Plus Products (CSE: PLUS) has managed to stave off creditors just in the nick of time. The company this morning announced that it has managed to reach an agreement to amend the maturity of certain convertible debentures that were originally due on February 28, 2021, however the changes did not come cheap for the company.
The debentures were originally issued in February 2019, with gross proceeds of C$25.0 million being raised in the offering. The debt contained an 8% interest rate per annum, a C$6.50 per share conversion price, and a total of 77 subordinate voting share purchase warrants were issued in connection with the offering.
However, due to the need from the company to amend the terms of the debt, simply because the $12.6 million cash they have would not cover the debt, the cost of those funds has increased substantially. With an amended maturity of February 28, 2024, that same debt now bears interest at a rate of 12.0% per annum. Furthermore, 25% of the debt can now be converted to shares at a price of $0.95 per share until March 31, 2021, while the remainder will no longer be convertable.
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Furthermore, the debt will also be redeemed at 103% of the principal amount until February 28, 2023, while after that period it will be redeemed at 101.5% of the principal amount.
The kicker however, is that a consent fee is to be paid to the debtholders, in the form of common share purchase warrants. For every $1,000 in principal amount held, the company will pay $499 in warrants as a fee for this amendment. One warrant to purchase a subordinate voting share at a price of $1.10 for a period of three years is to be issued, with each warrant accounting for $1.10 of the consent fee. Effectively 454 warrants are to be issued for every $1,000 in principal held.
Plus Products last traded at $0.94 on the CSE.
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