22:35:37 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Transeastern Power Trust
Symbol TEP
Shares Issued 11,555,614
Close 2015-02-27 C$ 0.95
Market Cap C$ 10,977,833
Recent Sedar Documents

Transeastern to raise $18-million through equity, debt

2015-03-02 11:15 ET - News Release

Mr. J. Colter Eadie reports

TRANSEASTERN POWER TRUST ANNOUNCES $18 MILLION FINANCING LED BY AFFILIATES OF SPROTT; PROCEEDS TO BE USED TO ACQUIRE TWO SOLAR POWER PRODUCTION PLANTS

Transeastern Power Trust has entered into two non-binding term sheets with certain affiliates of Sprott Inc. for a minimum $18-million financing, comprising a non-brokered private placement for a minimum of $13-million of subscription receipts to be led by Sprott and a $5-million secured debt facility to be provided by Sprott Resource Lending Partnership.

Proceeds from the financing will be used for the acquisition of two photovoltaic solar power production plants in Romania and for general working capital purposes. The plants are fully operational and have a total capacity of over 16 kilowatts-peak. The plants have been in production for over two years and have performed consistently over that time frame. The trust is currently in the process of finalizing the purchase agreements for the power assets, and further details will be announced in due course. The gross purchase price of the power assets is expected to be approximately $9.6-million, net of assumed bank debt. As partial payment for the power assets, it is expected that the vendors will subscribe for up to $5.8-million of units of the trust at a purchase price of $1 per unit.

The equity offering will comprise the issuance of subscription receipts at a price of $1 per subscription receipt, each exercisable for one trust unit and one purchase warrant. Each warrant shall entitle the holder to acquire one trust unit for a period of 36 months from the date of issuance at an exercise price of $1, subject to compliance with TSX Venture Exchange pricing policies. The warrants will contain an acceleration provision providing that, if: (i) four months and one day have passed since the closing date, (ii) the subscription receipt escrow release conditions have been satisfied, and (iii) the closing price of the trust units on the TSX Venture Exchange is higher than $1.50 for 20 consecutive trading days, then on the 20th consecutive trading day, the expiry date of the warrants will be accelerated to the date that is 10 business days after the acceleration trigger date.

The issuance of the subscription receipts will be subject to satisfaction of due diligence, receipt of a minimum of $13-million in gross proceeds from the equity offering (which may include the dollar amount issued to vendors of the acquired power assets) and receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange. The subscription receipts shall convert into trust units and warrants, and funds shall be released from escrow upon the fulfilment of certain release conditions, including all conditions precedent for the purchase of the power assets (other than the release of escrow funds) being satisfied or waived, receipt of funds from the debt facility, and other customary conditions for a subscription receipt offering.

A finder's fee will be payable to Sprott on proceeds realized from sales to investors introduced by Sprott equal to 5 per cent cash (or units at Sprott's election), 5 per cent warrants and 3 per cent subscription receipts. The securities issued in the equity offering will be subject to a four-month-and-one-day hold period. The closing of the financing and the acquisition of the power assets are expected to occur by the end of March, 2015.

The debt facility will be in the amount of $5-million, accruing interest at a rate of 10 per cent per annum, compounded monthly. It will have a two-year term and be repayable at the trust's option without penalty, provided six months interest has been paid. The debt facility will be guaranteed by the trust's subsidiaries, and will be secured against the power assets and each of the trust's current assets. In connection with the debt facility, the trust shall undertake to meet certain minimum working capital requirements and use of funds. The trust will also make certain required payments in conjunction with the debt facility, including a $300,000 bonus payment and an annual payment of 2 per cent of the debt facility, each payable in trust units at a 10-per-cent discount to the market price of the trust units. The debt facility is subject to TSX Venture Exchange approval.

J. Colter Eadie, chief executive officer of Transeastern, commented: "The acquisition of these two projects is a transformative transaction for the trust. Upon completion, we will be more than doubling our installed power production capacity, and doing so on a basis that we expect to be immediate and highly accretive to the trust, as well as dramatically lowering our payout ratio. With these acquisitions, we anticipate that approximately half of our power generation will come from solar and half from hydro. This diversification reduces our hydrology risk and dramatically increases our revenue. The vendors are agreeable to taking approximately 58 per cent of the total consideration for the acquisition in trust units, a major endorsement of our strategy, and evidence of confidence in the quality of the assets being acquired, our existing portfolio and the opportunities in front of us.

"We are very pleased to welcome Sprott, a high-quality global investment firm, as a cornerstone investor and lender to the trust. In addition to Sprott, insiders have committed to acquire at least $500,000 as part of this financing. We are particularly pleased to be receiving this support from management and the asset vendors."

The terms of the financing, the payment of finders' fees and the acquisition of the power assets are subject to TSX Venture Exchange approval.

We seek Safe Harbor.

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