Ms. Miriam Tuerk reports
CLEAR BLUE CLOSES LARGE SCALE TELECOM ROLLOUT CONTRACT & DEBT FINANCING WITH BDC
Clear Blue Technologies International Inc. has signed two key contracts:
A contract with a telecommunications operator in Africa to roll out an initial 500 sites this year. The entire program is planned for a phased rollout over the next three to five years. This initial contract is for the year one volumes of 500 systems for an estimated $3.5-million, the majority of which the company anticipates will be booked this year. The company received the purchase order for the first 50 systems with the signing of the contract;
A $5-million loan facility with BDC, Canada's bank for entrepreneurs, which includes an initial $2-million tranche delivered April 9, 2020. The company intends to use the proceeds from the BDC loan facility for growth capital and research and development.
"The telecom project will deploy 2G and 3G cellular networks in rural areas of Africa, providing low-cost mobile Internet coverage through commercially sustainable models that can be scaled and replicated," said Miriam Tuerk, chief executive officer and co-founder, Clear Blue. "It is exciting to see the largest telecom firms in Africa lead the way with innovative technologies and business models to bring much-needed communications and connectivity to the more than one billion underserved people in the world's emerging markets."
Bringing rural mobile Internet coverage, with critical data services, to rural areas can be twice as expensive as in urban areas when using traditional technologies. Next-generation open-cellular-based radio technologies, coupled with satellite services and Clear Blue's Smart Off-Grid highly reliable low-cost power services, brings a technology solution that makes this next wave of cellular network coverage possible.
Clear Blue's Smart Off-Grid technology delivers clean, managed, wireless power, anywhere and any time. Clear Blue's service team uses its Illumience platform to manage, control and operate all power systems remotely, ensuring the high availability and service levels needed for telecom services. Illumience is the industry's most advanced off-grid management service, providing real-time, 24-seven, remote control, monitoring and management of systems using Smart Off-Grid power.
BDC loan facility
Additionally, Clear Blue has received $2-million from BDC as a first tranche of a $5-million loan facility. The loan has a five-year term and consists of an initial period of interest only payments through Aug. 15, 2022, and a subsequent period commencing on Sept. 15, 2022, of principal and interest payments, culminating in a balloon payment at the end of the term. Subject to meeting certain financial milestones, the company has the option to draw down an additional $3-million in $1-million tranches. The loan is secured against the assets of Clear Blue and each of Clear Blue's subsidiaries, and carries a variable base interest rate per annum of 7.5 per cent. In addition to the cash interest a non-compounding payment in kind (PIK) interest of up to 9.5 per cent per annum will accrue, depending upon various factors.
This transaction was led by Cheri Corbett, director of cleantech practice for BDC. "Clear Blue has an innovative and unique technology and business model. Their presence in 37 countries and their adoption in lighting and telecom verticals at this early stage of their growth, is quite impressive. We are pleased to support them as they continue to scale and grow."
In connection with the BDC loan facility, the company agreed to issue an aggregate of 72,100 common share purchase warrants of the company to certain existing debentureholders of the company as compensation to enter into postponement agreements in favour of BDC. Each warrant will be exercisable for one common share of the company for a period of 18 months following the date of issuance at an exercise price of 50 cents per common share. All warrants proposed to be issued by the company will be subject to a statutory four-month hold period in accordance with applicable securities legislation. The issuance of the warrants is subject to approval from the TSX Venture Exchange.
Certain directors, officers and other insiders of the company will acquire direction and control over a total of 18,200 warrants in connection with the warrant issuance to existing debentureholders of the company. The issuance of securities to those persons constitutes a related party transaction as defined under Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The issuance of securities to the related parties is exempt from the formal valuation requirements of Section 5.4 of MI 61-101 pursuant to Subsection 5.5(a) of MI 61-101 and exempt from the minority shareholder approval requirements of Section 5.6 of MI 61-101 pursuant to Subsection 5.7(1)(a) of MI 61-101. The company did not file a material change report 21 days prior to this announcement as the details of the participation of insiders of the company had not been confirmed at that time.
With respect to the continuing COVID-19 pandemic, the company's distributed, remote management business model and geographically diverse customer base in 37 countries provide significant mitigation to the continuing business risks related to this virus. With installations provided by the company's local partners, travel risk to personnel is limited and it has taken steps to significantly reduce ancillary travel. However, significant risks remain related to global economic activity as a result of the virus that could have material impacts on the company in general and the two contracts reported herein.
About Clear Blue Technologies International Inc.
Clear Blue delivers clean, managed, wireless power -- anywhere and any time. The company uses its patented Smart Off-Grid technology, delivered through its energy-as-a-service business model, to manage lighting, telecom, Internet of things devices and other critical systems around the world. Clear Blue has thousands of systems under management across 37 countries, including the United States and Canada.
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