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Burcon NutraScience Corp
Symbol BU
Shares Issued 108,728,742
Close 2022-05-02 C$ 0.89
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Burcon NutraScience arranges $10-million credit line

2022-05-03 14:04 ET - News Release

Mr. Peter Kappel reports

BURCON ANNOUNCES $10 MILLION CREDIT FACILITY FROM SHAREHOLDER

Burcon NutraScience Corp. has signed a term sheet with its largest shareholder with respect to a proposed credit facility of up to $10-million to Burcon. In addition, Burcon announces it has advanced a loan from treasury to its joint venture, Merit Functional Foods Corporation ("Merit").

The Term Sheet with Large Scale Investments Limited (the "Lender"), a wholly-owned subsidiary of Firewood Elite Limited ("Firewood"), sets out the proposed terms of a secured credit facility (the "Facility") of up to $10,000,000 to be made available to Burcon in two $5 million tranches. The Facility is expected to be secured by certain assets of Burcon.

The proceeds from the Facility are expected to be used to support Burcon's partnership discussions for its innovative plant-based protein technologies, continued research and development of Burcon's protein extraction and purification platform, further strengthening of Burcon's intellectual property portfolio and for other general corporate purposes.

"We are pleased to have received a preliminary commitment for a $10 million credit facility," said Peter H. Kappel, Burcon's interim CEO and Chairman of the board, adding that, "This support from our major shareholder comes at an opportune time and will provide us the financial leeway to capitalize on additional commercialization opportunities."

Firewood is wholly-owned by Mr. Alan Chan, a director of Burcon. Firewood is an insider and related party of Burcon as it currently holds 22,866,874 common shares of Burcon ("Common Shares"), representing approximately 21% of the outstanding Common Shares. In addition, Mr. Alan Chan, a director of Burcon, is also a director of Firewood and the Lender, respectively. The Facility will be subject to approval of the Toronto Stock Exchange and other closing conditions customary for a loan transaction of this nature. The Facility is considered a "related party transaction" pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Burcon is relying on the exemption available under Section 5.7(1)(f) of MI 61-101 minority shareholder approval requirement. Additionally, the Facility is exempt from the formal valuation requirement of MI 61-101 since it is a related party transaction under section (j) of the "related party transaction" definition of MI 61-101.

The Term Sheet is non-binding and is subject to the negotiation and execution of definitive agreements setting out the full terms of the Facility. There can be no assurances that the Facility will be extended to Burcon as proposed or at all. The definitive loan documentation is expected to contain representations, warranties, covenants and conditions that are customary for a funding of this nature.

Burcon also announces that it has advanced $3.16 million to Merit. This represents Burcon's proportionate share of an aggregate $10 million financing provided by all shareholders of Merit (the "Merit Loan"). The financing is intended to address liquidity requirements of Merit as it ramps up production and sales at its state-of-the-art pea and canola protein production facility. The Merit Loan has a term of 15 years, will initially be non-interest-bearing and have terms similar to previously advanced shareholder loans. The Merit Loan will be subordinated to any indebtedness owed by Merit to each of its financial lenders, whether secured or unsecured.

About Burcon NutraScience Corporation

Burcon is a global technology leader in the development of plant-based proteins for foods and beverages. With over two decades of experience formulating high-purity proteins that have superior functionality, taste and nutrition, Burcon has amassed an extensive patent portfolio covering its novel plant-based proteins derived from pea, canola, soy, hemp, sunflower seed, among other plant sources. In 2019, Merit Functional Foods Corporation ("Merit Foods") was established between Burcon and three veteran food industry executives. Merit Foods has since built and commissioned a state-of-the-art protein production facility in Manitoba, Canada that is producing, under license from Burcon, best-in-class pea and canola proteins for the food and beverage industries. For more information, visit www.burcon.ca.

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