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Discovery Harbour amends debenture, proposes rollback

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Sam Dan Member Level  Friday, 06/23/17 05:44:49 PM
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Discovery Harbour amends debenture, proposes rollback
DISCOVERY HARBOUR ANNOUNCES PROPOSED AMENDMENT TO UNSECURED CONVERTIBLE DEBENTURE AND CONSOLIDATION

Discovery Harbour Resources Corp. has agreed to amend the unsecured convertible debenture in the principal amount of $100,000 issued to Richard Gilliam, a director and significant shareholder of the company, as previously announced in its news releases of March 24, 2017, and April 7, 2017. The Company and Richard Gilliam have agreed to amend the conversion terms of the Debenture from convertible into common shares of the Company to convertible into units (each, a "Unit") of the Company at the greater of $0.05 per Unit or the subscription price for each share in the most recently completed private placement of the Company during the term of the Debenture, subject to adjustment. Each Unit will consist of one common share (each, a "Share") and one non-transferable share purchase warrant (each, a "Warrant"). Each Warrant will be exercisable into one Share at an exercise price equal to the greater of $0.075 per Share or the warrant exercise price, if any, for each warrant issued in the most recently completed private placement of the Company during the term of the Debenture, subject to adjustment, for a period of one year from April 7, 2017, with an acceleration clause that if the closing share trading price meets or exceeds $0.20 for 10 consecutive trading days then notice can be given that the Warrants must be exercised within 30 days from notice. All other terms of the Debenture shall remain the same. The Amendment is subject to the approval of the TSX Venture Exchange (the "Exchange").

Richard Gilliam is considered a "related party" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") and the Amendment is therefore considered to be a "related party transaction" within the meaning of MI 61-101. The Amendment, however, is exempt from the valuation requirement and from the minority shareholder approval requirements of MI 61-101 by virtue of the exemptions contained in sections 5.5(a) and 5.7(1) (a) of MI 61-101 in that the fair market value of the consideration of the Debenture issued to the related party did not exceed 25% of the Company's market capitalization. This News Release is being filed less than 21 days before the Amendment being approved because the Company wishes to complete the Amendment in a timely manner.

The Company also announces that it intends to proceed with a consolidation of its outstanding common Shares on the basis of three (3) pre-consolidation Shares for one (1) post-consolidation Share (the "Consolidation").

Currently, a total of 53,393,513 Shares are issued and outstanding. Accordingly, if the Consolidation is completed, a total of 17,797,838 Shares would be issued and outstanding, subject to adjustments for rounding and assuming there are no other changes in the issued capital of the Company. There is currently no maximum number of authorized Shares. There is no name change in conjunction with the Consolidation. The Consolidation is subject to the approval of the Exchange




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