UrtheCast Corp. to Raise $100 Million of New Capital in Conjunction With Acquisition of the Earth Observation Business of Elecnor S.A.

Press Release From: UrtheCast
Posted: Wednesday, June 22, 2016


UrtheCast Corp. (TSX:UR) ("UrtheCast" or the "Company") is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by Raymond James Ltd. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase 12,500,000 subscription receipts ("Subscription Receipts") at a price of $4.00 per Subscription Receipt (the "Offering Price") for aggregate gross proceeds of CAD$50 million (the "Offering"). UrtheCast also announced today that it has received a binding commitment letter, subject to certain conditions, for a first priority secured term loan in the amount of €37.5 million (approximately CAD$52 million) (the "Debt Financing") from a division of a global alternative investment management organization based in New York (the "Lender"). The net proceeds from the Offering and the Debt Financing will be used by UrtheCast to fund, in part, the purchase price of the acquisition of Elecnor, S.A.'s Earth Observation ("EO") business (the "Acquisition"), which is expected to close on or before August 21, 2015. For further details on the Acquisition, see UrtheCast's press release dated June 22, 2015 entitled "UrtheCast To Acquire the Deimos Imaging Earth Observation Business from Elecnor, S.A." or the investor presentation dated June 22, 2015 filed on UrtheCast's SEDAR profile at

In addition, the Company has granted the Underwriters an option (the "Over-Allotment Option") to purchase up to an additional 1,875,000 Subscription Receipts at the Offering Price exercisable in whole or in part at any time and from time to time up to 30 days following the Closing Date (as hereinafter defined), for market stabilization purposes and to cover over-allotments, if any. If the Over-Allotment Option is exercised in full, an additional CAD$7.5 million will be raised pursuant to the Offering and the aggregate gross proceeds of the Offering will be CAD$57.5 million.

Subscription Receipts
Each Subscription Receipt will entitle the holder thereof to receive, without payment of additional consideration or further action, one common share of the Company (a "Common Share") in exchange for each Subscription Receipt.

The Subscription Receipts will be issued pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement") to be dated as of the Closing Date, pursuant to which the gross proceeds of the Offering less the Underwriters' expenses and 50% of the Underwriters' commission payable in connection with the Offering (the "Escrowed Proceeds"), will be held in escrow in an interest bearing account pending the closing of the Acquisition. Upon satisfaction or waiver of the conditions to completion of the Acquisition in accordance with the terms of the definitive purchase agreement signed in respect thereof (the "Purchase Agreement"), without amendment or waiver materially adverse to the Company (except for payment of the purchase price and such other conditions that by their nature are to be satisfied at the closing of the Acquisition (the "Escrow Release Conditions"), the remaining 50% of the Underwriters' commission (plus accrued interest) will be released to the Underwriters, the Escrowed Proceeds remaining thereafter will be released to the Company and each Subscription Receipt will be exchanged for one Common Share.

If the Acquisition is not completed prior to 5:00 p.m. (Vancouver time) on the date that is 90 days following the Closing Date, the Purchase Agreement is terminated at an earlier time or UrtheCast advises the subscription receipt agent and Raymond James Ltd., or announces to the public, that it does not intend to proceed with the Acquisition, holders of the Subscription Receipts will receive an amount per Subscription Receipt equal to the Offering Price plus a pro rata share of the interest earned on the Escrowed Proceeds, net of any applicable withholding taxes. To the extent that the Escrowed Proceeds (plus accrued interest) are not sufficient to redeem all of the Subscription Receipts for cancelation at the Offering Price, the Company will contribute such amounts as are necessary to satisfy any shortfall.

The Offering is expected to close on or about July 7, 2015 (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 Toronto Stock Exchange.

UrtheCast will file a prospectus supplement to its short form base shelf prospectus in the provinces of Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador and its amended and restated short form base shelf prospectus in the provinces of British Columbia, Alberta and Ontario dated May 15, 2015, as may be amended, qualifying the issuance of the Subscription Receipts and the underlying Common Shares issuable upon exchange thereof, including any Subscription Receipts or Common Shares issued pursuant to the exercise of the Over-Allotment Option. The Subscription Receipts may also be offered in the United States on a private placement basis pursuant to an exemption from the registration requirements of the U.S. Securities Act and certain other jurisdictions.

This press release does not constitute an offer of securities for sale in the United States. The Subscription Receipts and the Common Shares issuable upon exchange thereof have not been, and will not be, registered under the U.S. Securities Act and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

Debt Financing
The Debt Financing will have a five-year term and is secured by, among other things, a first priority security interest over all of the assets of UrtheCast. Subject to the satisfaction of certain conditions precedent customary for a financing of this type, funds will be available under the Debt Financing by way of a single draw at the closing of the Acquisition.

Funds borrowed under the Debt Financing will accrue interest at a rate equal to the greater of (i) one, three or six month EURIBOR or (ii) 1% plus 9.25%, except that, if UrtheCast elects to repay up to 3% of the interest rate through the addition of this amount to the principal, the rate shall increase to 1% plus 10.25% for the period during which such election applies.

Prepayments will be permitted at UrtheCast's option at any time, subject to payment of, in the case of repayment during (i) the first two years of the term of the Debt Financing, a make-whole payment equal to the sum of all interest payments due during those first two years (including any capitalized interest) plus 3% of the principal being repaid or (ii) the third or fourth years of the term of the Debt Financing, an early termination fee equal to the principal (including any capitalized interest) multiplied by 3% or 1%, respectively.

The commitment letter and related agreements in respect of the Debt Financing contain representations and warranties, affirmative and negative covenants (including requirements for UrtheCast to meet certain financial ratios on an ongoing basis) and events of default that are customary for lending facilities of this nature.

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