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Pele Mountain Resources Inc (2)
Symbol GEM
Shares Issued 20,999,693
Close 2017-12-08 C$ 0.09
Market Cap C$ 1,889,972
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Pele Mountain to issue shares for debt of $1.21-million

2017-12-08 17:44 ET - News Release

Mr. Martin Cooper reports

PELE MOUNTAIN ANNOUNCES $1.3 MILLION IN DEBT SETTLEMENTS AND WAIVERS OF FEES AND SALARIES

Further to the press release dated Nov. 24, 2017, Pele Mountain Resources Inc. has entered into agreements with certain creditors, including creditors which are related parties of the corporation, providing for the settlement of approximately $1,213,457 of its outstanding debts. Pursuant to the debt settlement, approximately $964,047 in debt will be settled through the issuance of an aggregate of 12,630,902 common shares of the corporation at a price of 6.8 cents per common share, $87,000 in debt will be settled through the issuance of 966,667 common shares at a price of nine cents per common share, $68,189 will be paid in cash and $94,221 owed to related-party creditors will be forgiven. The debt settlement is subject to the approval of the TSX Venture Exchange. The corporation expects to close the debt settlement immediately after such approval is obtained. Common shares issued pursuant to the debt settlement will be subject to a statutory hold period of four months and one day from the closing date.

Pele further announces that Martin Cooper, the interim chief executive officer and president, vice-president, indigenous relations, and a director of the corporation, has waived a total of $114,750 in salary accrued between January, 2016, to May, 2017. This waiver of salary, together with the debt settlement, will reduce Pele's indebtedness to less than $123,000 (net of disputed/aged payables of approximately $98,000) and increase the number of issued and outstanding common shares to 34,597,262.

Martin Cooper, Pele's newly appointed interim CEO and president, emphasized how important this restructuring of Pele's debt is for its future prospects as management focuses on seeking out strategic alternatives for Pele to enhance shareholder value. Mr. Cooper thanked all creditors of Pele who participated in this debt settlement and forgiveness initiative, which is critical for Pele's future economic viability and prospects.

Certain creditors who are insiders of the corporation or related to such insiders will participate in the debt settlement. John Wilkinson, a director of the corporation, will settle $6,332 in outstanding director fees in exchange for 93,125 common shares, and will forgive a further $9,720 in fees. Wilkinson Insight Inc., a corporation beneficially owned by Mr. Wilkinson, will settle $26,059 in debt in exchange for 383,227 common shares, and will forgive a further $39,089 in debt. Peter Dimmell, a director of the corporation, will settle $7,100 in outstanding director fees in exchange for 104,412 common shares, and will forgive a further $10,650 in fees. Richard Cooper, a director of the corporation, will settle $6,240 in outstanding director fees in exchange for 91,765 common shares, and will forgive a further $9,360 in fees. Richco Waterfall Equities Ltd., a corporation beneficially owned by Mr. Cooper, will settle $16,934 in debt in exchange for 249,036 common shares, and will forgive a further $25,402 in debt. Forbes Andersen LLP, a partnership of which Paul Andersen, the chief financial officer of the corporation, is the managing partner, will settle $201,380 in outstanding debt in exchange for 2,961,469 common shares.

The participation in the debt settlement by the related creditors constitutes a related-party transaction as such term is defined by Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions) under applicable securities laws. The corporation is relying on exemptions from the MI 61-101 formal valuation and minority approval requirements applicable to related-party transactions available as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the debt settlement, insofar as it involves the related creditors, exceeds 25 per cent of the corporation's market capitalization at the time at which such transactions were agreed to. The participation by each related creditor in the debt settlement was approved by directors of the corporation, who are independent of the related creditors.

About Pele Mountain Resources Inc.

The halt on trading of Pele shares imposed by the TSX Venture Exchange on or about June 2, 2017, was lifted by the TSX-V at opening of trading on Dec. 7, 2017.

We seek Safe Harbor.

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