/NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
TORONTO, April 29,
2024 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM)
("EMERGE", or the "Company"), a premium e-commerce
brand portfolio, is pleased to announce that, further to its news
releases dated March 22, 2024, and
April 12, 2024, 100% of the holders
(the "Debentureholders") of the 10% senior unsecured
convertible debentures (the "Debentures") that were issued
by the Company on November 24, 2022,
pursuant to a debenture indenture (the "Original Indenture")
dated November 24, 2022, between the
Company and TSX Trust Company (the "Trustee"), represented
in person or by proxy at a meeting of Holders, representing
$2,103,000 in principal amount out of
an aggregate total of $2,781,000 in
principal amount of Debentures issued and outstanding, or
approximately 75.6% of such principal amount, have approved an
Extraordinary Resolution (as defined in the Original Indenture)
approving the proposed amendment of certain terms of the Debentures
(the "Amendment") and have authorized the Trustee to enter
into a supplemental indenture (the "Supplemental Indenture")
giving effect to the Amendment.
Ghassan Halazon, Founder and CEO of
EMERGE commented, "We appreciate the strong vote of
confidence and unwavering support displayed by our holders in
agreeing to restructure the debentures in a manner that we believe
is in the best long-term interest of all stakeholders. The approved
amendment and the redemption, once completed in May, will
effectively reduce our debt by $1.39
million, with approximately 50% of the debentures expected
to convert to equity on the redemption date at the agreed
$0.135 conversion price. The
amendment, the redemption and the conversion of interest are also
expected to save EMERGE approximately $140K in annualized interest expense during the
extended term of the debentures, with the debentures now being due
in November 2026, instead of
November 2025. The debentures now
have an adjusted conversion price of $0.135, in turn increasing the possibility of
further debt reduction down the line."
An aggregate of 2,781 Debentures are issued and outstanding,
each with a principal amount of $1,000. The original terms of the Debentures
provided the Debentures would mature on November 24, 2025, the principal amount of the
Debentures was convertible into common shares of the Company
("Common Shares") at a conversion price of $0.20 per Common Share (the "Original
Conversion Price") and, upon the VWAP (as defined in the
Original Indenture) for 10 consecutive trading days exceeding
$0.50 per Common Share, the Company
would have the option to force the conversion of the Debentures at
the Original Conversion Price.
Pursuant to the Amendment, the Debentures will mature on
November 24, 2026, the principal
amount of the Debentures is convertible into Common Shares at a
reduced conversion price of $0.135
per Common Share (the "Reduced Conversion Price") and, upon
the VWAP (as defined in the Original Indenture) for 10 consecutive
trading days exceeding $0.25 per
Common Share, the Company will have the option to force the
conversion of the Debentures at the Reduced Conversion Price. The
Amendment also (a) provides the Company with a redemption right
(the "Redemption Right") whereby the Company will have the
option to redeem up to 50% (subject to rounding) of the aggregate
principal amount of the Debentures (those Debentures redeemed
pursuant to the Redemption Right are the "Redemption
Debentures") and to pay the principal amount, less any taxes
required to by law to be deducted, in cash or in Common Shares, at
the Company's discretion, with any Common Shares to be issued at
the New Conversion Price; (b) provides the Company with a right
(the "Interest Conversion Right") to settle accrued but
unpaid interest, less any taxes required to by law to be deducted
(the "Interest"), on the Redemption Debentures, up to but
excluding the date of redemption, in cash or in Common Shares, at
the Company's discretion, with any Common Shares to be issued at a
price per share (the "Settlement Price") equal to the
greater of the Reduced Conversion Price and the lowest price
permitted by the TSX Venture Exchange (the "TSXV") pursuant
to TSXV Policy 4.3 – Shares for Debt (the issuance of Common
Shares to settle such interest amounts is a "Shares for Debt
Settlement"); and (c) provides that, upon notice of the
exercise of the Redemption Right being given, the failure for 30
days to pay interest on the Redemption Debentures when due will not
be considered an Event of Default.
All other terms of the Debentures will remain the same.
The TSXV has conditionally approved the Amendment and the
Company and the Trustee have executed the Supplemental Indenture
with effect as of April 29, 2024.
In accordance with the Original Indenture, as amended by the
Supplemental Indenture (together, the "Indenture"), the
Company hereby provides notice to the Debentureholders of its
decision to exercise the Redemption Right and to redeem 50% of the
aggregate principal amount of the 2,781 Debentures currently
outstanding, subject to rounding, in accordance with the Indenture.
As a result of this rounding, an aggregate of $1,391,000 of principal amount (the
"Redemption Amount") will be redeemed on a pro rata basis.
The Company has elected to settle the Redemption Amount by the
issuance of 10,303,703 Common Shares, which shares will be issued
at the Reduced Conversion Price.
The date fixed for the redemption is May 6, 2024 (the
"Redemption Date").
Completion of the redemption remains subject to final TSXV
approval of the Amendment. In the event final TSXV approval of the
Amendment is not received on or before the second Business Day (as
defined in the Indenture) preceding the Redemption Date, then the
redemption will not proceed.
