Debenture proceeds will provide additional funds and flexibility for growth
BOUCHERVILLE, Québec, Sept. 21, 2023 (GLOBE NEWSWIRE) — LSL Pharma Group Inc. (TSXV: LSL) – (the “Company” or “LSL Pharma Group”), a Canadian integrated pharmaceutical company, announced today that it has entered into an agreement with iA Capital Markets as the sole agent and sole bookrunner (“Agent”), in connection with a “best-efforts” brokered private placement offering of up to $4.0 million in unsecured convertible debentures (the “Debentures”) of the Company at a price of $10 per convertible debenture, to raise aggregate gross proceeds between $2.0 million and $4.0 million (the “Offering“).
The Debentures will be convertible into Class A shares of the capital stock of the Company (the “Class A Shares”) at the option of the holder at any time prior to the close of business on the earlier of: (i) the last business day immediately preceding the Maturity Date, and (ii) the date fixed for redemption, at a conversion price of $0.70 per Class A Share (the “Conversion Price”), subject to adjustment in certain events.
The Debentures will mature 5 years from the Closing Date and accrue interest from the Closing Date at a rate of 11% per annum (the “Base Rate”), compounded semi-annually on the last day of April and October of each year. Interest will be payable in cash semi-annually on the last day of April and October, with payments commencing April 30, 2025. The annual interest rate will be recalculated on April 30 of every year, starting April 30, 2025 (each an “Interest Rate Review Date”), and will be equal to the Base Rate less 100 basis points for each Business Objective achieved (as defined below).
Business Objectives (each a “Business Objective”):
|1)||The Company will obtain FDA approval for its Steri-Med plant (one-time business objective);|
|2)||The Company will complete the acquisition of a business that: (i) complements the Company’s existing product offering and/or will create synergies with the Company’s existing business operations; and (ii) generated a minimum of $5.0 million in revenue during the last twelve-month period preceding the acquisition (one-time business objective); and|
|3)||The Company will generate a minimum of $30 million of revenue with a 20% EBITDA margin during the fiscal period preceding the Interest Rate Review Date (annual business objective).|
If, at any time following the date that is 24 months from the Closing Date, for the preceding 20 consecutive trading days (i) the daily volume weighted average trading price of the Class A Shares on the TSX Venture Exchange (the “TSXV”) is greater than 175% of the Conversion Price; and (ii) the average daily volume of the Class A Shares traded on the TSXV is no less than the number obtained when dividing the number of shares issued upon conversion of the total amount of Debentures outstanding by twenty (20), the Company shall have the option to convert all of the principal amount outstanding of the Debentures at the Conversion Price with at least 30 days’ prior written notice.
The Agent further shall have the option, exercisable at any time up to two days prior to the closing of the Offering, to increase the size of the Offering by up to $1.0 million (the “Agent’s Option“). Assuming the full exercise of the Agent’s Option, the aggregate gross proceeds of the Offering will be $5 million.
The net proceeds of the Offering will be used for working capital, capital expenditures, and for general corporate purposes.
For its services in connection with the Offering, the Company will pay to the Agent: (i) a cash commission equal to 7% of all gross proceeds raised in connection with the Offering from purchasers not included on the President’s List; (ii) a cash fee equal to 1.0% of all gross proceeds raised in connection with the Offering from purchasers identified by the Company (the “President’s List”); and (iii) broker warrants of the Company (“Broker Warrants”) equal to 7.0% of the gross proceeds of the Offering from purchasers not included on the President’s List and 1.0% of the gross proceeds of the Offering from purchasers on the President’s List divided by the Conversion Price, at an exercise price equal to the Conversion Price. The Broker Warrants will be exercisable to acquire one Class A Share of the Company for a period of 24 months from the date of issuance of the Broker Warrants.
The closing of the Offering is subject to the Company obtaining conditional approval to list the Debentures on the TSXV in addition to customary closing conditions and the receipt of all required regulatory approvals, including but not limited to the approval of the TSXV. The securities issuable pursuant to this Offering will be subject to a hold period as set out in National Instrument 45-102 – Resale of Securities. The Company and the Agent are dealing at arm’s length.
The securities issued in connection with the Offering mentioned herein have not been and will not be qualified for sale to the public under applicable Canadian securities laws and, accordingly, any offer and sale of securities in Canada will be made on a basis which is exempt from the prospectus and, when applicable, dealer registration requirements of such securities laws. Furthermore, none of the securities issued in connection with the Offering will be registered under the United States Securities Act of 1933, as amended (the “1933 Act“) or of any other jurisdiction, and none of them may be offered or sold in the United States or in any other jurisdiction absent registration or an applicable exemption from the registration requirements of the 1933 Act or of any other jurisdiction. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Information provided and statements contained in this press release that are not purely historical, such as those on the revenue and the EBITDA, are forward-looking statements within the meaning of the applicable securities laws. Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to LSL Pharma Group’s future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as “may”; “will”; “should”; “expect”; “plan”; “anticipate”; “believe”; “intend”; “estimate”; “predict”; “potential”; “continue”; “foresee”, “ensure” or other similar expressions concerning matters that are not historical facts. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. LSL Pharma Group will not update these statements unless applicable securities laws require LSL Pharma Group to do so.
ABOUT LSL PHARMA GROUP INC.
LSL Pharma Group is a Canadian integrated pharmaceutical company specializing in the development, manufacturing and distribution of high-quality natural health products and dietary supplements in solid dosage forms, as well as high quality sterile ophthalmic pharmaceutical products. For more information, please visit www.laboratoirelsl.com and www.sterimedpharma.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
François Roberge, President and Chief Executive Officer