Ceylon Graphite Announces Update on Extension of Convertible Debentures

 VANCOUVER, British Columbia, Nov. 22, 2023 (GLOBE NEWSWIRE) -- Ceylon Graphite Corp. (“Ceylon” or the “Company”) (TSX-V: CYL) (OTC: CYLYF) (FSE: CCY) announces that it has amended the terms of certain convertible debentures (the “2018 Convertible Debentures”) that were issued by the Company on May 23, 2018 in the aggregate principal amount of $2,000,000. The 2018 Convertible Debentures previously entitled the holders thereof to convert an aggregate principal balance of $1,850,000 into common shares (“2018 Debenture Shares”) of the Company at a price of $0.25 per 2018 Debenture Share at any time on or prior to November 23, 2023. The Company has amended the conversion price of an aggregate principal amount of $1,750,000 of the 2018 Convertible Debentures (the “Extended 2018 Convertible Debentures”) to $0.15 per 2018 Debenture Share and amended the maturity date of the Extended 2018 Convertible Debentures to November 23, 2024 (the “Amendments”). In addition, the Company has agreed to issue 5,833,333 warrants of the Company (the “Replacement Warrants”) to the holders of the Extended 2018 Convertible Debentures to replace the warrants originally issued together with the 2018 Convertible Debentures and which otherwise would have expired on November 23, 2023. Each Replacement Warrant is exercisable for one common share of the Company (a “Replacement Warrant Share”) at a price of $0.15 per Replacement Warrant Share at any time until November 23, 2024. The Company is not receiving any additional funds in connection with the Amendments or issuance of the Replacement Warrants.

A total principal amount of $100,000 of the 2018 Convertible Debentures were not extended and mature on November 23, 2023. The Company is currently evaluating options for the repayment of the 2018 Convertible Debentures which rank subordinate in payment priority to the senior secured convertible debentures issued by the Company on October 26, 2023.

All securities issued and issuable in connection with the Replacement Warrants are subject to a four month and one day hold period from the dated of issuance in accordance with Canadian securities laws. The Amendments and issuance of the Replacement Warrants are subject to the final approval of the TSX Venture Exchange.

In connection with the above transactions a company controlled by Sasha Jacob, CEO of the Company, and holder of a principal amount of $1,000,000 of the 2018 Debentures has received 3,333,333 Replacement Warrants (the “Insider Participation”). The Insider Participation constitutes a “related party transaction” as such term is defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on an exemption from the formal valuation and minority shareholder approval requirements provided under MI 61-101 pursuant to section 5.5(a) and section 5.7(1)(a) of MI 61-101, on the basis that the Insider Participation does not exceed 25% of the fair market value of the Company’s market capitalization.