Sale of warrants, three-year 10% discounted notes helps keep RS afloat
By Susanna Moon
Chicago, Oct. 21 - RS Technologies Inc. announced plans for a C$6 million financing by way of private placement of 240 units of 10% three-year notes and warrants for C$25,000 each.
Each unit will consist of a C$27,777 principal amount of a 10% secured promissory note and warrants to purchase 3,981,656 common shares for five years exercisable at C$0.01 per share.
The warrant strike price is equal to the company's closing price on Oct. 21.
The notes will be issued at a 10% discount. For each C$25,000 of units, holders will receive a face value of C$27,777.
Proceeds from the bridge financing will be used to fund near-term working capital. The additional C$3.1 million the company will receive from the issuance of the units will provide working capital to continue as a going concern until the end of December, according to a company press release.
If the private placement is fully subscribed, RS will issue warrants to purchase 955,597,440 common shares representing 30% of the issued common shares.
RS plans to issue C$3.1 million units to arm's length subscribers and C$2.9 million units to directors and officers, of which C$2.9 million has already been advanced and will be expended by the end of October.
The settlement date is expected to be Oct. 28.
In conjunction with issuing the notes, the outside date of the C$7 million principal amount demand facility with a Canadian chartered bank will be extended to Dec. 1, 2013 from Dec. 1.
As previously disclosed, RS said it has been exploring options for obtaining additional financing. As a result, the company has signed a term sheet with an investment fund for up to C$15 million of equity financing.
RS may choose the time and amount of each advance. In exchange for the funds, the company would issue common shares to the fund based on an average price less a discount to the market price and subject to a minimum price at which RS is willing to issue its common shares.
Completion of the private placement of the warrants requires approval of the Toronto Stock Exchange as well as shareholder approval at a meeting scheduled for Nov. 29.
Issuing the warrants will result in insiders receiving warrants to purchase about 14.5% of the fully diluted common shares. Therefore the Toronto exchange will require the company to obtain approval of a majority of its disinterested shareholders as a condition to the issuance of the warrants.
The Calgary, Alta., technology company develops advanced composite material products for infrastructure markets.
| Issuer: | RS Technologies Inc.
|
| Issue: | 240 units of 10% secured promissory note, warrants
|
| Amount: | C$6 million
|
| Price: | C$25,000
|
| Warrants: | For 3,981,656 common shares exercisable
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| Warrant expiration: | Five years
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| Warrant strike price: | C$0.01
|
| Pricing date: | Oct. 22
|
| Stock symbol: | Toronto: RS
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| Stock price: | C$0.01 at close Oct. 21
|
| Market capitalization: | C$1.1 million
|
|
|
| Notes
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| Amount: | C$6 million
|
| Maturity: | Three years
|
| Coupon: | 10%
|
| Price: | At 10% discount
|
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