First Cobalt (TSXV: FCC) this morning announced that it will be settling an outstanding debt with Glencore via the issuance of shares. The arrangement will see a $5.5 million outstanding loan settled via shares, resulting in Glencore having a notable stake in the firm.
The debt to equity conversion is in relation to a loan agreement entered into by the company back in August 2019. At the time, First Cobalt needed funding to undertake engineering studies, metallurical testwork, and permitting for the expansion of the Ontario refinery for the production of battery-grade cobalt.
As part of the arrangement, Glencore was eligible to convert the debt to equity at a 15% discount to the market price of First Cobalt’s equity. As a result, the debt to equity conversion is set to take place at a price of $0.29 per share, resulting in the issuance of 23.8 million shares of First Cobalt to that of Glencore, leaving Glencore with a 4.8% stake in the company.
Following the close of the transaction, First Cobalt will have removed substantially all debt currently on its books, however a financing process for the debt portion of the refinery financing plan is currently underway. Once completed, it will provide the remaining funding required to see the cobalt processing facility completed.
First Cobalt last traded at $0.355 on the TSX Venture.
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