good natured announces closing of convertible debenture financing for gross proceeds of $5,049,000
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
February 28, 2018 — (Vancouver, BC) good natured Products Inc. (the “Company” or “good naturedTM”) (TSX-V: GDNP), is pleased to announce the closing of its previously-announced brokered private placement offering (the “Offering”) of units (“Units”), with each unit comprised of one $1,000 principal amount unsecured 10% convertible debenture (each, a “Debenture”) of the Company due February 28, 2022 (the “Maturity Date”) and 1,500 common share purchase warrants (“Warrants”). Gravitas Securities Inc. and Canaccord Genuity Corp. (the “Agents”) were engaged to act as the Company’s agents on a best efforts basis in connection with the Offering under the terms of an agency agreement (the “Agency Agreement”). The Company issued 4,949 Units for gross proceeds of $4,949,000 in the Offering.
Concurrent with the closing of the Offering, the Company issued an additional 100 Units for gross proceeds of $100,000 on a non-brokered basis to a non-Canadian resident subscriber.
“The closing of this offering provides us with significant capital to accelerate our organic growth strategy.” – Paul Antoniadis, CEO of good naturedTM
Paul added: “We are well positioned to continue to expand revenues by cross selling additional products to our existing customer base, while adding net new customers throughout the year.”
Each Debenture is convertible, at the option of the holder, at any time prior to the close of business on the last business day immediately preceding the Maturity Date, into that number of common shares (the “Debenture Shares”) computed on the basis of the principal amount of the Debentures divided by the conversion price of $0.15 per common share (the “Conversion Price”). Each Warrant entitles the holder thereof to purchase one common share of the Company (each a “Warrant Share”) for a period of 48 months after the closing date of the Offering at a price of $0.10 per Warrant Share (subject to adjustment in certain circumstances). The Debentures will be subject to an acceleration right exercisable by the Company, which will force the conversion of the Debentures into common shares at the $0.15 conversion price. This right is exercisable if the Company’s common shares trade at or above a volume-weighted average trade price of $0.15 on the TSX Venture Exchange (the “TSX-V”) on any 20 consecutive trading days and on cumulative 20-day trading volume of at least 1,000,000 common shares. If the acceleration right is exercised by the Company, the conversion of the Debentures into common shares will occur immediately. The Warrants will be subject to an acceleration right if on any 20 consecutive or non-consecutive trading days following the closing date, the Company’s common shares trade at greater than a volume-weighted average trading price of $0.20 on the TSX-V.
The Debentures, Debenture Shares issued within four months of issuance of the Debentures, the Warrants, and any Warrant Shares issued on exercise thereof within four months of issuance of the Warrants, will be subject to a hold period expiring on that day that is four months and one day after closing of the Offering.
The interest on the Debentures will be payable in cash on a semi-annual basis in arrears. An amount sufficient to satisfy the interest payments for the first year following the closing of the Offering will be set aside and held in escrow by the Company from the proceeds raised.
The Company has granted to the Agents, under the Agency Agreement, an option, exercisable in whole or in part at any time until the date that is 30 days after the closing of the Offering, to purchase up to an additional 15% of the number of Units sold under the Offering on the same terms as the Offering.
The Company issued to the Agents, plus certain members of the selling group, an aggregate cash commission and fees of $271,430, inclusive of taxes. The Company also issued to the Agents and certain members of the selling group non-transferable warrants to acquire 2,239,867 common shares from treasury at a price of $0.15 per common share, exercisable at any time within the 36-month period following the closing of the Offering, subject to acceleration in certain circumstances.
The proceeds of the Offering will be utilized to accelerate the fulfillment of pending customer orders for product line extensions and for general corporate and working capital purposes.
Closing remains subject to final TSX-V approval.
The securities offered have not been, and will not be, registered under the United States Securities Act of 1933 (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.
For further information on the Offering, please see the Company’s press releases of December 18, 2017 and February 9, 2018.
