Mr. Sam Kenny of I-Pulse reports
EARLY WARNING REPORT FILED PURSUANT TO CANADA'S NATIONAL INSTRUMENT 62-103 WITH RESPECT TO DEBT SETTLEMENT WITH KAIZEN DISCOVERY INC.
This news release is being issued by I-Pulse Inc. pursuant to the early warning requirements of National Instrument 62-103 with respect to common shares of Kaizen Discovery Inc.
On Aug. 9, 2021, Kaizen and I-Pulse's affiliate, Ivanhoe Electric (IVNE), entered into a standby commitment agreement, whereby IVNE agreed that it will exercise its basic subscription privilege in Kaizen's rights offering transaction (refer Kaizen's news release dated Aug. 9, 2021) to maintain its pro rata equity interest in Kaizen and exercise rights to purchase an additional 121,970,246 Kaizen shares (as defined herein). In addition, if less than the maximum number of Kaizen common shares that may be issued under the rights offering are subscribed for by other Kaizen shareholders, IVNE will purchase such number of Kaizen shares, to a maximum of 44,696,420 Kaizen shares, so that the maximum number of Kaizen shares that may be issued under the rights offering will have been issued.
If all Kaizen shareholders exercise their basic subscription privilege, IVNE's ownership prior to the rights offering of approximately 73.2 per cent of Kaizen shares will be unaffected by the rights offering. If no other Kaizen shareholder exercises their basic subscription privilege, IVNE will be obligated to purchase an additional 44,696,420 Kaizen shares in addition to the basic subscription privilege shares, resulting in IVNE owning approximately 81.9 per cent of the then-outstanding Kaizen shares following the closing of the rights offering.
As consideration for entering into the standby agreement, Kaizen will issue to IVNE 11,174,105 warrants, with each warrant entitling IVNE to acquire one additional Kaizen share at an exercise price of 6.5 cents per Kaizen share for a period of five years.
In addition, on Aug. 9, 2021, Kaizen entered into a debt settlement agreement with IVNE, whereby Kaizen will issue Kaizen shares to IVNE at a price of five cents per Kaizen share in full satisfaction of approximately $5,242,000 (U.S.) principal and interest Kaizen owes to IVNE. Upon completion of the debt conversion, and assuming IVNE only acquires the basic subscription privilege shares, IVNE would then be the registered owner of approximately 79.2 per cent of the then-outstanding Kaizen shares. In the event that IVNE acquires all of the Kaizen shares to be issued under the rights offering pursuant to the terms of the standby agreement, then following the debt conversion, IVNE would be the registered owner of approximately 86 per cent of the then-outstanding Kaizen shares.
All of the securities described in this release owned by, or to be subscribed by, IVNE are, and will be, beneficially owned and controlled by I-Pulse.
I-Pulse, through IVNE, is acquiring these shares for investment purposes. Depending on economic or market conditions or matters relating to Kaizen, I-Pulse or IVNE may choose to either acquire or dispose of additional Kaizen shares.
For further information and to obtain a copy of the early warning report filed under applicable Canadian provincial securities legislation in connection with the transactions hereunder, please go to Kaizen's profile on the SEDAR website, or contact Sam Kenny at 604-689-8765. I-Pulse has an office located at No. 606, 999 Canada Place, Vancouver, B.C., Canada, V6C 3E1.
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