Dual-listed Desert Lion Energy Inc. has secured up to $10 million in convertible note financing to facilitate the continued advancement of both organic and strategic growth initiatives as its develops itself as lithium company.
This comes the day after the company announced that the Investment Industry Regulatory Organization of Canada (IIROC) granted it’s request for temporary suspension of trading.
The note purchase agreement (NPA) is with AIP Asset Management and AIP Global Macro Fund L.P. (AIP) providing for a secured convertible note financing for gross proceeds of up to $10 million.
The initial tranche of secured convertible promissory notes for gross proceeds of $5 million shall be purchased by AIP on the date certain standard conditions precedent are satisfied, including, approval of the TSX Venture Exchange and completion of a equity offering.
A second tranche of notes for proceeds of an additional $5 million is also available to the company under the NPA to fund acquisitions as mutually agreed by AIP and the company.
The notes may be converted to common shares of the company at a price of $0.20 per share at any time prior to maturity, which is 24 months following the closing date.
On the closing date the company shall pay a fee to AIP to be settled by a cash payment of $150 000 and, subject to approval of the TSXV, the issuance of 2 857 142 common shares.
The equity offering entails a non-brokered private placement financing of 28 571 428 units at a price of $0.07 per unit for gross proceeds of $2 million. Each Unit is comprised of one common share of the company and one-half of one common share purchase warrant.
Closing of the offering is expected to occur on or about 23 November 2018 and remains subject to certain conditions, including receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange. All securities issued in connection with the offering will be subject to a four month hold period.
"AIP's commitment to investment a minimum of $5 million and up to $10 million in conjunction with support from our existing shareholders and management in the private placement reiterates management's belief in the potential for the Desert Lion Energy project," comments Tim Johnston, CEO of Desert Lion Energy Inc.
"AIP invests in companies with strong management teams, world class assets and large upside growth potential. This strategy used by AIP Global Macro Fund LP has resulted in an average return of over 40% per year since 2014," adds Jay Bala, Senior Portfolio Manager of AIP Asset Management.
"We are highly selective of management teams and the companies we work with and we are proud to announce that Desert Lion was able to meet these requirements"
Desert Lion has concurrently entered into a loan agreement with Pella Ventures, pursuant to which Desert Lion has borrowed $150 000. The loan in unsecured, is subject to an interest rate of 8.0% per annum and matures on 31 December 2018. The company expects to use the proceeds from the loan for general corporate and working capital purposes.