Northstar Clean closes first tranche of financing

Executive Summary

• Northstar Clean Technologies Inc. has closed the first tranche of its previously announced $10-million (U.S.) non-brokered private placement of unsecured convertible debentures, raising $9-million (U.S.) in gross proceeds.
• The company has entered into a definitive subscription agreement for the remaining $1-million (U.S.) tranche, which is subject to customary closing conditions.
• The financing includes specific terms regarding interest payments, conversion mechanics, and finder's fees, alongside an update on the management of existing debt maturities.

Key Details

• Financing Structure: Non-brokered private placement of unsecured convertible debentures.
• Tranche 1 Status: Closed with gross proceeds of $9-million (U.S.).
• Tranche 2 Status: $1-million (U.S.) remaining; definitive subscription agreement signed, closing subject to customary conditions.
• Debenture Terms:
  • Term: Five years.
  • Interest Rate: 8% per annum on outstanding principal.
  • Interest Payment: Payable in cash semi-annually in arrears on June 30 and Dec. 31, commencing June 30, 2026.
  • Interest in Kind: Company may, at its option and subject to TSX Venture Exchange (TSX-V) approval, satisfy accrued interest by issuing common shares. The deemed issue price is the 30-day VWAP on TSX-V converted to USD.
  • Conversion Price: 20 U.S. cents per common share.
  • Conversion Option: Holder may convert at any time during the five-year term.
  • Forced Conversion: Company may force conversion upon 30-60 days' notice if the daily VWAP on TSX-V exceeds 75 Canadian cents for 90 consecutive trading days.
  • Prepayment: Not prepayable for 12 months without holder consent.
  • Hold Period: Statutory hold period of four months and one day from issuance (expiring July 31, 2026).
• Finder’s Fees (Tranche 1):
  • Paid to arm’s-length third parties.
  • Satisfied via issuance of approximately 3.7 million common shares.
  • Price: 20 Canadian cents per common share.
  • Subject to statutory hold period.
• Finder’s Fees (Tranche 2): Intends to pay similar fees on similar terms, subject to TSX-V acceptance.
• Use of Proceeds: Working capital requirements and other general corporate purposes.
• Debt Management Update (February 2023 Tranche):
  • Maturity Extension: Extended maturity from Feb. 28, 2026, to Feb. 28, 2027.
  • Outstanding Principal: Total extended principal is $525,000 (comprising $425,000 original principal + $100,000 converted back from non-convertible debenture).
  • Warrant Extension: Expiry date of 200,000 warrants extended to Feb. 28, 2027.
  • Interest Settlement: Company issued common shares to satisfy interest owing as of Feb. 28, 2026.
    • Total shares issued: 118,750 common shares.
    • Total interest settled: $23,750.
    • Recipients: Arm’s-length third parties and James Borkowski (independent director), who received 12,500 shares for $2,500 of interest.

Notable Quotes

• "Closing tranche 1 of this financing with a five-year term, conversion price at a premium to market and no warrant reflects a strong vote of confidence from our investors," said president and chief executive officer Aidan Mills. "We believe it underscores both the strength of our underlying technology and the team's ability to execute on our development plan. Importantly, the structure allows us to secure meaningful capital while minimizing dilution for existing shareholders."