Itafos Announces Letter of Intent for US$36,000,000 Capital Raise Through Non-Brokered Private Placement Financing and Amendment to Unsecured Subordinated Promissory Note

TORONTO, Dec. 18, 2019 (GLOBE NEWSWIRE) -- Itafos (TSX VENTURE: IFOS) (the “Company”) announced today that it has entered into a binding letter of intent with CL Fertilizers Holding LLC (“CLF”) for a US$36,000,000 capital raise through a non-brokered private placement financing of US$15,000,000 and an amendment to increase the availability of a previously issued unsecured subordinated promissory note by US$21,000,000. The proceeds of the capital raise are expected to be used to fund general working capital and capital expenditure needs of the Company and its subsidiaries.

Pursuant to the letter of intent, CLF will subscribe for up to 38,076,923 shares in the capital of the Company (the “Subject Shares”) at an offering price of CAD$0.52 per share on a non-brokered private placement basis, for aggregate gross proceeds of US$15,000,000 (equivalent to approximately CAD$19,800,000) (the “Private Placement”). No finder’s fees or commissions will be payable in connection with the Private Placement.

Also pursuant to the letter of intent, the Company and CLF will amend the convertible unsecured and subordinated promissory note in favor of CLF that was issued by the Company on September 11, 2019, to make the promissory note non-convertible and increase the availability by US$21,000,000 (the “Amended CLF Promissory Note” and together with the Private Placement, the “Transaction”). At closing, the Company intends to borrow US$5,000,000 of the available US$21,000,000, with the balance of US$16,000,000 remaining available to be drawn by the Company at its sole discretion through December 31, 2020. An availability fee of 4% per year shall apply on undrawn amounts during the availability period with such fee to be capitalized and added to principal on a quarterly basis.

Other than the changes specified in this news release, all other terms of the Amended CLF Promissory Note shall remain unchanged. In this regard, the Amended CLF Promissory Note shall (i) remain subordinate to the Company’s existing senior credit facility and subject to the terms of subordination incorporated thereunder, (ii) continue to accrue an interest rate of 15% per year, (iii) continue to be payable on demand no earlier than six months after the date on which the Company’s existing senior credit facility is paid in full, and (iv) continue to add interest to and increase the outstanding principal balance on a quarterly basis.