PowerBand Solutions (TSXV: PBX) has closed on the first US$1.5 million tranche from its previously announced US$10.0 million financing. The investment results in significant financing for both its Canadian and US based operations as it works towards securing credit facilities for its automotive finance and leasing platform.
The investment comes from that of D&P Holdings, one of the largest providers of warranty and insurance products in the US. The company currently deals directly with more than 850 dealerships across the United States, and is the managing general agency for the Hanover Insurance Agency, a firm valued in excess of $5 billion.
We are delighted to make this USD $10-million strategic investment, to be part of PowerBand and help the Company secure the necessary credit facilities for their revolutionary transaction system. This technology allows you to approve a vehicle lease in seconds, rather than days, as the Company and its teams have already proven with Tesla. That, in itself, is revolutionary for the automotive industry and consumers.John Armstrong, CEO of D&P
PowerBand is currently in negotiations to secure extensive credit facilities for its cloud-based transactional platform, which which will allow consumers and dealers to buy, sell, lease and trade vehicles on their smart phones and others devices. The funding from D&P is a significant step in moving the platform forward with securing these credit facilities for electric and non-electric vehicles.
The $10.0 million investment takes the form of convertible debentures within a subsidiary of PowerBand Solutions. With the first tranche for $1.5 million closing on March 6, the second tranche, valued at $3.5 million, will now close April 6, 2020. The third and final tranche for $5.0 million will then close May 6, 2020. All debt in relation to the financing will be due March 6, 2023, and bears interest at a rate of 9.0% per annum.
D&P Holdings will also have the option to convert the debt to equity in PowerBand’s subsidiaries. If converted, the debt will result in D&P owning a 9% interest in PowerBand US, while also owning a 9% interest in PowerBand’s Canadian leasing division.
Lastly, 2.4 million common share purchase warrants, with an exercise price of $0.30 have been issued in connection with the financing. The warrants have a term of 24 months, and are subject to a four-month hold period.
PowerBand Solutions last traded at $0.15 on the TSX Venture.
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