Planet Based to issue debt shares to Baron, Coenda

Executive Summary

• Planet Based Foods Global Inc. has entered into binding term sheets to settle an aggregate of $800,000 in bona fide debt owed to related parties Baron Global Financial Canada Ltd. and Coenda Investments Holding Corp.
• The debt will be converted into subordinate voting shares of the company, with the share price determined by the greater of $0.05 or 75% of the closing share price on the trading day prior to the release.
• The transaction relies on exemptions from formal valuation and minority approval under Multilateral Instrument 61-101 due to the company's serious financial difficulty, and a material change report has been filed to avoid an event of default.

Key Details

• Debt Amount: Aggregate of $800,000 in bona fide debt.
• Creditors: Baron Global Financial Canada Ltd. (provided compliance and financial services) and Coenda Investments Holding Corp. (paid operating expenses and working capital advances).
• Settlement Mechanism: Issuance of subordinate voting shares.
• Share Price Formula: The number of shares issued equals the debt amount divided by the greater of:
  • (i) $0.05; or
  • (ii) 75% of the closing price of the company's shares on the CSE on the trading day immediately prior to the dissemination of the news release.
• Hold Period: Shares are subject to a four-month hold period under applicable Canadian securities laws.
• Regulatory Framework: The transaction is a related-party transaction under Multilateral Instrument 61-101.
• Exemptions: The company intends to rely on exemptions from formal valuation and minority approval (sections 5.5(g) and 5.7(1)(e) of MI 61-101) based on serious financial difficulty, improvement of financial position, and reasonable terms.
• Material Change Report: Filed concurrently with the release pursuant to Section 5.2 of MI 61-101.
• Default Risk: An event of default would occur if the debt is not repaid within five business days following demand; the early filing of the material change report was necessary to avoid this default.
• Conditions Precedent: Finalization of definitive debt settlement agreements and approval by the audit committee and independent directors.

Notable Quotes

• "The debt settlement agreements therefore constitute related-party transactions under MI 61-101."
• "The company views it as reasonable and necessary to file its material change report fewer than 21 days prior to the anticipated closing of the debt settlement agreements, so as to avoid an event of default."