An aggregate of $48,685 (the
"Interest Amount") in unpaid interest is expected to have
accrued on the Redemption Amount as of the Redemption Date,
calculated in accordance with the Indenture. Interest on the
principal amount of the redeemed Debentures will be payable on the
Redemption Date and interest on the redeemed Debentures will cease
to accrue on and after the Redemption Date.
In accordance with the Indenture, the Company hereby also
provides notice to the Debentureholders of its decision to exercise
the Interest Conversion Right, and to settle the Interest Amount by
the issuance of 360,629 Common Shares, which shares will be issued
at the Reduced Conversion Price. This settlement will be a Shares
for Debt Settlement and it remains subject to TSXV approval. In the
event that conditional TSXV approval of the Shares for Debt
Settlement is not received on or before the second Business Day
preceding the Redemption Date, then the Interest Amount will be
paid in cash on the Redemption Date.
Based on the register of Debentures maintained by the Trustee,
all of the Debentures are registered in the name of CDS & CO,
the registration name for The Canadian Depository for Securities
Limited ("CDS"). As such, CDS is the sole registered
Debentureholder and the redemption will take place in such manner
as may be agreed upon by CDS, the Company and the Trustee.
None of the securities issuable in connection with the
Amendment, the Company's exercise of the Redemption Right, the
Company's exercise of the Interest Conversion Right or otherwise
pursuant to the Indenture will be registered under the United
States Securities Act of 1933, as amended, or state securities laws
and none may be offered or sold in the
United States, except under circumstances that do not
require registration under the U.S. Securities Act or any
applicable state securities laws. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities of the Company, nor shall there be any sale of the
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful.
About EMERGE
EMERGE is a premium e-commerce brand portfolio in Canada and the U.S. Our subscription and
marketplace e-commerce properties provide our members with access
to unique offerings across grocery and golf verticals. Our grocery
businesses include truLOCAL.ca, our premium meat subscription
brand, and Carnivore Club, our artisanal meat brand. Our golf
businesses include UnderPar, our discounted experiences business,
and JustGolfStuff, our golf products & apparel brand.
Follow
EMERGE:
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Cautionary notice
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Notice regarding forward-looking statements
This press release may contain certain forward-looking
information and statements ("forward-looking information") within
the meaning of applicable Canadian securities legislation, that are
not based on historical fact, including, without limitation,
statements related to the anticipated benefits of the Amendment,
the redemption and the conversion of interest to the Company and to
the Company's stakeholders, the possibility of further debt
reduction, the Company receiving final approval of the Amendment
from the TSXV on or before the second Business Day preceding
the Redemption Date, the Company receiving conditional
approval of the Shares for Debt Settlement from the
TSXV on or before the second Business Day preceding the
Redemption Date, the completion of the redemption and the
completion of the Shares for Debt Settlement, the issuance of
common shares in settlement of the Redemption Amount, the issuance
of common shares in settlement of the Interest Amount or the
settlement of such amount in cash, as applicable, and the agreement
of the Company, CDS and the Trustee as to the manner of the
redemption, as well as other statements containing the words
"believes", "anticipates", "plans", "intends", "will", "should",
"expects", "continue", "estimate", "forecasts" and other similar
expressions. Readers are cautioned to not place undue reliance on
forward-looking information. Actual results and developments may
differ materially from those contemplated by these statements. The
forward-looking information contained herein is based on the
assumptions of management of the Company as of the date hereof
including, without limitation, assumptions with respect to the
financial position and working capital of the Company,
macro-economic factors including interest rate changes, and the
conditions of the financial markets and the e-commerce markets
generally, among others. The Company undertakes no obligation to
comment on analyses, expectations or statements made by
third-parties in respect of the Company, its securities, or
financial or operating results (as applicable). Although the
Company believes that the expectations reflected in forward-looking
information in this press release are reasonable, such
forward-looking information has been based on expectations, factors
and assumptions concerning future events which may prove to be
inaccurate and are subject to numerous risks and uncertainties,
certain of which are beyond the Company's control, including risks
that the anticipated benefits of the Amendment, the redemption and
the conversion of interest to the Company and the Company's
stakeholders, including the possibility of further debt reduction,
will not be realized, that the TSXV will not provide final approval
of the Amendment and/or conditional approval of the Shares for Debt
Settlement, in each case, on or before the second Business
Day preceding the Redemption Date, that the redemption may not be
completed as contemplated or at all, and that the Company, CDS and
the Trustee may not agree as to the manner of the redemption,
changes to general economic factors, as well as the risk
factors discussed in the Company's MD&A, and other public
disclosure filings which are available through SEDAR+ at
www.sedarplus.ca. The forward-looking information contained in this
press release are expressly qualified by this cautionary statement
and are made as of the date hereof. The Company disclaims any
intention and has no obligation or responsibility, except as
required by law, to update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise.
On Behalf of the Board
Ghassan Halazon
Director, President, and CEO
SOURCE EMERGE Commerce Ltd.
