Zefiro settles debt of $1.79-million (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: Aggregate of $1,790,000 (U.S.) in outstanding secured loan debt was eliminated.
• Liquidity Secured: Approximately $447,500 (U.S.) in cash added to the balance sheet from the 25% cash portion of the warrant exercise price.
• Warrant Exercise: Credititors exercised an aggregate of 10.79 million common equity warrants.
• Settlement Structure:
  • 75% of Warrant Exercise Price: Satisfied via dollar-for-dollar set-off against principal amounts owing.
  • 25% of Warrant Exercise Price (~$447,500): Paid by creditors to Zefiro in cash.
  • Remaining 25% of Principal Debt: Settled through the issuance of 1,409,589 common shares at a deemed price of 44 cents per share.
  • Accrued Interest: Settled through the issuance of 1,014,904 common shares at a deemed price of 44 cents per share (representing 18% per annum interest that would have accrued).
• Total Shares Issued: 2,424,493 common shares issued to creditors (1,409,589 for principal settlement + 1,014,904 for interest settlement).
• Use of Proceeds: The $447,500 raised is intended to retire other near-term debt and for general working capital purposes.
• Impact on Maturities: 2026 debt maturities reduced by approximately 64%.
• Outstanding Debt: $690,000 (U.S.) principal amount 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 under Canadian securities laws.
• 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.
  • Shares Issued to Flax: 1,083,573 debt shares.
  • Total Holdings: Upon completion, Ms. Flax holds 7,132,448 common shares.
  • Regulatory Compliance: Exemptions from formal valuation and minority approval requirements of MI 61-101 were relied upon as the fair market value did not exceed 25% of market capitalization. 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."