Understanding the Convertible Debenture Terms
STEER, a dynamic company, has initiated a private placement for raising to $3.5 million. This will be achieved through the issuance of convertible debentures. These unique debentures give holders the right to convert them into company units at a specified price and time. The conversion price is set at $0.06.
Upon conversion, each debenture becomes a unit, comprising a common share and a warrant. The warrant further allows the holder to purchase another common share at the same price of $0.06. This option is valid for 12 months from the issue date.
The debentures come with a one-year maturity period from their date of issue. They accrue a 12.0% annual interest, compounded monthly. The interest calculation is based on a 365-day year and is applied for the actual number of days elapsed. Investors can receive interest payments in cash or through a shares-for-debt transaction, pending TSXV approval.
Key Investors and Share Distribution
The private placement targets certain key investors, including ESG Holdings Inc., Arichandran Investments Inc., and others. To maintain a balanced share distribution, no single investor can convert debentures into common shares exceeding 19.99% of STEER’s total issued and outstanding common shares on a partially diluted basis. This includes the potential exercise of the attached warrants. The total number of common shares reserved for issuance under this private placement is capped at 117,880,000.
It’s important to note that this private placement does not aim to alter the control of STEER. Each investor’s maximum shareholding is carefully capped to prevent any single investor from gaining disproportionate influence over the company.
Securities and Closing Details
The debentures are classified as senior secured obligations. They are secured with a first-ranking security interest in all assets of STEER and its subsidiaries, except for specific exclusions. One such exclusion is a pledge of equity interests in FoodsUp Inc., a STEER subsidiary. STEER indirectly owns a 62.5% interest in FoodsUp through its wholly-owned subsidiary, Food Highway.
The FoodsUp shares are under a call option agreement with FoodGrowup Partner Group. This agreement allows FoodGrowup to purchase a portion of STEER’s equity interest in FoodsUp at a nominal price. The terms of this option were disclosed in a previous company press release.
The private placement is scheduled to close by February 5, 2024. This closure date remains flexible, subject to agreement by all parties and TSXV approval.
