Crown Capital Announces Closing of Private Placement Offering of Debentures to Insiders and Issuance of Shares to Insiders in Lieu of Cash Compensation
On December 29, 2023, the Corporation issued $1,500,000 principal amount of 10% redeemable secured subordinated debentures of the Corporation (the "Former Insider Debentures") to the Insider Debentureholders which were due and payable on June 30, 2025.
The Corporation was not able to raise the funds required to repay the Former Insider Debentures from external sources on terms acceptable to the Corporation. In order to address the maturity of the Former Insider Debentures on June 30, 2025, the Corporation repaid the Former Insider Debentures on maturity and then immediately issued the Insider Debentures.
The Insider Debentures bear interest at a rate of 10% per annum from the date of issue, payable in arrears semi-annually on June 30 and December 31 of each year, commencing on December 31, 2025.
The principal amount of each Insider Debenture, plus all accrued and unpaid interest thereon are redeemable by the Corporation, without penalty, upon 30 days prior written notice to the Insider Debentureholders for a cash amount equal to the principal amount of the Insider Debentures plus any accrued and unpaid interest. Prior to redemption, the Insider Debentureholders that hold Insider Convertible Debentures will have the option to convert any Insider Convertible Debentures, excluding any accrued and unpaid interest that is payable in cash, at the applicable conversion price. The redemption of the Insider Debentures may not be satisfied by the Corporation issuing common shares of the Corporation ("Common Shares").
The Insider Debentures have been granted a security interest by the Corporation by way of a charge to and in favor of the Insider Debentureholders on all the Corporation's property and assets, subject only to permitted encumbrances. The security for the Insider Debentures ranks subordinate to the senior indebtedness of the Corporation but senior to the 11% secured subordinated debentures of the Corporation due December 31, 2026 that are listed on the TSX under the trading symbol "CRWN.NT". The security for the Non-Convertible Insider Debentures ranks senior to the Insider Convertible Debentures.
In connection with the Offering, the Corporation and its subsidiaries entered into an amending agreement to the credit agreement with its senior lender, Sandton Investments IX (Luxembourg) S.A.R.L. dated December 18, 2024.
Commencing on June 30, 2026, the Convertible Insider Debentures, excluding any accrued and unpaid interest payable thereon, shall be convertible, at the option of the Insider Debentureholders, into Common Shares. The price at which the Convertible Insider Debentures may be converted into Common Shares will depend on when the Convertible Insider Debentures are converted. The different conversion prices of the Insider Convertible Debentures are set forth below:
Each of the following Insider Debentureholders of the Corporation participated in the Offering directly or through corporations controlled by them or through persons related to them: John Brussa, Christopher Johnson, Alan Rowe, Steven Sharpe, C. Robert Gillis and Charles Frischer. These Insider Debentureholders purchased all of the Insider Debentures sold pursuant to the Offering (the "Insider Subscriptions"). The Insider Subscriptions are considered to be a "related party transaction" for the purposes of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). In accordance with MI 61-101, the Corporation is not required to obtain a formal valuation in accordance with Section 5.5(c) of MI 61-101. The Corporation obtained minority shareholder approval for the Offering and the Insider Subscriptions in accordance with MI 61-101 at a meeting of shareholders held on June 26, 2025.
The Corporation also announces today that is has completed the issuance of 305,186 Common Shares to certain insiders of the Corporation at a deemed price of $1.10 per Common Share in lieu of compensation owed to such insiders by the Corporation (the "Settlement Share Issuance") as set forth in the management information circular of the Corporation dated May 23, 2025. The Settlement Share Issuance is considered to be a "related party transaction" for the purposes of MI 61-101. In accordance with MI 61-101, the Corporation is not required to obtain a formal valuation or minority approval of the Settlement Share Issuance in accordance with Section 5.5(c) and Section 5.7(1)(a) of MI 61-101, respectively.
In accordance with the company manual of the Toronto Stock Exchange, the Offering and Settlement Share Issuance required the approval of the disinterested shareholders of the Corporation. As previously announced by the Corporation on June 27, 2025, the issuance of the Insider Debentures and the Settlement Share Issuance were approved by the disinterested shareholders of the Corporation at the meeting of shareholders held on June 26, 2025.
All securities issued in connection with the Offering and the Settlement Share Issuance are subject to a hold period of four-months and one day in accordance with applicable securities laws.
The final closing of the Offering and the Settlement Share Issuance are each subject to receipt of all necessary approvals, including the approval of the Toronto Stock Exchange.
Founded in 2000 within Crown Life Insurance Company, Crown Capital Partners is a capital partner to entrepreneurs and growth businesses mainly operating in the telecommunications infrastructure, distribution services, and distributed power markets. We focus on growth industries that require a specialized capital partner, and we aim to create long-term value by acting as both a direct investor in operating businesses serving these markets and as a manager of investment funds for institutional partners. For additional information, please visit crowncapital.ca.
FORWARD-LOOKING STATEMENTS
This news release contains certain "forward looking statements" and certain "forward looking information" as defined under applicable Canadian and U.S. securities laws. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology. Forward-looking statements in this news release include, but are not limited to, statements, management's beliefs, expectations or intentions regarding the closing of the Offering and the use of the proceeds of the Offering. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in the Crown's periodic filings with Canadian securities regulators. See Crown's most recent annual information form for a detailed discussion of the risk factors affecting Crown. Crown undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
SOURCE Crown Capital Partners Inc.
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