Indiva Limited closes a non-brokered private placement for over $2.1 million, to form part of a $4 million debenture.
Indiva Limited (TSXV:NDVA) (OTCQX:NDVAF) announced the closing of the first tranche of its non-brokered private placement of unsecured convertible debentures totaling $2,115,000, which forms part of its larger offering of up to the aggregate principal amount of $4,000,000 Debentures.
As previously announced in the Company's December 9, 2019, news release, the Debentures will mature on the date that is 36 months from the date of issuance, bear interest at the rate of 10% per annum, computed on the basis of a 360-day year composed of twelve 30-day months, and payable semi-annually on the last day of June and December of each year, commencing on June 30, 2020. The Debentures will be issued at a price of $1,000 per Debenture with each Debenture being convertible, at the option of the holder, into 5,000 common shares in the capital of the Company at a conversion price of $0.20 per Share, subject to adjustments. The Offering is subject to final approval from the TSX Venture Exchange.
The Company expects that the proceeds of the first tranche of the Offering will be used for capital expenditures, equipment purchases and working capital purposes.
The Company has paid a cash finder's fee in connection with the first tranche of the Offering to a finder in the aggregate amount of $2,800, which represents 7% of the gross proceeds received from the investor introduced to the Company by the finder. Insider participation totalled $410,000 of the first tranche.
The second tranche of the Offering is expected to consist of up to the aggregate principal amount of $1,885,000 in Debentures and be completed on or prior to January 20, 2020, at the Company's discretion. The second tranche will only be funded upon, among other things, receipt of necessary approvals from the TSX Venture Exchange. The proceeds of the second tranche of the Offering are expected to be used by the Company for capital expenditures, equipment purchases and working capital purposes.
MI 61-101 Disclosure
Three insiders of the Company participated in this first tranche of the Offering and, as such, the issuance of the Debentures to such insiders is a "related-party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). However, the issuance is exempt from: (i) the valuation requirement of MI 61-101 by virtue of the exemption contained in Section 5.5(b), as the Shares are not listed on a market specified in MI 61-101, and (ii) from the minority shareholder approval requirement of MI 61-101 by virtue of the exemption contained in Section 5.7(1)(a) of MI 61-101, as the fair market value of the Debentures does not exceed 25% of the Company's market capitalization. A material change report was not filed by the Company 21 days before the closing of the first tranche of the Offering as the level of insider participation was not known at that time and the Company moved to close the Offering immediately upon satisfaction of all applicable closing conditions. In the view of the Company, this was reasonable in the circumstances because the Company wished to complete the first tranche of the Offering as soon as possible.
The Offering will be conducted by the Company utilizing the "accredited investor" exemption of National Instrument 45-106 – Prospectus and Registration Exemptions, and also other applicable exemptions available to the Company.
The Debentures, and the Shares into which the Debentures may be converted (collectively, the "Securities"), are subject to restrictions on resale under applicable Canadian securities laws for a period of four months and one day from December 23, 2019, the issue date of the Debentures.
Disclaimer: Past performance is not an indicator of future performance.
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