CRAiLAR Technologies Inc. announces additional commitments of up to $3 million of secured convertible debentures
VICTORIA, BC and PORTLAND, OR, Feb. 12, 2013 /PRNewswire/ – CRAiLAR
Technologies Inc. (TSXV: CL) (OTCBB: CRLRF) (“CL” or the “Company“) is pleased to announce that it has received commitments from a small
group of institutions to raise an aggregate of not less than $3.0
million, on a non-brokered deal basis, by way of a private placement
offering of up to $5.0 million 10.0% secured subordinated convertible
debentures (the “Debentures“) of the Company at a price of $1,000 per Debenture (the “Offering“).
“This funding is an important step in the growth strategy for the
Company as we apply to move to a senior U.S. exchange platform,” said
Ken Barker, CEO of CRAiLAR. “The assurance that this private investor
confidence provides to the public market, while we simultaneously
prepare to deliver finished fiber at increased capacities from our
Pamplico, S.C. manufacturing facility, puts CRAiLAR in an ideal
position for introduction on a more visible and globally accessible
The Offering is intended to be completed on essentially the same terms
as the offering previously announced by the Company on August 23, 2012
(the “Previous Private Placement“). Under the Previous Private Placement, the Company sought to raise an
aggregate of $18.0 million and closed on approximately $12.5 million of
debentures and equity units. The Offering at minimum $3 million will
substantially complete the funding goal of the Previous Private
Placement. The Offering is expected to close on or about February 19,
Terms of Financing
The Debentures will mature on September 30, 2017 (the “Maturity Date“) and will accrue interest at a rate of 10.0% per annum payable
semi-annually in arrears on March 31(st) and September 30(th) in each year commencing September 30(th), 2013. The September 30(th), 2013 interest payment will represent accrued interest for the period
from the Closing Date (as defined below). At the holder’s option, the
Debentures may be converted into common shares in the capital of the
Company (each a “Share“) at any time up to the earlier of the Maturity Date and the business
day immediately preceding the date specified by the Company for
redemption of the Debentures. The conversion price, subject to
adjustment in certain circumstances, will be $2.90 per Share (the “Conversion Price“), being a conversion rate of approximately 344.828 Shares for each
$1,000 principal amount of Debentures.
The Debentures will be direct obligations of the Company. Crailar Inc.,
a wholly-owned U.S. subsidiary of the Company (“Crailar US“), will provide a limited guarantee of the obligations of the Company
under the Debentures and a security interest over certain assets of
Crailar US having an initial acquisition cost of approximately $5.5
million (the “Secured Assets“). The security granted in respect of the Debentures will be
subordinated to the security granted in respect of the Company’s
secured convertible debentures issued on September 20, 2012 and will be
limited to the Secured Assets. The Debentures will otherwise rank
subordinate in right of payment of principal and interest to all
present and future senior obligations of the Company and rank equally
to all present and future unsecured indebtedness of the Company.
The Debentures will not be redeemable before September 30, 2015. On or
after September 30, 2015, and prior to Maturity, the Company may, at
its option, subject to providing not more than 60 and not less than 30
days’ prior notice, redeem the Debentures, in whole or, from time to
time, in part, at par plus accrued and unpaid interest provided that
the volume weighted average trading price of the common shares of the
Company on the TSX Venture Exchange (the “Exchange“) during the 20 consecutive trading days ending five trading days
preceding the date on which the notice of redemption is given is not
less than 125% of the Conversion Price.
The Debentures contain a change of control provision, whereby upon a
change of control, as set forth in the Debentures, the Company shall
make an offer in writing to the holders of the Debentures to, at the
Debenture holder’s election, either (i) purchase the Debentures at 100%
of the principal amount thereof plus accrued and unpaid interest, or
(ii) convert the Debentures at the change of control conversion price,
which is a declining discount to the Conversion Price the closer the
change of control occurs to the Maturity Date.
The Offering is scheduled to close on or about February 19, 2013 (the “Closing Date“) and is subject to certain conditions including, but not limited to,
the receipt of all necessary approvals, including the approval of the
It is anticipated that the Company will pay cash finders’ fees equal to
7.0% of the gross proceeds of the Offering.
The net proceeds of the Offering will be used to fund the Company’s
capital program and for general corporate purposes.
The Debentures have not been and will not be registered under the United
States Securities Act of 1933, as amended (the “U.S. Securities Act“), and may not be offered or sold in the United States absent
registration or applicable exemption from the registration
requirements. This press release shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of
the Debentures in any jurisdiction in which such offer, solicitation or
sale would be unlawful. Any public offering of the Debentures to be
made in the United States must be made by means of a prospectus
containing detailed information about the Company and management, as
well as financial statements.
The Debentures to be issued by the Company will be “restricted
securities” as defined under Rule 144(a)(3) of the U.S. Securities Act
and will contain the appropriate restrictive legends as required under
the U.S. Securities Act, National Instrument 45-102 and as required by
Neither the Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the Exchange) accepts responsibility for
the adequacy or accuracy of this release.
About CRAiLAR Technologies Inc.
CRAiLAR® Technologies Inc., previously known as Naturally Advanced
Technologies Inc., offers cost-effective and environmentally
sustainable natural fiber in the form of flax, hemp and other best
fibers for use in textile, industrial, energy, medical and composite
material applications. Produced using a fraction of water and chemical
inputs compared with other natural fibers, CRAiLAR Flax is used
primarily as a compliment to cotton today, and aims to supplement the
impending natural fiber gap caused by the increased use of cotton and
other natural fibers in emerging global markets. The Company supplies
its CRAiLAR Flax to HanesBrands, Georgia-Pacific, Brilliant Global
Knitwear, Tuscarora Yarns, and Target for commercial use, and to Levi
Strauss & Co., Cintas, Carhartt, Ashland, Target, PVH Corp and Lenzing
for evaluation and development. The Company was founded in 1998 as a
provider of environmentally friendly, socially responsible clothing.
For more information, visit www.crailar.com.
ADVISORY: This press release contains forward looking statements which may include
statements concerning completion of any proposed acquisitions, capital
programs, debt, funds flow from operations, closing date of the
Offering and the anticipated use of the net proceeds of the Offering.
Although CL believes that the expectations reflected in these forward
looking statements are reasonable, undue reliance should not be placed
on them because CL can give no assurance that they will prove to be
correct. Since forward looking statements address future events and
conditions, by their very nature they involve inherent risks and
uncertainties. Any proposed acquisition may not be completed if
required approvals or some other condition to closing is not satisfied.
The closing of the Offering could be delayed if CL is not able to
obtain the necessary regulatory and stock exchange approvals on the
timelines it has planned. The Offering will not be completed at all if
these approvals are not obtained or some other condition to the closing
is not satisfied. Accordingly, there is a risk that any proposed
acquisition or offering will not be completed within the anticipated
time or at all. The intended use of the net proceeds of the Offering by
CL might change if the board of directors of CL determines that it
would be in the best interests of CL to deploy the proceeds for some
The forward looking statements contained in this press release are made
as of the date hereof and CL undertakes no obligations to update
publicly or revise any forward looking statements or information,
whether as a result of new information, future events or otherwise,
unless so required by applicable securities laws.
The Exchange has neither approved nor disapproved the contents of this
SOURCE Crailar Technologies Inc.