TORONTO, Aug. 23, 2019 (GLOBE NEWSWIRE) — Nutritional High International Inc. (“Nutritional High” or the “Company”) (CSE: EAT, OTCQB: SPLIF, FRANKFURT: 2NU) is pleased to announce the closing of the first tranche of its non-brokered private placement (the “Offering”) consisting of C$1,807,000 aggregate principal amount of secured convertible debenture units (the “Convertible Debenture Units”) at a price of $1,000 per Convertible Debenture Unit. The Offering will consist of up to $5 million of Convertible Debenture Units.
Each Convertible Debenture Unit is comprised of a $1,000 principal amount 9% subordinate secured convertible debenture (each, a “Convertible Debenture”) and 5,000 common share purchase warrants (each, a “Warrant”). Each Warrant is exercisable into a common share of the Company (a “Warrant Share”) at a price of $0.24 (“Warrant Exercise Price”) for 36 months from the date of issuance (the “Maturity Date”). The Convertible Debentures are convertible into common shares in the capital of the Company (“Conversion Shares”) at a price of $0.20 per share (“Conversion Price”) at any time prior to Maturity Date. The Convertible Debentures, Conversion Shares, Warrants and Warrant Shares will be subject to a statutory hold period of four months and one day from the applicable issuance date. The Company shall have a right to prepay a part or the entire principal amount of Convertible Debentures at any time without penalty.
The Convertible Debentures rank pari passu and will bear interest at a rate of 9% per annum from the date of issuance payable semi-annually in arrears. The interest can be payable in cash or by issuing common shares against the amount due at the sole option of the Company.
In connection with the Offering, the Company paid a finder a cash fee of C$80,700 and issued 403,500 finder compensation options (each, a “Finder Option”). Each Finder Option entitles the holder thereof to purchase one finder unit (each, a “Finder Unit”) consisting of one common share and one Warrant of the Company, such Warrant having the same terms and conditions as the Warrant forming part of the Convertible Debenture Units, at a price of C$0.20 per Finder Unit for a period of twenty-four (24) months from the date of issuance.
The Convertible Debentures are secured by the assets of the Company, subject to subordination in certain situations, as set out in the certificates representing the Convertible Debentures and security documents.
Certain directors of the Company (the “Related Parties”) participated in the Offering. This transaction constitutes a “related party transaction” as defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of securities being issued to the Related Parties nor the consideration being paid by the Related Parties exceeded 25% of the Company’s market capitalization. A material change report in respect of this related party transaction will be filed by the Company but could not be filed at least 21 days prior to the closing of the Offering due to the fact that the Company wished to close the transaction as soon as practicable to enable it to use the proceeds of the Offering in an expeditious manner to bolster the Company’s financial position.
The Company intends to use the net proceeds of the Offering for capital projects and general corporate purposes.