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Maxim Power Corp (2)
Symbol C : MXG
Shares Issued 52,387,905
Close 2019-09-10 C$ 1.78
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Maxim Power holder Chernoff arranges convertible loan

2019-09-11 06:32 ET - News Release

Mr. M. Bruce Chernoff, a shareholder, reports

M. BRUCE CHERNOFF MAKES INVESTMENT IN MAXIM POWER CORP.

Pursuant to the early warning requirements of applicable Canadian securities laws, Alpine Capital Corp., a company that is majority owned by Mr. Bruce Chernoff, together with Prairie Merchant Corp., as lenders, has entered into a loan agreement with Maxim Power Corp., and certain other subsidiaries of Maxim, pursuant to which Maxim may borrow up to $75-million from the lenders. Pursuant to the terms of the loan agreement, amounts drawn under the convertible loan, including accrued but unpaid interest that has been capitalized, to a maximum of $75-million, is convertible, in whole or in part, into common shares of Maxim at a conversion price of $1.90 per common share at the election of each lender, such right exercisable at any time during the term of the convertible loan or within 10 business days of receipt of any repayment notice from Maxim. The conversion right may be exercised by each lender separately, and any non-electing lender will be entitled to the repayment of any amounts outstanding under the convertible loan, based on its pro rata commitment under the convertible loan (being 50 per cent to Alpine and 50 per cent to Prairie Merchant). Upon the conversion of $75-million of principal indebtedness under the convertible loan into common shares, the conversion right expires and will not apply to additional indebtedness under the convertible loan that may be drawn on a revolving basis or otherwise exceeds $75-million.

The convertible loan requires minority shareholder approval as required by Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions -- and the rules of the Toronto Stock Exchange. If such approval is not received, and all other conditions to the convertible loan are not otherwise satisfied or waived, the convertible loan will terminate, and no funds would be advanced thereunder and no common shares may be issuable to the lenders. A special meeting of shareholders of Maxim to approve the convertible loan is expected to be held in October, 2019, and in any event, within 60 days of the entering into of the loan agreement.

Before giving effect to the convertible loan, Mr. Chernoff (through Kai Commercial Trust, Alpine and Caribou Capital Corp.) owned and/or controlled an aggregate of 13,826,050 common shares representing approximately 26.4 per cent of the issued and outstanding common shares. After giving effect to the convertible loan, Mr. Chernoff (through Kai Commercial Trust, Alpine and Caribou Capital Corp.) continues to own and/or control an aggregate of 13,826,050 common shares, with a right to acquire up to 19,736,842 additional common shares on conversion of the full amount of the convertible loan attributable to Alpine, representing approximately 36.5 per cent of the then-issued and -outstanding common shares assuming the full conversion of the convertible loan, including the conversion of any principal amounts attributable to Prairie Merchant thereunder (46.5 per cent of the then-issued and -outstanding common shares assuming the full conversion of the convertible loan attributable to Alpine only and excluding the conversion of any principal amounts attributable to Prairie Merchant thereunder).

The provision of the convertible loan was made in furtherance of Mr. Chernoff's investment objectives. Mr. Chernoff may, from time to time, as market opportunities exist or develop, increase (including by way of the conversion of the portion of the convertible loan attributable to Alpine) or decrease his ownership in common shares as permitted by applicable securities laws.

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