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Viridis Energy Inc
Symbol C : VRD
Shares Issued 59,798,883
Close 2013-02-26 C$ 0.075
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Viridis Energy restructures short-term debt

2013-02-27 08:34 ET - News Release

Mr. Christopher Robertson reports

VIRIDIS ENERGY ANNOUNCES DEBT RESTRUCTURING

Effective Feb. 25, 2013, Viridis Energy Inc. has completed a restructuring of its short-term debt with its largest investor, Cornwall Investments LLC. The debt restructuring includes Okanagan Pellet Company Inc.'s (OPC) assumption of the HSBC Bank Canada debt and the short-term loan on the Scotia Atlantic Biomass Company Ltd. facility, currently in default. The aggregate of the two credit facilities is approximately $5.7-million of long-term debt.

The first of the two facilities is a non-revolving term credit facility in the principal amount of $3,067,657 and represents the conversion of the demand revolving credit facility in the original principal amount of $3-million previously provided by HSBC Bank Canada to Viridis's wholly owned, marketing subsidiary, Cypress Pacific Marketing Inc. This facility was subsequently sold and assigned by HSBC Canada to Cornwall.

To facilitate the restructuring, Cypress assigned the debt of the revised credit facility to OPC via an assignment and assumption agreement. OPC irrevocably accepted and assumed all of the rights and obligations to Cornwall under the revised credit facility. OPC is one of two wood pellet production facilities of Viridis and, as such, holds fixed assets that can be collateralized. As further security for the revised credit facility, Viridis has guaranteed the debt of OPC to Cornwall.

Interest on the revised credit facility is due at the maturity date, or on such earlier date or dates as it repays in whole or in part the principal amount of the revised credit facility, at the prime rate plus 6 per cent per annum. Interest will accrue and be computed daily and will be compounded monthly until paid.

In consideration for the revised credit facility and subject to TSX Venture Exchange approval, Viridis will issue shares of its common stock to Cornwall. A total of 2.42 million bonus shares will be represented by four share certificates registered in the name of Cornwall, in denominations of 484,000; 484,000; 605,000 and 847,000 shares respectively. Upon approval by the TSX-V, the first certificate for 484,000 bonus shares will be delivered to Cornwall. As an incentive to Viridis to arrange for the refinancing of the revised credit facility with a third party, the balance of the bonus shares will be subject to the provisions of an escrow agreement and the certificates for those bonus shares will be held by the escrow agent. The escrow agreement provides for the delivery of the remaining three certificates after each six-month period during which the revised credit facility, or any portion thereof, is outstanding have elapsed, starting on Oct. 1, 2013, with the final delivery on Oct. 1, 2014.

The second facility is an extension of the existing short-term facility in the original principal amount of $2,455,000 provided to Scotia by Cornwall. The revised facility is a non-revolving term credit facility in the principal amount of $2,636,238 established by Cornwall in favour of Scotia. As further security for the Scotia credit facility, Viridis has guaranteed the debt of OPC to Cornwall.

Interest on the Scotia credit facility is due on the maturity date, or on such earlier date or dates as it repays in whole or in part the principal amount of the Scotia credit facility, at the prime rate plus 5 per cent per annum. Interest will accrue and be computed daily and will be compounded monthly until paid.

In consideration for the Scotia credit facility and subject to TSX-V approval, Viridis will issue bonus shares to Cornwall. A total of 2.08 million bonus shares will be represented by four share certificates registered in the name of Cornwall, in denominations of 416,000; 416,000; 520,000 and 728,000 shares respectively. Upon TSX-V approval, the first certificate for 416,000 bonus shares will be delivered to Cornwall. As an incentive to Viridis to arrange for the refinancing of the Scotia credit facility with a third party, the balance of the bonus shares will be subject to the provisions of an escrow agreement and the certificates for those bonus shares, will be held by the escrow agent. The escrow agreement provides for the delivery of the remaining three certificates after each six-month period during which the Scotia credit facility, or any portion thereof, is outstanding have elapsed, starting on Oct. 1, 2013, with the final delivery on Oct. 1, 2014.

"The debt restructuring with Cornwall is an important step in the process that we began in December. The deferment of interest and principal payments until maturity will further Viridis's ability to generate working capital to support growth. In addition, the escrowed bonus share program provides Viridis the incentive to accelerate its plans for refinancing with a traditional lender over the next two years. Cornwall continues to demonstrate its support of Viridis as it develops its production capacity to capitalize on the renewable energy industry's advancement," said Christopher Robertson, chairman and chief executive officer, Viridis Energy.

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