Final closure of PP
MPX International Corp. has completed the fourth and final tranche of its previously announced non-brokered private placement offering of units of the corporation at a price of $1,360 ($1,000 (U.S.)) per unit.
The corporation has issued a total of 5,000 units for aggregate gross proceeds of $6.8-million ($5-million (U.S.)) from the closing of all four tranches of the offering broken down as follows: first tranche -- 3,348 units for aggregate gross proceeds of $4,553,280 ($3,348,000 (U.S.)); second tranche -- 346 units for aggregate gross proceeds of $470,560 ($346,000 (U.S.)); third tranche -- 800 units for aggregate gross proceeds of $1,088,000 ($800,000 (U.S.)); and fourth tranche -- 506 units for aggregate gross proceeds of $688,160 ($506,000 (U.S.)).
The corporation intends to use the proceeds from the offering to finance product and facility development in Switzerland and retail expansion in Canada as well as for working capital and other general corporate purposes.
The units will be issued on the same terms as those previously announced at a price of $1,360 ($1,000 (U.S.)) per unit with each unit consists of one 12 per cent secured convertible debenture of the corporation in the principal amount of $1,360 ($1,000 (U.S.)) and 7,000 common share purchase warrants.
Each debenture shall bear interest at a rate of 12 per cent per annum from the date of issue, payable quarterly in arrears on the last day of March, June, September and December in each year, commencing Dec. 31, 2020.
The amount of interest that becomes payable on Dec. 31, 2020, will represent accrued interest for the period from the initial closing date to Dec. 31, 2020 . All accrued but unpaid interest as of each coupon date shall be payable by the corporation in cash and shall accrue interest at a rate of 12 per cent per annum. The principal amount, shall be convertible, for no additional consideration, into common shares of the corporation at the option of the holder at any time prior to the earlier of: (i) 6 p.m. (Eastern Standard Time) on the maturity date; or (ii) the business day immediately preceding the date specified by MPXI for redemption of the debentures at a conversion price equal to 12 cents per common share.
Each warrant entitles the holder thereof to purchase one common share at an exercise price of 20 cents for a period of 24 months from the closing date. The corporation and AST entered into a warrant indenture dated June 30, 2020, pursuant to which the warrants are created and issued.
Insider participation
The fourth tranche of the offering can be considered a related party transaction for certain regulatory purposes. The participation by the insiders in the second tranche of the offering is summarized in the table.
Name Relationship Interest in the offering Common shares directly Percentage of
to the corporation Amount C$ No. of units or indirectly, beneficially common shares
owned or control of MPXI
Alastair Director $184,960(1) 136 8,134,472 5.74%
Crawford
---------- --- --------- ----
Totals $184,960 136 8,134,472 5.74%
Note: (1) Mr. Crawford's participation in the fourth tranche of the offering will be broken down as
follows: (a) 86 units will be issued to Mr. Crawford; and (b) 50 units will be issued to Puddles 7
Ltd., a company in which Mr. Crawford holds a majority interest.
Mr. Crawford also participated in the second tranche of the offering acquiring 112 units for a
subscription amount of $153,320. In sum, Mr. Crawford has been issued a total of 248 units for an
aggregate subscription amount of $338,280.
It is important to note that the offering is exempt from valuation and minority approval requirements which might otherwise result from the participation by insiders due to: (1) the corporation, as a Canadian Securities Exchange issuer, not being listed on a designated market; and (2) the fair market value of the offering, in so far as the offering involves such interested parties, is less than $2.5-million.
To the knowledge of the corporation, after reasonable inquiry, none of the related parties have knowledge of any material information concerning the corporation or its securities that has not been generally disclosed.
A special committee of independent directors reviewed the offering and determined that as a Canadian Securities Exchange issuer MPXI is not listed on a specified market and the fair market value of the offering, in so far as it involves related parties, is not more than $2.5-million. The special committee unanimously recommended that the board of directors of the corporation approve the offering. Accordingly, the offering is exempt from minority shareholder approval and formal valuation requirements of MI 61-101.
The offering is closing in less than 21 days due to the limited number of subscribers to the offering, all subscription agreements being properly completed and received, and all subscription proceeds having been forwarded, which shorter period is reasonable in the circumstances. MI 61-101 requires if a material change report is filed less than 21 days before the expected date of the closing of the transaction, an explanation is to be provided why the shorter period is reasonable or necessary in the circumstances.
AI
