Vancouver, BC – good natured Products Inc. (TSX-V:GDNP) (the “Company” or “good naturedTM”) and Integral Wealth Securities Ltd. (the “Agent”) today announced the successful completion of the closing of a first tranche (the “First Tranche”) of its brokered private placement offering (the “Offering”) of convertible debenture units (the “Units”) announced on October 10, 2019 for aggregate gross proceeds of $2,740,000. The Company expects to close the remaining tranche of the Offering on or about January 31, 2020.
In the First Tranche, the Company has issued 2,740 Units at a price of $1,000 per Unit. Each Unit is comprised of a CAD $1,000 principal amount, 10% subordinated unsecured convertible debenture (each, a “Debenture”) due sixty (60) months from the closing date and 938 common share purchase warrants (the “Warrants”). Each Debenture is convertible at a conversion price of $0.23 per common share (“Share”) of the Company. Each Warrant entitles its holder to acquire one additional Share at a price of $0.16 per Share within the 24-month period following the closing of the First Tranche.
Proceeds of the First Tranche will be utilized for closing costs and to redeem a portion of the Company’s existing 10% convertible unsecured debentures due February 2022 (the “2018 Debentures”), of which $4,604,000 principal amount is currently outstanding. The 2018 Debentures will be partially redeemed at a 5% premium, plus accrued interest since August 28, 2019.
In connection with the closing of the First Tranche, the Company paid Integral Wealth Securities Ltd., plus certain members of the selling group, an aggregate cash commission of $170,050. The Company also issued to the Agent and certain members of the Agent’s selling group an option to purchase an additional 708,940 Shares from treasury at a price of $0.16, exercisable at any time within the 24-month period following the closing date of the First Tranche.
The closing of the First Tranche is subject to final approval by the TSX Venture Exchange (the “TSX-V”). The Units and Warrants issued by the Company in connection with the First Tranche are subject to a four month “hold period” expiring on May 1, 2020 under applicable securities laws.
The securities offered have not been, and will not be, registered under the U.S. Securities Act or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor in any other jurisdiction.
The Debentures will be subject to an acceleration right exercisable by the Company which will force the conversion of the Debentures into Shares at the $0.23 conversion price. This right is exercisable if the Company’s Shares trade at or above a volume-weighted average trade price of $0.33 on the TSX Venture Exchange on any 20 consecutive trading days. If the acceleration right is exercised by the Company, the conversion will occur immediately.
Related Party Participation in the Offering
Jim Zadra, Director of the Company, subscribed for 25 Units having a subscription price of $25,000. Following the closing of the First Tranche, Jim Zadra will beneficially own or control 477,264 Shares on a fully-converted basis (i.e., assuming conversion of the Debentures purchased in the First Tranche), representing approximately 0.5% of the issued and outstanding Shares on an undiluted basis.
As an insider of the Company participated in this Offering, it is deemed to be a “related party transaction” as defined under Multilateral Instrument 61-101—Protection of Minority Security Holders in Special Transactions (“MI 61-101”).
Each Share of the Company provides the holder with the right to one vote per Share. The Debentures and Warrants do not entitle the holder to any voting rights. Therefore, all Debentures and Warrants subscribed for pursuant to this Offering provide the subscriber, including the related party, with no additional votes at present but the holder thereof will have one vote per Share if and when issued upon the conversion of the Debentures or the exercise of the Warrants.
Other than the subscription agreement between the aforementioned insider and the Company relating to the issuance of the Units pursuant to the Offering, the Company has not entered into any agreement with an interested party or a joint actor with an interested party in connection with the Offering. Neither the Company, nor to the knowledge of the Company after reasonable inquiry, a related party, has knowledge of any material information concerning the Company or its securities that has not been generally disclosed.
The Offering is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 (pursuant to subsections 5.5(c) and 5.7(1)(b)) as it was a distribution of securities for cash and neither the fair market value of the Units distributed to, nor the consideration received from, interested parties exceeded $2,500,000. The Company has one or more independent directors in respect of the Offering who are not employees of the Company and all directors of the Company approved the Offering. The material change report in connection with the Offering was not filed 21 days in advance of the closing of the Offering for the purposes of Section 5.2(2) of MI 61-101 on the basis that the subscriptions under the Offering were not available to the Company until shortly before the closing.
About good natured Products Inc.
good natured® is producing and distributing one of North America’s widest assortments of better everyday products® made from the highest possible percentage of renewable, plant-based materials and no BPAs, phthalates or other chemicals of concern potentially harmful to human health and the environment.
By combining cutting-edge renewable material technology and the latest sustainable design features, good natured® creates planet-friendly products and packaging that do good for the planet, good for human health and good for business by driving incremental sales, minimizing waste and improving logistics, all bundled up in a fresh and friendly brand.
For more information: goodnatured.ca
About Integral Wealth Securities Ltd.
Integral is a private, independent investment dealer founded in 2003. We provide objective advice, investment transparency, and access to innovative products and solutions for our clients. Licensed by IIROC and headquartered in Toronto, we operate from seven offices in Canada.
Integral’s private client group is experienced advisors with a track record of results in providing sophisticated wealth management solutions for affluent clients. Integral’s capital markets capital markets group has established capabilities in market making, energy banking and private capital solutions. The group works closely with institutional and ultra-high-net-worth investors seeking attractive risk-adjusted returns through equity and debt investments in both public and private markets.
On behalf of the Company:
Paul Antoniadis – Executive Chair & CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Cautionary Statement on Forward-Looking Information
Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the potential closing of the Offering and the amount to be raised, are assumptions regarding the general market conditions for offerings such as the Offering. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that the closing of the Offering is subject to a number of risks and uncertainties, including relating to general market conditions, and accordingly the Offering may not be able to be completed on the terms currently expected as set out above, or at all. Other than as required under securities laws, we do not undertake to update this information at any particular time. Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.