NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. WIRE SERVICES
Vancouver, British Columbia, May 5, 2017, Royalty North Partners Ltd. (TSXV:RNP) (“RNP” or the “Company”) is pleased to announce that further to its press release dated April 12, 2017, the Company has increased its non-brokered private placement financing (the “Private Placement”) of units (the “Units”) at a price of $0.17 per Unit to up to $3,700,000 and has closed the first tranche of the Private Placement (the “First Tranche”) by issuing 16,238,356 Units for gross proceeds of approximately $2,768,000.
Each Unit consists of one common share in the capital of the Company (a “Unit Share”) and one-half of one common share purchase warrant. Each whole warrant (a “Warrant”) entitles the holder to purchase, until September 1, 2021, one additional common share of the Company (a “Warrant Share”) at an exercise price of $0.25. The Warrants are governed by the terms of a warrant indenture dated November 24, 2016 between the Company and TSX Trust Company as warrant agent and a supplement thereto dated May 5, 2017 (the “Warrant Indenture”). The Unit Shares, the Warrants and the Warrant Shares issued under the First Tranche are subject to a hold period and may not be traded until September 6, 2017, except as permitted by applicable securities legislation and the policies of the TSX Venture Exchange (the “TSXV”).
The proceeds of the First Tranche were used to fund the Company’s loan agreement (the “SST Agreement”) with SST Construction, LLC (“SunSystem”). Proceeds of the Private Placement will be used for transaction expenses and for working capital purposes.
The Company will pay a commission to certain arm’s length finders in connection with the Private Placement. Each of Sprott Global Resource Investments, Ltd., DGW Capital Corp., Canaccord Genuity Corp., PI Financial Corp. and Haywood Securities Inc. will receive a 6% cash commission for Units placed by them.
The second tranche of the Private Placement is expected to close later in May, subject to certain conditions, including the approval of the TSXV.
This press release does not constitute an offer to purchase securities. The securities offered in the Private Placement have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States or to, or for the benefit or account of, a U.S. person, except pursuant to an available exemption from such registration requirements.
Transaction with SunSystem
The Company is also pleased to announce that further to its press release dated March 21, 2017 it has closed its loan transaction with SunSystem, a leading provider of operations and maintenance (O&M), engineering, procurement and construction (EPC) and asset management services in the solar industry.
Under the terms of the SST Agreement, RNP has loaned a total of US$5,000,000 (the “Loan”) in two tranches to SunSystem. The previously announced US$600,000 funding by RNP to SunSystem under the unsecured promissory note (the “Promissory Note”) issued on March 13, 2017 (the “Promissory Note Issue Date”) was deemed to be the initial advance (the “Initial Advance”) under the SST Agreement and any outstanding interest accrued under the Promissory Note from the Promissory Note Issue Date to the date of signing of the SST Agreement was waived by RNP. The second tranche (the “Second Advance”) of US$4,400,000 was advanced today. In connection with the Second Advance and pursuant to the terms of the SST Agreement, the Promissory Note has been cancelled and the total amount of the Loan is now evidenced by the SST Agreement.
The Loan will be repaid by way of monthly loan payments calculated on the gross sales of SunSystem. The initial loan payment rate will be 2.25% of gross sales until the Loan has been repaid at which point reduced royalty rates will be payable thereafter. SunSystem has guaranteed minimum loan payments of US$700,000 per year for the first three years. The proceeds of the Loan will be used for working capital, capital expenditure and to replace existing debt.
In order to facilitate an early closing of the SunSystem transaction, certain shareholders of the Company have loaned an aggregate of $500,000 (the “Shareholder Loans”) to RNP. The Shareholder Loans are unsecured and have a 30 day term at which time they mature and become due and payable. The Shareholder Loans bear interest at 8% per annum payable quarterly. RNP may prepay the outstanding principal amount of the Shareholder Loans together with all accrued and unpaid interest, without penalty, at any time prior to the maturity date.
The Company is also pleased to announce that it has entered into a credit agreement with the Canadian Imperial Bank of Commerce (“CIBC”) for a committed credit facility initially in the amount of $5,000,000 (the “Credit Facility”) maturing on the third anniversary of closing the Credit Agreement. The proceeds borrowed under the credit facility were used by RNP to fund, in part, the Second Advance (as defined above) under the SST Agreement and will be used by RNP for financing royalty financing transactions, working capital and general corporate purposes going forward.
The Credit Facility will bear interest at varying margins based on CIBC’s Canadian prime rate, United States base rate, LIBOR or bankers’ acceptance rate. The Credit Facility is secured by all of the assets of the Company.
The Credit Facility includes the usual and customary representations and warranties and covenants and negative covenants restricting the amount of indebtedness. Advances under the Credit Facility are subject to customary conditions.
On behalf of the Company,
Chief Executive Officer and Director
About SunSystem Technology
Established in 2013, SunSystem is a leading provider of operations and maintenance (O&M), engineering, procurement and construction (EPC) and asset management services in the solar industry. It derives a high degree of recurring revenue through its O&M businesses and EPC work through its relationships with residential originators and financing platforms. SunSystem has in total nine office locations with its headquarters in Sacramento, California.