Zefiro Methane cuts debt by $1.79M (U.S.)

Executive Summary

• Zefiro Methane Corp. strengthened its balance sheet by eliminating $1.79 million in outstanding debt and securing approximately $447,500 in additional liquidity through loan satisfaction agreements with three creditors.
• The transaction involved the exercise of 10.79 million common equity warrants previously issued in May 2025, with 75% of the exercise price set off against principal debt and 25% paid in cash.
• The remaining 25% of the principal debt was settled via the issuance of common shares, and accrued interest was settled via additional share issuances, resulting in a 64% reduction in 2026 debt maturities.

Key Details

• Debt Elimination: Eliminated an aggregate of $1,790,000 (U.S.) in outstanding secured loan debt.
• Liquidity Secured: Added approximately $447,500 (U.S.) in cash to the balance sheet.
• Warrant Exercise: Credititors exercised an aggregate of 10.79 million common equity warrants.
• Settlement Structure:
  • 75% of the aggregate warrant exercise price was satisfied via dollar-for-dollar set-off against principal amounts owing.
  • 25% of the aggregate warrant exercise price (approx. $447,500) was paid by creditors to Zefiro in cash.
• Share Issuances for Principal: The remaining 25% of the aggregate principal amount of the secured loan was settled through the issuance of 1,409,589 common shares at a deemed price of 44 cents per share.
• Share Issuances for Interest: Zefiro issued 1,014,904 common shares at a deemed price of 44 cents per share to settle interest (18% per annum) that would have accrued on the creditors' portion of the loan.
• Use of Proceeds: The $447,500 raised is intended to retire other near-term debt and for general working capital purposes.
• Impact on Maturities: The transaction reduces 2026 debt maturities by approximately 64%.
• Outstanding Debt: The $690,000 (U.S.) principal amount of the secured loan and 4.16 million common equity warrants provided by a fourth creditor remain outstanding.
• Hold Period: Debt shares issued are subject to a statutory four-month-and-one-day hold period.
• Related Party Transaction: CEO Catherine Flax participated as a creditor, settling $800,000 (U.S.) in principal and $144,000 (U.S.) in future interest. This included the issuance of 1,083,573 debt shares to Ms. Flax. She now holds 7,132,448 common shares. The transaction was approved by the board with Ms. Flax abstaining.

Notable Quotes

• "Given my confidence in the continued growth and success of Zefiro, I am participating alongside other loan holders in funding the exercise of equity warrants and equitizing my remaining debt," said Zefiro chief executive officer Catherine Flax.
• "Today's transaction marks another meaningful step in Zefiro's turnaround. The company remains solely focused on the execution of Zefiro's stated goals -- namely, growing our core operating businesses and continued debt reduction."