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

TORONTO, Dec. 31, 2019 (GLOBE NEWSWIRE) -- Itafos (TSX VENTURE: IFOS) (the “Company”) announced today that it has completed its previously announced US$36,000,000 capital raise with CL Fertilizers Holding LLC (“CLF”) 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.

CLF subscribed for 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 were paid in connection with the Private Placement.

The Company and CLF have also amended 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”). As of today, the Company has borrowed 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 have remained unchanged.

In connection with the Transaction, the Company and CLF have entered into an investor rights agreement (the “IRA”). Pursuant to the IRA, the Company has granted CLF, among other rights, the right to (i) participate pro-rata on future equity issuances, (ii) designate two nominees to the Company’s Board of Directors so long as CLF holds more than 20% of the Company’s outstanding shares on an undiluted basis and (iii) designate one nominee to the Company’s Board of Directors so long as CLF holds more than 10% of the Company’s outstanding shares on an undiluted basis.