation and minority shareholder approval requirements under MI 61-101, as the fair market value involving insiders will not exceed 25% of market capitalization.
• Closing Timeline: Expected within 21 days of the announcement. No material change report will be filed at least 21 days before closing.
• Hold Period: Four-month statutory hold period applies to securities and underlying common shares.

Notable Quotes

• None provided in the text.