Home Philatelic investment Enablence Technologies provides update on recapitalization transaction and announces modification of senior loan agreement

Enablence Technologies provides update on recapitalization transaction and announces modification of senior loan agreement

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OTTAWA, ON, November 15, 2021 / CNW / – Enablement Technologies Inc. (“Activation“or the”Society“) (TSXV: ENA), a supplier of optical components and subsystems, is pleased to provide an update on its previously announced recapitalization transaction (the”Recapitalization operationIn particular, the Debt Settlement and Consolidation Actions (each as defined below) are expected to close before the end of November 2021. In addition, Enablence has agreed to modify and restate its existing loan agreement with a related party to allow further advances of up to 2 million Canadian dollars to the Company to cover operating costs until the closing of the Recapitalization Transaction and while discussions continue with potential investors regarding additional equity investments in the Company.

Settlement of actions against debt

As previously announced, the Company has entered into debt settlement agreements with certain unsecured creditors holding a total of CA $ 41,397,844.11 of the Company’s total unsecured debt (collectively, the “Existing debt settlements“), representing approximately 95% of the total balance of debts proposed to be settled under the Recapitalization Operation. The remaining unpaid debts held by unsecured creditors total CA $ 1,955,863.59 (collectively, the “Remaining debtAs of the date hereof, the holders of the Remaining Debt have not agreed to enter into a stock for debt settlement with the Company.

Some major creditors who have agreed to settle the debt actions have a closing condition in their favor requiring 100% of the remaining debt to enter into a debt stock settlement with the company to convert this remaining debt on the same terms as indicated. above “Closing condition“). The Company is pleased to announce that it has obtained the necessary waivers from these major creditors of the Closing Condition.

In addition, as part of the Recapitalization Transaction, the Company will settle (i) CA $ 1,000,000.00 amounts due under a share-for-service agreement, and (ii) CA $ 1,020,000.00 in principal of the amounts advanced under the previously announced promissory note (the “Original grid note“). All amounts owed by the Company under points (i) and (ii) will be settled on the same terms and conditions as the Existing Debt Settlements (the”Additional debt settlements“). No further advance will be made under the original Grid Score after the date hereof.

In total, existing debt settlements and additional debt settlements add up to CA $ 43,417,844.11. All settlements should be closed before the end of November 2021.

Consolidation

As previously announced, the Company has obtained the necessary shareholder approvals to consolidate (the “Consolidation“) the issued and outstanding ordinary shares of the Company (the”Ordinary actions“). The Board of Directors of the Company has decided to complete the consolidation on the basis of one (1) new post-consolidation ordinary share in exchange for one hundred and twenty (120) pre-consolidation ordinary shares (the” “).Consolidation ratio“).

The Company currently has 641,927,418 common shares issued and outstanding and, following completion of the Combination, it is expected that there will be approximately 5,349,395 common shares issued and outstanding (subject to rounding), prior to completion. of the debt-for-equity settlements described above. After giving effect to the Debt Settlement and Consolidation, 17,845,261 Common Shares are expected to be issued and outstanding (subject to rounding) at a date pro forma of which (i) 5,349,395 ordinary shares (or 30%) are expected to be held by existing shareholders of the Company, and (ii) 12,495,866 ordinary shares (or 70%) are expected to be held by creditors who have agreed to receive common shares in connection with debt settlement. 1,577,844 additional share subscription warrants issued as part of the debt settlement (subject to rounding) will also be outstanding after closing.

The Company will not issue any fractional common shares after the Combination. Instead, each fraction of a share remaining after the conversion will be rounded up to the nearest whole common share after the consolidation. Completion of the consolidation is subject, among other things, to the approval of the TSX Venture Exchange. The Company will not change its name or trade symbol in connection with the Consolidation.