Related Party Participation in the Offering
Paul Antoniadis, Chief Executive Officer of the Company, subscribed for 130 Units having a subscription price of $130,000. Don Holmstrom, Chief Financial Officer and EVP of Operations, subscribed for 36 Units having a subscription price of $36,000. Jim Zadra, Director of the Company, subscribed for 25 Units having a subscription price of $25,000. Michel Thomson, Director of the Company, subscribed for 6 Units having a subscription price of $6,000. Noel Harvey, Vice President of the Company, subscribed for 6 Units having a subscription price of $6,000. Michel Labonté, Chief Technical Officer of the Company, subscribed for 6 Units having a subscription price of $6,000. Following the closing of the Offering, Paul Antoniadis will beneficially own or control 5,855,596 Shares on a fully-converted basis (i.e., assuming conversion of the Debentures), representing approximately 5% of the issued and outstanding Shares on an undiluted basis. Don Holmstrom will beneficially own or control 279,118 Shares on a fully-converted basis (i.e., assuming conversion of the Debentures), representing approximately .1% of the issued and outstanding Shares on an undiluted basis. Jim Zadra will beneficially own or control 535,243 Shares on a fully-converted basis (i.e., assuming conversion of the Debentures), representing approximately .4% of the issued and outstanding Shares on an undiluted basis. Michel Thomson will beneficially own or control 1,004,287 Shares on a fully-converted basis (i.e., assuming conversion of the Debentures), representing approximately 1% of the issued and outstanding Shares on an undiluted basis. Michel Labonté will beneficially own or control 269,404 Shares on a fully-converted basis (i.e., assuming conversion of the Debentures), representing approximately .3% of the issued and outstanding Shares on an undiluted basis. Noel Harvey will beneficially own or control 299,552 Shares on a fully-converted basis (i.e., assuming conversion of the Debentures), representing approximately .2% of the issued and outstanding Shares on an undiluted basis
As insiders 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 common share (“Share”) of the Company provides the holder with the right to one vote per common share. The Debentures and Warrants do not entitle the holders 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 holders thereof will have one vote per common share if and when issued upon the conversion of the Debentures or the exercise of the Warrants. The Offering was unanimously approved by the directors of the Company.
Other than the subscription agreement between the aforementioned insiders 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.
Shares for Debt Offering
Following the closing of the Offering, the Company plans to issue 150,000 common shares at a deemed price of $0.11 per Share to settle approximately $16,500 of corporate debt owed to various arm’s length parties of the Company (the “Share Settlement”). The Share Settlement remains subject to TSX-V approval and is expected to occur upon receipt of such approval. The Shares to be issued pursuant to the Share Settlement will be subject to a four-month hold period.
About good natured Products Inc.
With over 100 plant-based food packaging designs, 10 grades of bioplastic rollstock sheets, 30 home & business organizational products and a world class team of scientists, business builders and retailers, good naturedTM is producing and distributing one of North America’s widest assortments of consumer products and packaging made from the highest possible percentage of renewable, plant-based materials and no BPAs, phthalates or other chemicals of concern.
Committed to doing what’s right for the planet and right for business, good naturedTM is creating better everyday productsTM that combine cutting-edge bioplastic technology and the latest sustainable design features that not only look good, but maximize shelf space, drive incremental sales, enhance logistics and boost environmental benefits, all bundled up in a fresh and friendly brand.
For more information, see our investor site.
About Gravitas Securities Inc.
Gravitas Securities is a leading wealth management and capital markets firm comprised of tactical individuals known for their sophisticated sector expertise, commitment to excellence, and a global platform committed to integration and innovation. Gravitas provides a wide range of investment services for retail and corporate clients globally with offices in Toronto and Vancouver, and is represented in the United States through its FINRA representative, Gravitas Capital International, in New York.
Gravitas Securities Inc. is a member of IIROC and CIPF.
About Canaccord Genuity Group Inc.
Through its principal subsidiaries, Canaccord Genuity is a leading independent, full-service financial services firm, with operations in two principal segments of the securities industry: wealth management and capital markets. Canaccord Genuity has offices in 10 countries worldwide, including Wealth Management offices located in Canada, the UK, Guernsey, Jersey, the Isle of Man and Australia. Canaccord Genuity, the international capital markets division, operates in Canada, the US, the UK, France, Ireland, Hong Kong, China, Australia and Dubai. To us there are no foreign markets.™
Canaccord Genuity Group Inc. is publicly traded under the symbol CF on the TSX.
On behalf of the Company:
Paul Antoniadis – Chief Executive Officer
Contact: 1-604-566-8466
Investor Contact:
Caleb Jeffries
Kin Communications
1-866-684-6730
GDNP@kincommunications.com
Capital Markets Advisor:
Nicole Marchand
1-416-428-3533
Nicole@nm-ir.com
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 any additional tranches 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 any further tranches 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 as currently expected as set out above. 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.