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COLLINGWOOD, Ontario, May 12, 2022 (GLOBE NEWSWIRE) -- The Limestone Boat Company Limited ("Limestone" or the "Company") (TSXV: BOAT | OTCQB: LMSBF) is pleased to announce the closing of its previously announced non-brokered private placement of 10% unsecured convertible debentures of the Company ("Debentures") at a price of $1,000 per Debenture for aggregate gross proceeds of $340,000 (the "Existing Offering"). As previously disclosed, the Debentures issued in connection with the Existing Offering were subscribed for by Telfer Hanson, the Chair of the Board and a Director of the Company.
The Company is also pleased to announce the proposed offering of up to $3.0 million of additional 10% unsecured convertible debentures of the Company that will mature 3 years from their date of issuance and be convertible into common shares of the Company ("Common Shares") at a conversion price of $0.19 per Common Share.
Closing the Existing Offering of Convertible Debentures
The Debentures issued under the Existing Offering will mature 3 years from their date of issuance and will bear interest at a rate of 10% per annum, payable annually in arrears. These Debentures will be convertible at any time at the option of the holder into Common Shares at a conversion price of $0.24 per Common Share. If at any time following 120 days from the date of issuance of the Debentures (the "Closing Date") and prior to the date that is 30 days prior to the end of their term, the volume weighted average closing price of the Common Shares on the TSX Venture Exchange, or such other exchange on which the Common Shares may be listed, (the "Exchange"), is equal to or higher than $0.50 per Common Share for 20 consecutive trading days, the Company may notify the holders of the Debentures that the Debentures will be automatically converted into Common Shares at the conversion price of $0.24 per Common Share 30 days following the date of such notice.
For their services in connection with the Existing Offering, Haywood Securities Inc. were paid a cash commission equal to 8% of the gross proceeds and compensation warrants that will entitle the holder thereof to acquire up to 113,333 Common Shares for a period of 18 months following the date of issuance at an exercise price of $0.24 per Common Share.
The subscription by Mr. Hanson, an "insider" of the Corporation is considered to be a "related party transaction" for the purposes of Multilateral Instrument 61-101 ? Protection of Minority Security Holders in Special Transactions ("MI 61-101") and Policy 5.9 ? Protection of Minority Security Holders in Special Transactions of the TSX Venture Exchange. The Corporation is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The Corporation is exempt from the formal valuation requirement in section 5.4 of MI 61-101 in reliance on sections 5.5(a) and (b) of MI 61-101 as the fair market value of the transaction, insofar as it involves interested parties, is not more than 25% of the Corporation's market capitalization, and no securities of the Corporation are listed or quoted for trading on prescribed stock exchanges or stock markets. Additionally, the Corporation is exempt from the minority shareholder approval requirement in section 5.6 of MI 61-101 in reliance on section 5.7(b) as the fair market value of the transaction, insofar as it involves interested parties, is not more than 25% of the Corporation's market capitalization.
All securities issued under the Existing Offering are subject to a four month hold period which will expire September , 2022. The Existing Offering is subject to certain conditions including, but not limited to, final approval of the TSX Venture Exchange.
The Proposed Offering of Additional Convertible Debentures
The Limestone Boat Company Limited is also pleased to announce a non-brokered private placement offering of up to $3.0 million in aggregate principal of 10% unsecured convertible Debentures of the Company (the "Proposed Offering" and collectively with the Existing Offering, the "Offerings").
The Debentures to be issued under the Proposed Offering will mature 3 years from their date of issuance (the "Term") and bear interest at a rate of 10% per annum, payable annually in arrears, commencing December 31, 2022. These Debentures shall be convertible, in whole or in part, at the discretion of the holders, into Common Shares at a price of $0.19 per Common Share (the "Conversion Price"). If at any time following 120 days from the Closing Date and prior to the date that is 30 days prior to the maturity date of these Debentures, the volume weighted average closing price of the Common Shares on the Exchange is equal to or higher than $0.38 per Common Share for 20 consecutive trading days, the Company may notify the holders of these Debentures that these Convertible Debentures will be automatically converted into Common Shares at the Conversion Price 30 days following the date of such notice.
