Northstar Clean signs deal for site lease in Baltimore

Executive Summary

• Northstar Clean Technologies Inc. has entered into a non-binding agreement to lease a 54,000-square-foot facility in Baltimore, Maryland, marking its first commercial expansion into the United States.
• The company initiated permitting activities for the Baltimore site, with operations expected to commence in the second half of 2027. The facility is strategically located near strategic partner Tamko Building Products LLC.
• The company announced the issuance of common shares to satisfy interest obligations on various tranches of previously issued convertible debentures, noting that nearly $2.5 million in debentures has been converted to date.

Key Details

• U.S. Facility Lease Terms:
  • Location: Baltimore, Maryland.
  • Property: Existing 54,000-square-foot building with an additional three acres for outside storage and operational considerations.
  • Lease Duration: 10-year term with three separate five-year renewal options.
  • Timeline: Lease commences July 1, 2026; rent commences October 1, 2026.
  • Strategic Rationale: Avoids construction complexities, aligns with economic return targets (tipping fees, asphalt prices, shingle supply access), and is located 50 miles from Tamko Building Products LLC’s facility in Frederick, Md.
  • Tamko Agreement: Tamko has agreed to purchase the majority of the asphalt product produced from the first four U.S. facilities constructed and operated by Northstar.
  • Regulatory Status: Permitting activities have been initiated; formal start of the regulatory process.
  • Operational Start: Anticipated commencement of operations in the second half of 2027.
• Shares-for-Debt Transactions:
  • Purpose: Issuance of common shares to satisfy interest payable on various tranches of previously issued convertible debentures.
  • Conversion Activity:
    • Of the $1.44 million issued in December 2022, 97% has been converted into common shares.
    • Nearly $2.5 million in total convertible debentures has been converted to date.
  • Regulatory Compliance: Transactions involve insiders, constituting a related party transaction under Multilateral Instrument 61-101. The company intends to rely on exemptions from formal valuation and minority approval requirements.
  • Conditions: Closing is subject to customary conditions, including approval of the TSX Venture Exchange.
  • Share Status: All shares issued will be free of resale restrictions.

Notable Quotes

• Aidan Mills, President and CEO: "We are coming off a transformational year in which we completed construction of our Calgary facility and began ramping up operations. Announcing Baltimore as the location for our first U.S. facility is an excellent way to start the new year and a major step in our U.S. expansion and plans to supply Tamko's Frederick, Md., facility... This initial project represents our first entry into the U.S. market and reflects growing interest from U.S.-based strategic partners and investors who see the U.S. market as an important long-term opportunity in our scalable, circular asphalt-shingle-reprocessing solution."
• Greg Phaneuf, VP Corporate Development and CFO: "We are very appreciative of the continued support by our capital providers, namely holders of convertible debentures. By converting their original debt and taking common shares as interest payments, our financial supporters evidence a confidence in the long-term potential and value proposition for the company."