Base Carbon Announces Closing of HCBL Partnership Restructuring

TORONTO, May 10, 2023 (GLOBE NEWSWIRE) -- Base Carbon Inc. (NEO: BCBN) (OTCQX: BCBNF) ("Base Carbon", or the "Company"), a financier and developer of emission reduction, removal and related climate action projects, confirms it has closed the previously announced transaction (the “HCBL Restructuring Transaction”) to consolidate ownership of Base Carbon Capital Partners Corp. (“BCCPC”) and the restructuring of its partnership with Hardwick Climate Business Limited (“HCBL”). All financial references are denominated in U.S. dollars, unless otherwise noted.

Pursuant to the HCBL Restructuring Transaction, Base Carbon has now completed the purchase of HCBL’s equity interest in BCCPC for an aggregate purchase price of US$2,996,000. The purchase price was comprised of (i) a cash payment of US$1,600,000, and (ii) the delivery of a promissory note to HCBL in the amount of US$1,396,000 (the “Promissory Note”). Base Carbon also reduced its equity ownership in HCBL by way of a share capital reduction and the cancellation of the Promissory Note, and upon completion of certain post-closing ancillary steps to the HCBL Restructuring Transaction, Base Carbon is expected to retain a 15% equity interest in HCBL. Philip Hardwick has resigned as Chief Operating Officer of Base Carbon and reverted to his role as CEO of HCBL.

As part of the HCBL Restructuring Transaction, the parties have entered into an amended and restated shareholder agreement with respect to HCBL and a consulting and origination agreement (the “Consulting and Origination Agreement”) whereby HCBL has agreed to continue to originate and present opportunities to the Company for investment, partnership and/or development with respect to carbon reduction and removal projects until June 30, 2024. The Company has agreed to pay HCBL a success-based project origination fee of up to 3.5% in aggregate. Origination fees from Base to HCBL will be based upon the Company’s required investment capital for qualified carbon credit development projects which are sourced by HCBL and executed by Base Carbon. All applicable project origination fees will be payable in stages according to pre-determined project milestones, and a portion of project origination fees may be payable in Base Carbon common shares at the Company’s election. During the term of the Consulting and Origination Agreement, HCBL will also provide certain consulting services to the Company with respect to the Company’s carbon project portfolio for a fixed cost-based fee of approximately $830,000 (the “Consulting Fee”).