By Laura Lutz
Des Moines, May 18 - True North Corp. is preparing to close a C$1.7 million private placement of convertible secured debentures with Quorum Investment Pool LP.
True North is in default on outstanding convertible secured debentures held by Quorum Investment, Quorum Secured Equity Trust and Ontario SME Capital Corp., according to a news release from True North. The company said that the holders agreed to waive the defaults if the company completes the new financing and amends some provisions of the outstanding debentures.
The new 8% debentures will mature in five years. They will be convertible into common stock at C$0.10 per share in the first two years, C$0.11 per share in the third year, C$0.121 per share in the fourth year and C$0.1331 per share in the fifth year.
The conversion price will automatically increase to C$0.15 if the company files financial statements showing revenues of at least C$25 million or EBITDA of at least C$4 million.
The company will also issue warrants for 6,022,804 commons shares. The warrants are exercisable at C$0.12 per share for two years.
Quorum Investment has agreed to transfer 4,022,804 of the warrants to True North chief executive officer Rick Camilleri and 1 million of the warrants to each of Larry Klopot and Jim Holland. Klopot will become executive vice-president, client services at True North, Holland will become the company's chief financial officer.
Proceeds will be used for product development, sales staff and executive hires, marketing and working capital.
The company also announced details of the proposed amendments to the outstanding debentures.
Quorum Investment holds C$1,388,889 principal amount of the affected debentures, Quorum Secured holds C$1,435,185 principal amount and Ontario SME holds C$1,225,926 principal amount.
The conversion price on the debentures held by Quorum Investment would be decreased to C$0.20 per share from C$0.4630 per share for two years. Thereafter, its conversion price would increase by 10% per year until maturity. That conversion price would be increased to C$0.25 if the company files financial statements showing revenues of at least C$25 million or EBITDA of at least C$4 million.
The debenture held by Quorum Secured would be amended in the same way.
The maturity date of the debentures held by Ontario SME would be moved to Jan. 4, 2008 from Feb. 28, 2008, and True North would be required to make an additional C$500,000 payment on April 30, 2008.
True North is a marketing company based in Mississauga, Ont.
| Issuer: | True North Corp.
|
| Issue: | Convertible secured debenture
|
| Amount: | C$1.7 million
|
| Maturity: | Five years
|
| Coupon: | 8%
|
| Price: | Par
|
| Yield: | 8%
|
| Conversion price: | C$0.10 for the first two years; C$0.11 in the third year; C$0.121 in the fourth year; C$0.1331 in the fifth year
|
| Investor: | Quorum Investment Pool LP
|
| Announcement date: | May 18
|
| Stock symbol: | TSX Venture: TN
|
| Stock price: | C$0.045 at close May 18
|
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