Clearford Water Systems Announces C$24 Million Long-Term Debt Financing Agreement
Ottawa, April 18, 2016 – Clearford Water Systems Inc. (“Clearford” or the “Company”), a TSX Venture 50 Company, the provider of the Clearford One™ unified water management and sanitation system, today announced that it has entered into a long-term debt financing agreement (the “Agreement”) with Sustainable Water Projects Inc. (“SWP”), a wholly owned subsidiary of Sustainable Water Investments Inc., a Vancouver-based holding company capitalized by a European bond issuance platform, pursuant to which SWP will acquire Clearford’s existing debt of C$18.25 million and advance an additional project-linked loan in the amount of between C$5.75 to 6.75 million (collectively, the “Investment”) to the Company. The Investment is scheduled to close by April 29, 2016 (the “Closing Date”), subject to the completion of definitive documentation giving effect to the transactions contemplated under the Agreement and the receipt of any necessary approvals required from the TSX Venture Exchange.
Under the terms of the Agreement, SWP will acquire Clearford’s existing loans in the aggregate principal amount of C$18.25 million (the “Existing Debt”), including the accrued interest thereon, from the current holder. The Existing Debt will be consolidated into a single loan (the “Restructured Loan”) denominated in the US$ equivalent of C$18.25 million at the Bank of Canada noon exchange rate on the Closing Date (the “Principal Amount”). The Restructured Loan will have a 12-year term, with the Principal Amount bearing interest at 11% per annum. The “Make Whole” provision of the Existing Debt will be cancelled, and replaced with an amortization schedule, pursuant to which a percentage of the margin realized by the Company from the worldwide sales of its Clearford One™ system or the equivalent thereof shall be applied, on an annual basis, towards the repayment of the outstanding Principal Amount.
In addition to the Restructured Loan, SWP shall advance to the Company an additional project-linked loan in the US$ equivalent of between C$5.75 to 6.75 million at the Bank of Canada noon exchange rate on the Closing Date (the “Additional Advance”). The Additional Advance will have a 10-year term, with the principal amount bearing interest at 9.75% per annum.
The parties to the Agreement, which includes the current holder of the Existing Debt, have undertaken to act in good faith to close the transactions contemplated under the Agreement as soon as practical, but no later than the Closing Date. Payment of or the demand of any accrued interest due under the Existing Debt, which forms part of the consideration for the Investment, during the interim period was postponed to the Closing Date.
“We are pleased to report another material milestone in the business of Clearford”, said Kevin Loiselle, President and CEO of Clearford. “The new debt package better reflects the Company’s strategic positioning and transition to growth, with financing terms that provide Clearford with much added flexibility in the management of its cost of capital. We look forward to utilizing improved resources and capabilities to expanding Clearford’s value proposition in Canada and beyond”.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
About Clearford Water Systems Inc.
Clearford Water Systems Inc. (TSX-V: CLI) is a provider of unified water management and sanitation systems based on Clearford One™. Clearford One™ is a proprietary system comprised of ClearDigest™ smart digester, ClearConvey™ small bore sewer, and ClearRecover™ final treatment facility. For additional information about Clearford Water Systems, please visit www.clearford.com
Forward Looking Statements
This news release contains certain statements that constitute forward-looking statements as they relate to the Company and its management. Forward-looking statements are not historical facts but represent management’s current expectation of future events, and can be identified by words such as «believe», «expects», «will», «intends», «plans», «projects», «anticipates», «estimates», «continues» and similar expressions. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.
By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this news release, Clearford will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities law, the Company assumes no obligation to update or revise any forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: industry cyclicality; the ability to secure third party agreements; successful integration of Clearford’s system with third party technology; competition; reduction in demand for products; collection from customers; relationships with suppliers; product liability; intellectual property; reliance on key personnel; environmental; interest rates; uninsured and underinsured losses; operating hazards; risks of future legal proceedings; income tax matters; credit facilities; availability and terms of financing; distribution of securities; restrictions on potential growth; effect of market interest rates on price of securities; and potential dilution.
For additional information please contact:
Kevin Loiselle, President & CEO
Clearford Water Systems Inc.
Phone: (613) 599-6474 ext. 303