Amendments to the Senior Loan Agreement

The Company also wishes to announce that it has entered into an agreement with Vortex ENA LP (“Vortex LP“), a non-arm’s length party, to amend and restate the terms of the Company’s secured term loan facility which was assigned to Vortex LP on August 20, 2021 (the “Preferred loan agreement“) as announced on 23 Aug 2021. A copy of the Amended and Restated Loan Agreement will be filed on SEDAR upon closing, which is expected to occur on or before 24 December 2021. The main changes to the Senior Loan Agreement should include:

  • Vortex LP has agreed to accept the transfer of certain accounts payable from the Company, totaling CA $ 380,000 and US $ 235,000, both amounts being added to the loan balance

  • An additional advance of CA $ 245,000 provided by Vortex LP to the Company will be added to the loan balance

  • Vortex LP will provide up to 2 million Canadian dollars in additional loan advances under the Senior Loan Agreement, at its sole discretion

The interest rate, maturity date and other key terms of the senior loan agreement will remain unchanged.

Since Vortex LP is a “related party” of the Company, the modification of the senior loan agreement is considered a “related party transaction” for the purposes of Multilateral NI 61-101 – Protection of holders of minority securities in special transactions (“MI 61-101The Company did not file a material change report more than 21 days before agreeing to modify and restate the senior loan agreement, as the details of the modifications were not settled until shortly before that date. The Company avails itself of the exemptions from the formal assessment and minority shareholder approval requirements available under NI 61-101 The Company is exempt from the formal assessment requirement of section 5.4 of the NI 61-101. 61-101 under section 5.5 (b) of Regulation 61-101, because the Company is not listed on a specified market under MI 61-101. In addition, the Company is exempt from the requirement approval of minority shareholders provided for in section 5.6 of MI 61-101 under section 5.7 (f) of MI 61-101.

About Enablence Technologies Inc.

Enablence is a publicly traded company that designs, manufactures and sells optical components and subsystems to a global customer base. It uses its patented technologies, including the intellectual property of planar light wave circuits, in the production of a set of photonic components and broadband subsystems that provide a key part of the infrastructure for telecommunications systems. current and next generation. The Company’s components are key elements of large optical network infrastructures that enable global networking and large-scale computing for businesses and individuals, including data centers and 5G telecommunications networks. For more information visit www.enablence.com.

Forward-looking statements

This press release contains forward-looking statements about the Company based on management’s current expectations and assumptions, which involve known and unknown risks and uncertainties associated with our business and the economic environment in which the business operates. All of these statements are forward-looking statements under applicable Canadian securities legislation. All statements contained in this document that are not statements of historical fact can be considered as forward-looking statements. In particular, this press release contains forward-looking statements regarding the timing and ability of the Company to complete the Consolidation, if any; the Company’s ability to obtain regulatory approvals (including TSX Venture Exchange) for consolidation and related matters; modification of the senior loan agreement and the funds expected to be available as a result of such modification; and the consolidation of its ordinary shares. By their nature, forward-looking statements require us to make assumptions. The assumptions are based in part on future levels of capital expenditure, the ability to meet the remaining preconditions to closing debt settlement and the ability to obtain regulatory approval. These statements are based on current expectations which involve several risks and uncertainties that could cause actual results to differ from those anticipated. These risks include, but are not limited to, the risks associated with the Company not obtaining the required regulatory approvals (including the TSX Venture Exchange) for consolidation and related matters; the terms as described herein are subject to change after the date hereof; the impact of the evolution of the COVID-19 pandemic on the Company’s activities, operations and sales; uncertainties relating to the ultimate spread, severity and duration of COVID-19 and the related negative effects on the economies and financial markets of the countries in which the Company operates; and the Company’s ability to successfully implement its business continuity plans with respect to the COVID-19 pandemic. Although the Company believes that the expectations reflected in the forward-looking statements contained in this press release, and the assumptions upon which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. We caution our readers of this press release not to place undue reliance on our forward-looking statements as a number of factors could cause actual results or conditions to differ materially from current expectations. Additional information on these and other factors that could affect the Company’s operations is set out in the Company’s continuous disclosure documents which can be viewed on SEDAR (www.sedar.com) under the Enablence issuer profile. Enablence does not intend and disclaims any obligation, except as required by law, to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Enablence Technologies Inc.

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