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Burcon NutraScience Corp
Symbol BU
Shares Issued 108,728,742
Close 2022-06-20 C$ 0.64
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Burcon arranges $10-million loan with Large Scale

2022-06-21 12:51 ET - News Release

Mr. Steve Campbell reports

BURCON ANNOUNCES EXECUTION OF $10 MILLION LOAN AGREEMENT

Burcon NutraScience Corp. has entered into a loan agreement pursuant to which Large Scale Investments Ltd., a wholly owned subsidiary of Firewood Elite Ltd., will provide Burcon with a secured loan of up to $10-million. Firewood is wholly owned by Alan Chan, a director of Burcon.

Upon the satisfaction of certain conditions with respect to each tranche, the loan amount will be available in two tranches of $5-million each. The first tranche, which is currently available to the company, has a maturity date of July 1, 2024, and the second tranche will have maturity date that is 24 months from the closing date of such tranche. The lender will be paid a commitment fee of 1 per cent of the undrawn amount of the loan amount under each tranche on: (i) the closing date of such tranche and (ii) each annual anniversary of the closing date of such tranche. The drawn portion of the loan amount will bear interest at a rate of 8 per cent per annum. Interest on the principal balance will accrue monthly, not in advance, and will be payable on the maturity date of the applicable tranche.

The net proceeds from the loan will be used to continue Burcon's joint venture operations, commercialization efforts, for partnering discussions for its plant-based protein technologies, for continued research and development of Burcon's protein extraction and purification technologies, for work on Burcon's intellectual property portfolio and for other general corporate purposes.

Firewood is an insider and related party of Burcon as it currently indirectly holds 22,866,574 common shares of Burcon representing approximately 21.03 per cent of the outstanding common shares. In addition, Mr. Chan, a director of Burcon, is also a director of Firewood and the lender, respectively. The loan is considered a related party transaction pursuant to Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. Burcon is relying on the exemption available under Section 5.7(1)(f) of MI 61-101 minority shareholder approval requirement. Additionally, the loan 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 loan agreement was approved by the independent members of the board of directors of Burcon, with Mr. Chan abstaining from the vote. Burcon will file a material change report containing the prescribed disclosure under MI 61-101 on or before June 30, 2022.

"We are pleased to have arranged this non-dilutive financing with a major shareholder of Burcon," said Peter H. Kappel, Burcon's interim chief executive officer and chairman of the board. "We've laid the groundwork for additional strategic partnerships and with this support, we can continue our commercialization efforts."

The loan agreement was conditionally approved by the Toronto Stock Exchange on June 17, 2022.

About Burcon NutraScience Corp.

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 and sunflower seed, among other plant sources. In 2019, Merit Functional Foods Corp. 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 licence from Burcon, best-in-class pea and canola proteins for the food and beverage industries.

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