Transeastern Power Trust Announces $10 Million Secured Debt Financing
April 5, 2016
NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES
Toronto, Ontario - April 5, 2016 - Transeastern Power Trust ("Transeastern" or the "Trust") (TSXV: TEP.UN) is pleased to announce that it has entered into a letter of intent and associated term sheet for a $10 million secured debt and royalty facility (the "Debt Facility").
The Debt Facility is for a three year term, subject to a one year extension at the option of Transeastern under certain conditions. Interest on the Debt Facility is payable at a rate of 5% per annum, compounding semi-annually.
The Trust expects to use the net proceeds from the Debt Facility to repay existing secured indebtedness at both the Trust and Romanian subsidiary levels, to facilitate the purchase of the wind and hydro renewable energy projects announced on February 1, 2016 and February 10, 2016 (the "Acquisitions") and for ongoing working capital requirements. It is expected that the Debt Facility and the Acquisitions will close in June of this year. Closing of the Debt Facility is subject to certain conditions precedent including legal and technical due diligence and successful completion of the Acquisitions.
In connection with the Debt Facility, the lender will be granted a 2% annual royalty (the "Royalty") calculated on the gross revenues of the Trust's Romanian operating subsidiaries existing at the time of the closing (including the subsidiaries acquired pursuant to the Acquisitions). The Royalty will have a term of 20 years, subject to Transeastern's option to repurchase the Royalty on the seventh anniversary of the closing date for £1.5 million.
The Debt Facility will be secured by a first charge against the assets of the Trust's subsidiaries existing at the time of closing (including the subsidiaries acquired pursuant to the Acquisitions). The Royalty shall be secured by way of a second mortgage against the Romanian subsidiaries which are subject to the Royalty calculation.
Transeastern is also pleased to announce that it has closed a first tranche of a private placement ("Private Placement") of 1,156,043 units (the "Units") at subscription price of $0.70 per Unit for gross proceeds of approximately $810,000. The net proceeds of this first tranche shall be applied primarily towards the repayment of a portion of the Trust's existing $5 million secured debt facility. The Trust expects to complete further tranches of the Private Placement over the next three months to help facilitate the completion of the Acquisitions.
Each Unit is comprised of one trust unit in the capital of the Trust (a "Trust Unit") and one Trust Unit purchase warrant (a "Warrant"). Each Warrant entitles the holder thereof to acquire one Trust Unit for a period of 36 months from the date of issuance at an exercise price of $1.00 per Trust Unit. The Warrants contain an acceleration provision providing that, if: (i) four months and one day have passed since the closing date and (ii) the closing price of the Trust Units on the TSX Venture Exchange or such other exchange on which the Trust Units are listed for trading is higher than $1.25 for 20 consecutive trading days, then on the 20th consecutive trading day (the "Acceleration Trigger Date") the expiry date of the Warrants will be accelerated to the date that is ten (10) Business Days after the Acceleration Trigger Date. In connection with the closing of this first tranche of the Private Placement, Transeastern issued non-transferable broker warrants to purchase up to 68,118 Trust Units containing the same terms as the Warrants, with the exception of the exercise price which is $1.20 per Trust Unit.
All securities issued in connection with this first tranche of the Private Placement are subject to a statutory restricted resale period expiring on August 6, 2016, in accordance with applicable securities legislation.
Mr. J. Colter Eadie, Chief Executive Officer of Transeastern, commented: "We are very pleased to have structured this novel financing transaction that is a critical component of the completion of the recently announced transformative wind and hydro acquisitions. The nature of this financing will minimize dilution for investors and is in keeping with our focus on growing distributable cash-flow on an accretive basis. At the time of our initial public offering, we had just over 5 MW of installed capacity. Assuming the completion of the above transactions, we will have over 51 MW of installed capacity. We have been able to consistently deliver on our business plan to grow scale and diversify our renewable portfolio and plan to continue to do so."
The Trust, through its direct and indirect subsidiaries in Canada, the Netherlands and Romania, has been formed to acquire interests in renewable energy assets in Romania, other countries in Europe and abroad that can provide stable cash flow to the Trust and a suitable risk-adjusted return on investment. The Trust seeks to provide investors with long-term, stable distributions, while preserving the capital value of its investment portfolio through investment, principally in a range of operational assets, which generate electricity from renewable energy sources, with a particular focus on solar and hydro power. The Trust intends to qualify as a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act), provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). All material information about the Trust may be found under Transeastern's issuer profile at www.sedar.com.
Except for statements of historical fact contained herein, the information in this press release constitutes "forward-looking information" within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as "anticipates", "plans",
"proposes", "estimates", "intends", "expects", "believes", "may" and "will". There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others: risks related to foreign operations (including various political, economic and other risks and uncertainties), the interpretation and implementation of the energy law, expropriation of property rights, political instability and bureaucracy, limited operating history, lack of profitability, high inflation rates, failure to obtain bank financing, fluctuations in currency exchange rates, competition from other businesses, reliance on various factors (including local labour, importation of machinery and other key items and business relationships), risks related to seasonality (including adverse weather conditions, shifting weather patterns, and global warming), a shift in energy trends and demands, a shift in energy generation in the European Union, vulnerability to fluctuations in the world market, the lack of availability of qualified management personnel and stock market volatility. Details of the risk factors relating to Transeastern and its business are discussed under the heading "Risks and Uncertainties" in Transeastern's management discussion and analysis dated November 27, 2015, a copy of which is available on Transeastern's SEDAR profile at www.sedar.com. Most of these factors are outside the control of the Trust. Investors are cautioned not to put undue reliance on forward-looking information. These statements speak only as of the date of this press release. Except as otherwise required by applicable securities statutes or regulation, Transeastern expressly disclaims any intent or obligation to update publicly forward-looking information, 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.
For further information please contact:
|Ravi Sood||J. Colter Eadie||Michael Murphy|
|+1 (647) 987-7663||+40 736 372 724||+1 (416) 625-5064|