Its Bad News...More dilution
Radient arranges $9.4-million at-the-market program
2020-03-27 12:29 ET - News Release
Mr. Prakash Hariharan reports
RADIENT ANNOUNCES THE INITIATION OF AN AT-THE-MARKET EQUITY PROGRAM AND PROVIDES AN UPDATE ON INITIATIVES TO MEET CUSTOMER DEMAND DURING COVID-19 PANDEMIC, FINANCING ACTIVITIES AND LIQUIDITY
Radient Technologies Inc. has established an at-the-market equity program. The Company also announces that it is actively reviewing its operations in response to guidance from governmental and health authorities with a view to limiting the spread of the virus that causes COVID-19, and also wishes to provide an update on its current liquidity and financing activities.
ATM Program
The ATM Program will allow the Company to issue up to $9.4 million worth of common shares from treasury ("Common Shares") to the public from time to time at prevailing market prices through the TSX Venture Exchange ("TSXV") or any other marketplace on which the Common Shares are listed, quoted or otherwise traded in Canada. The volume and timing of distributions under the ATM Program, if any, will be determined at the Company's sole discretion, subject to applicable regulatory limitations.
Sales of Common Shares through the ATM Program will be made pursuant to National Instrument 44-102 Shelf Distributions and the terms of an equity distribution agreement dated March 26, 2020 entered into between the Company and National Bank Financial Inc. (the "Agent"), as agent. The ATM Program will be effective until February 21, 2022, unless all Common Shares available for issue under the ATM Program have been issued or the ATM Program is terminated prior to such date by the Company or the Agent.
Radient intends to use the net proceeds from the ATM Program, if any, for funding:
additional equipment for the Company's Edmonton I facility to allow for faster stream time as well as allowing an increase in evaporation capacity increasing Radient's product pipeline;
additional refining equipment, refurbishing existing equipment facility space and designing and installing customized downstream equipment for the Company's Edmonton II facility;
capital investment in further cannabinoid extraction, purification, isolation and product manufacturing capabilities at the Company's Edmonton III facility;
the Company's planned project in Germany, similar to the Company's Edmonton III facility, to deliver consistent cannabinoid derivatives and formulations, manufactured in accordance with EU GMP requirements; and
general corporate purposes.
The Company has filed a prospectus supplement dated March 26, 2020 ("Prospectus Supplement") to its base shelf prospectus dated January 21, 2020 ("Base Shelf Prospectus") with each of the securities regulatory authorities in each of the provinces of Canada for the initiation of the ATM Program. Before you invest, you should read the Company's Prospectus Supplement, the Base Shelf Prospectus, and all other documents the Company has filed with the Canadian securities regulatory authorities for more complete information about the Company and the ATM Program. These documents may be downloaded from SEDAR at www.sedar.com. Alternatively, the Agent will arrange to send you these documents if you request it by contacting:
NBF Syndication, 130 King Street West, 4th Floor Podium, Toronto, Ontario, M5X 1J9, or by telephone at (416)-869-6534, or by email at ecm@nbf.ca.
Operational Update
In response to the COVID-19 pandemic, the Company's workforce will be reduced due to temporary layoffs, effectively retaining only those staff who the Company believes are essential to maintaining the safety of day-to-day operations. The Company plans to reorganise its workforce, focus on current projects at hand and utilize existing inventory to process cannabinoid extracts including resins, distillates and isolates.
The Company has also instituted additional COVID-19 measures, including:
essential staff who are able to work from home have been asked to do so;
all staff have been instructed to practice social distancing;
expanded hygiene and cleaning protocols have been implemented at all sites;
access to all sites is restricted to essential personnel; and
additional preventive measures in operating activities have been implemented that will ensure the highest level of safety in the products we produce for our customers.
"In these challenging times we are committed to continuing to deliver high-quality products to our customers, while maintaining the strictest level of safety for our employees," said Denis Taschuk, President and CEO of Radient.
Despite current economic conditions, the Company believes there is strong consumer demand for cannabis-based products, both medical and recreational. The temporary layoffs announced today are expected to allow the Company to quickly recall workers and safely scale up operations, as required to meet customer demand.
By managing its resources in this fashion while leveraging its proprietary product development platform, Radient expects to execute on its current commitments, such as its recently executed manufacturing agreements with Allied Corp., Dhaliwal Group and Shoppers Drug Mart, and any other near-term opportunities, while maintaining the highest standards of safety and quality for its products which include THC and CBD-based oils, resins, distillates and isolates. Other aspects of Radient's business, including deliveries of finished products, will not be impacted by these staffing measures.
"These measures will allow Radient to manage its capital and human resources to respond to any increase in demand, while ensuring a safe work environment," said Taschuk. "We are continuing to attract positive responses from potential customers in our pursuit of additional opportunities."
Financing and Liquidity Update
In addition to the initiation of the ATM Program, the Company also wishes to provide an update on its current liquidity and financing activities. As of the date hereof, the Company has net working capital of $2.75 million exclusive of an account payable in respect of the Edmonton III facility in the amount of $7.1 million. Radient continues to pursue financing, including the following previously announced initiatives:
Debenture Financing
The Company announced a debenture financing of up to $5,000,000 on February 10, 2020. The Company announced the closing of the first tranche of debentures on March 4, 2020 for gross proceeds of CAD$1,162,500. The Company continues to pursue completion of the full $5,000,000 debenture financing.
Note Financing
The Company announced that it entered into a non-binding letter of intent with an institutional investor with respect to a proposed note financing on February 10, 2020 for gross proceeds of up to $10.4 million. Due diligence by the institutional investor is now substantially complete and the financing remains subject to execution of definitive documentation and regulatory approval, including approval of the TSXV.
Sale and Leaseback
The Company announced on January 14, 2020 that it entered into a binding letter of intent with 223801 Alberta Ltd (the "Purchaser") with respect to the proposed purchase of land and buildings comprising the Company's Edmonton I, II and III facilities for gross proceeds of approximately CAD$20 million. Due diligence and documentation for this transaction are substantially complete. The Company and the Purchaser are awaiting certain approvals of third parties.
About Radient
Radient Technologies provides industrial-scale manufacturing solutions for premium natural ingredients and products. Utilizing its patented MAP extraction technology, Radient delivers superior customer outcomes in terms of ingredient purity, yield, and cost, serving global market leaders in industries such as foods & beverages, nutraceuticals, pharmaceuticals, cosmetics, and personal care. Since 2016, Radient has expanded its offerings to enter the cannabinoids market, using its MAP platform to provide premium ingredients that contain a full range of cannabinoid and terpene profiles.
