Nouveau Monde Graphite Inc. (NYSE: NMG) (TSX-V: NOU) is pleased to announce that Pallinghurst Graphite International Limited the holder of a secured convertible bond in the principal amount of C$15 million as announced in the press release dated July 15, 2020, has converted the full outstanding principal amount of the Convertible Bond to common shares of the Company. This decision further demonstrates Pallinghurst’s significant and continuing support for the Company and its ongoing project development initiatives, as it strives to become a key player in the sustainable energy revolution.
Importantly, all related security to secure the obligations of the Company under the Convertible Bond will be released and discharged, which will provide the Company with increased flexibility for its project financing initiatives, as it moves towards the next stage of development.
The Convertible Bond was converted in two tranches: 1,875,000 common shares were received by Pallinghurst on exercise of the first tranche and distributed by Pallinghurst to its investors, which include Messrs. Arne H Frandsen and Andrew Willis, who are directors of the Company. 5,625,000 common shares were subsequently issued to Pallinghurst in respect of conversion of the second tranche.
In addition, and pursuant to the terms of the Convertible Bond, the Company has elected to settle the accrued and unpaid interest owing under the Convertible Bond of C$1,900,463 by issuing an additional 220,471 common shares of the share capital of the Company at C$8.62 per Interest Share, in accordance with the rules of the TSX Venture Exchange. Following the issuance of the Interest Shares, all amounts payable pursuant to the Convertible Bond will have been settled in full.
Following the exercise of the Convertible Bond, the distribution to Pallinghurst investors, and receipt of the Interest Shares, together with its existing holdings, Pallinghurst, together with its subsidiary will own 11,541,014 common shares of the Company representing approximately 21% of the issued and outstanding common shares of the Company.
Arne H Frandsen, Managing Partner and Co-Founder of The Pallinghurst Group said:
“Pallinghurst is delighted to continue its support of Nouveau Monde and today’s announcement indicates our firm belief that Nouveau Monde is set to become a significant, fully integrated supplier of carbon-neutral battery anode material in the future. As the Company’s largest shareholder, Pallinghurst looks forward to continuing to work closely with management as we develop what is projected to be the Western World’s largest battery grade graphite operation, with best-in-class ESG credentials.”
Eric Desaulniers, Founder, President and CEO of Nouveau Monde added:
“Developing a large-scale battery mining and transformation project is a journey that can only be achieved with long term investors like Pallinghurst who support and embrace our vision, while enhancing our business plan with their experience and execution discipline. The whole team at Nouveau Monde and myself are looking forward to our continuing collaboration with Pallinghurst as we work towards delivering our next exciting milestones in support of an anode material supply chain in America for the benefit of all of Nouveau Monde’s stakeholders.”
The payment of interest in the form of Interest Shares of the Company takes place in favor of Pallinghurst, a holder of more than 10% of the securities of the Company, which constitutes a “transaction with a related party” within the meaning of Regulation 61-101 on measures to protect minority holders during specific transactions (“Regulation 61-101”) and within the meaning of Policy 5.9 of the Stock Exchange – Measures to protect minority holders during specific transactions. However, the directors of the Company have determined that the exemptions from the official valuation obligation and the approval of minority holders, provided for in sections 5.5 a) and 5.7 1) a) of Regulation 61-101 respectively, may be invoked as neither the fair market value of the shares issued to this insider nor the fair market value of the consideration exceed 25% of the market capitalization of the Company. No director of the Company has expressed a contrary opinion or disagreement in connection with the foregoing.
The issuance of Interest Shares is conditional upon the approval of the TSX Venture Exchange and the New York Stock Exchange, and will be subject to a hold period of 4 months and one day.
A material change report relating to this transaction with a related party will be filed by Nouveau Monde no later than 21 days prior to the date on which the Interest Shares are expected to be issued as the conditions in connection with the issuance of the Interest Shares were not determined.
Nouveau Monde is striving to become a key contributor to the sustainable energy revolution. The Company is working towards developing a fully integrated source of carbon-neutral battery anode material in Québec, Canada for the growing lithium-ion and fuel cell markets. With low-cost operations and enviable ESG standards, Nouveau Monde aspires to become a strategic supplier to the world’s leading battery and automobile manufacturers, providing high-performing and reliable advanced materials while promoting sustainability and supply chain traceability.
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We acknowledge the [financial] support of the Government of Canada.