Cielo Announces Closing of $11 Million Mortgage, Partial Repayment and Modification of Existing Loan
VANCOUVER, BC /ACCESSWIRE/February 22, 2022/ Cielo Waste Solutions Corp. CMCCWSFF (“Cielo” or the “Company”), an environmental technology waste recovery company, is pleased to announce:
- The closing of the $11 million mortgage loan previously announced on December 30, 2021 (the “loan”) to partially repay the $12 million mortgage loan announced on August 24, 2021 (the “existing loan”) and to provide general turnover at Cielo; and
- the favorable modification of the terms of the existing loan, including the elimination of market capitalization requirements (as defined below) and the repayment of a proportionate part of the interest reserve (as defined below).
All amounts in this press release are in Canadian dollars, unless otherwise indicated.
“The loan settlement represents an important step in streamlining Cielo’s financial structure and providing additional capital to fund the operations of the Aldersyde facility and the Fort Saskatchewan research and development facility,” commented Gregg Gegunde, CEO and COO of Cielo. “This quarter is an exciting time in the operational development of Cielo as we prepare for the commissioning of the Aldersyde facility. With the additional funds and the favorable amendment of the existing loan, we will allocate additional capital to execute our plans at Aldersyde and Fort Saskatchewan facilities.”
Cielo obtains additional working capital and a favorable modification of the existing loan
As announced on December 30, 2021, the Company, as borrower, entered into an agreement with First Choice Financial (“FCF”), as lender, which closed on February 18, 2022 (the “Closing Date”). ). As detailed in the December 30, 2021 press release, the loan bears an annual interest rate of 3%, has a term of 24 months, matures on February 18, 2024, subject to prepayment terms (such as described below), and is warranted by facility in Aldersyde and ownership in Fort Saskatchewan, Alberta. The prepayment terms are: (i) Cielo’s right to repay the loan early, without penalty, and (ii) FCF’s right to review Cielo’s financial condition and business and technological advances at one year anniversary of the Closing Date and to require repayment within 90 days if CWF is not satisfied with such review, acting reasonably and in good faith.
The Company has issued 50,000,000 non-transferable share purchase warrants (the “Warrants”), each Warrant entitling FCF to purchase one common share of the Company at an exercise price of $0.22 for a period of 24 months, however in the event that the loan is prepaid in whole or in part, a proportionate number of the total number of bonus warrants will have their term reduced on the later of: i) 30 days following the date of this reimbursement; and ii) 12 months from the date of issue of the Bonus Warrants.
The Company used $5.5 million of the net loan proceeds to repay the existing loan, and the balance will be used for general working capital purposes. Management believes that the closing of the loan is positive for the company as follows:
- Further improve the Company’s cash position and provide additional capital to fund the operations of the Aldersyde facility to achieve a steady state of production, as well as costs related to the Fort research and development facility Saskatchewan, Alberta;
- Authorize a partial repayment of $5.5 million on the existing loan without penalty, and the favorable modification of the terms of the existing loan, as further described below;
- Generate interest savings on the existing loan.
In consideration for the partial repayment of the Existing Loan, the terms of the Existing Loan have been amended in favor of Cielo as follows:
- The Existing Loan was subject to a special clause relating to the market capitalization of the Company, which authorized the lenders of the Existing Loan to request partial repayments of the Existing Loan when the market capitalization of the Company is below a certain threshold (the “requirements”). market capitalization”). Market capitalization requirements have been removed in their entirety; and
- For the initial 12 month term, total interest of $720,000 has been withheld by the lenders of the Existing Loan as an interest reserve (the “Interest Reserve”) and applied to the first 12 monthly interest payments . A proportional portion of the interest reserve, approximately $175,000, will be returned to Cielo in due course.
In addition, following the partial repayment of the Existing Loan, the term of 5.5 million of the 12 million bonus warrants that were issued under the Existing Loan (the “Existing Bonus Warrants”) was reduced so that the 5.5 million Existing Bonus Warrants will expire, if not exercised, on May 19, 2022.
Cielo remains committed to providing timely updates to shareholders as the Company continues to achieve milestones and new key objectives are established.
About Cielo Waste Solutions Corp.
Cielo was incorporated under the Business Corporations Act (British Columbia) on February 2, 2011. Cielo is a publicly traded company whose shares are listed on the TSX Venture Exchange (“TSXV”) under the symbol “CMC”, as well as on the OTC Venture Market (“OTCQB”), under the symbol “CWSFF”.
The company’s strategic intention is to become one of the leading environmental technology companies for waste recovery by using its environmentally friendly and economically sustainable technology. Cielo has a patented process that can convert waste feedstocks including plastics, rubber, organics and wood-derived waste into fuel. Cielo’s business model is to source raw materials from industrial producers and other suppliers and convert the raw materials into fuels. Having demonstrated its ability to produce diesel and naphtha from waste, Cielo plans to further upgrade its Aldersyde facility and build additional facilities that will convert waste into energy fuels including diesel, naphtha and kerosene. . Cielo distillate diesel could be used in diesel engines. Kerosene could be suitable for jet fuel for aviation or the navy, and naphtha could be used to help transport heavy oil. Cielo’s goal is to generate value by converting waste into fuel while ridding the world of unwanted and problematic waste.
Caution Regarding Forward-Looking Statements
This press release contains certain forward-looking statements and information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of current or historical facts are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “achieve”, “could”, “believe”, “plan”, “intend”, “objective”, “continuing”, “in progress”, “estimate”, “prospect”, “expect”, “may”, “will”, “plan”, “should” or similar words, including their negative forms, suggesting future results.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which may cause actual results, level of activity, performance or the Company’s achievements are materially different. of those expressed or implied by such forward-looking statements. Cielo makes forward-looking statements regarding, but not limited to: the use of the net loan proceeds and the additional capital allocation to execute Cielo plans at Aldersyde and Fort Saskatchewan facilities; FCF’s assessment of Cielo’s financial condition and business and technological progress, and such assessment occurring 12 months or more after the closing date and FCF acting reasonably and in good faith; the terms of the Existing Bonus Warrants and the Existing Bonus Warrants, including, but not limited to, their respective expiry dates, and in particular the expiry of the Existing Bonus Warrants, if they have not been exercised d ‘here May 19, 2022; Cielo’s requirement and ability to make monthly interest payments of $27,500 for the second year of the loan term, if unpaid; the return of a proportionate portion of the interest reserve, approximately $175,000, to Cielo in due course; management’s preparation for the commissioning of the Aldersyde facility in the current quarter; and the favorable impact and anticipated benefits of the foregoing on the Company. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other factors that cause results not to be those anticipated, estimated or expected.
Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some of which are described here. These forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the actual performance and results of the Company to differ materially from the projections of future performance or results expressed or implied by these forward-looking statements. All forward-looking statements are made as of the date hereof and, except as required by law, the Company undertakes no obligation to publicly update or revise such statements to reflect new information, whether subsequent or not. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange), nor the OTCQB nor WKN has reviewed the contents of this Press Release.
THE SOURCE: Cielo Waste Solutions Corp.
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