In connection with the Proposed Offering, the Company will pay qualified brokers a cash commission of 8% of the gross proceeds from each Debenture subscription and compensation options equal to 8% of the number of Common Shares underlying the Debentures (the "Compensation Options"). Each Compensation Option will be exercisable by the holder thereof to acquire one Common Share at an exercise price of $0.19 per Common Share for a period of 18 months from the closing date of the Proposed Offering (the "Closing").
Closing of the Proposed Offering may occur in multiple tranches and is subject to receipt of all necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange. Closing of the Proposed Offering is anticipated to occur on or about May 19, 2022, or such other date as reasonably determined by the Company (the "Closing Date"). The Convertible Debentures (and any Common Shares issuable upon conversion thereof) offered pursuant to the Proposed Offering will be subject to a statutory hold period in Canada of four months and one day after the Closing Date.
The net proceeds from both Offerings are expected to be used to fund the purchase of manufacturing equipment and investment in facilities and processes to increase production, and for working capital and general corporate purposes.
Scott Hanson, CEO of Limestone to participate in the Proposed Offering of Convertible Debentures
Mr. Hanson has announced a commitment to a lead order investment of $244,000 of Debentures to be issued in connection with the Proposed Offering.
"Increasing our production scale to meet the overwhelming demand and order backlog that we are experiencing is a primary focus for The Limestone Boat Company. I am very pleased to participate in this offering which will allow the Company to initiate its strategic investments in inventory, technology, process, labor and manufacturing expansion efforts at our 145,000 square foot White Bluff, Tennessee boatbuilding plant," stated Scott Hanson, CEO of Limestone.
Finders Fees in Connection with the March 2021 Offering of Convertible Debentures
The Company confirms that in connection with the closing of its previously announced non-brokered private placement of unsecured convertible debentures (the "March 2021 Debenture Offering") qualified brokers were entitled to receive either: (i) a cash commission equal to 8% of the aggregate principal amount of Debentures issued thereunder and compensation options ("March 2021 Compensation Options") equal to 8% of the Common Shares underlying such Debentures; or (ii) an all-cash commission of 10% of the aggregate principal amount of Debentures issued thereunder. Each March 2021 Compensation Option entitles the holder thereof for a period of 18 months from the closing of the March 2021 Debenture Offering to acquire one Common Share at an exercise price of $0.36 per Common Share.
The securities offered in connection with the Existing Offering and the Proposed Offering have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.
About Limestone Boat Company Limited:
The Limestone Boat Company ? owner and builder of Aquasport Boats, Limestone«áBoats and Boca Bay Boats - is publicly traded on the Toronto Venture Exchange under the ticker symbol BOAT. They are headquartered in Collingwood, Ontario with a 145,000 sq. ft. manufacturing facility in White Bluff, Tennessee. The company is backed by a large, skilled labor force and dealer partners throughout the United States and the Canadian Great Lakes Region.
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Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "anticipate", "believe", "could" "should", "would", "estimate", "expect", "forecast", "indicate", "intend", "likely, "may", "plan", "potential", "project", "outlook", "seek", "target", "trend" or "will" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the parties' current belief or assumptions as to the outcome and timing of such future events. Forward-looking statements in this press release include statements regarding the anticipated timing to complete the Proposed Offering, the ability of the Company to obtain Exchange approval of the Offerings, the use of proceeds of the Offerings, and expectations of increased production capacity. The forward- looking information contained in this release is made as of the date hereof and the parties are not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward- looking information contained herein.
Many factors could cause actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward- looking statements. All the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors in this press release. There can be no assurance that the actual results or developments will be realized or, even if substantially realized, will have the expected consequences to, or effects on, the Company. Unless required by applicable securities law, the Company does not intend and does not assume any obligation to update these forward-looking statements.
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