TORONTO, ON / ACCESSWIRE / February 1, 2024 / Global Food and Ingredients Ltd. (TSXV:PEAS) ("GFI" or the "Company"), announced today that it has completed the previously announced transactions to raise $3.45 million through an investment in equity and a new debt facility of up to $10.0 million in its pet food division, Big Sky Milling Inc. ("Big Sky") (the "Pet Food Transaction") as well as a further injection of $0.5 million in the Company's core ingredients division (the "Subordinated Loan", and together with the Pet Food Transaction, the "Transactions") by 35 Oak Holdings Ltd. ("35 Oak").
Concurrent with the closing of the Transactions, the Company's core ingredients business, operated through GFI's subsidiary Global Food and Ingredients Inc., entered into a new $20 million asset-based credit facility (the "ABL Facility") to fund the day to day working capital requirements of the core ingredients business. The proceeds from the Transactions and ABL Facility will be used by the Company's core ingredients division to strengthen the Company's balance sheet through the refinancing and repayment of existing loans and unlock liquidity to invest in further growth of the operation.
The proceeds drawn from the ABL Facility, coupled with a portion of the proceeds from the Transactions, will be used to repay the Company's existing asset-based lending facility.
"We are very pleased to announce the closing of the Pet Food Transaction and the refinancing being offered by our new lender," said David Hanna, CEO. "The Transactions will help meet the capital needs in our core ingredients business and this refinancing will significantly improve our flexibility and strengthen our balance sheet, positioning GFI to realize on continued growth opportunities."
The ABL Facility replaces the Company's previous credit facility and is committed for three years, maturing February 1, 2027. The ABL Facility is secured by a first ranking interest in the Company's core ingredients' accounts receivable and inventory. The ABL Facility will immediately unlock approximately $2-3 million in additional capital, which will be used to realize on growth opportunities. The ABL Facility will bear interest at an annual rate that is equal to the 1-month CDOR Rate plus 4%, subject to a minimum interest rate of 8.38% during the term of the facility. Further details regarding the terms of the ABL Facility will be made available under the Company's SEDAR+ profile.
Pet Food Transaction
Under the Pet Food Transaction, the Company transferred all of the assets and liabilities associated with the pet food ingredients business to Big Sky, a subsidiary of the Company. As part of the Pet Food Transaction, the Company raised $3.45 million (the "Subscription Proceeds") through the sale of common shares of Big Sky to 35 Oak representing an ownership stake of 49.9%.
In addition to the Subscription Proceeds, Big Sky entered into a two-year committed $10.0 million credit facility consisting of two tranches, including a revolving credit facility of up to $5.0 million and a term loan in the amount of $5.0 million (collectively the "Pet Food Loans") from the lender, 35 Oak. The Pet Food Loans bear interest at a rate of Canadian Prime Rate plus 3.80% and are secured by all of the assets of Big Sky. The Pet Food Loans include a 2.0% commitment fee payable over the term.
As consideration for providing the Pet Food Loans, the Company issued 35 Oak non-transferrable warrants (the "Warrants", and each, a "Warrant") to purchase an aggregate of 3,250,000 common shares of the Company (each, a "Common Share"), each Warrant entitling 35 Oak to acquire one Common Share at an exercise price of $0.20 per share for a period of two years following the date of issuance.
Concurrent with the close of the Pet Food Transaction, the Company entered into a $0.5 million Subordinated Loan with 35 Oak. The Subordinated Loan will have a term of one year from the date of issuance, accrue interest at a rate of 15% per annum and be payable in full at maturity. The Subordinated Loan includes a 3.0% commitment fee payable at disbursement and is secured by a general security agreement over all of the assets of the Company's core ingredients division, subordinated to the Company's senior lenders.
The Transactions constituted "related party transactions" of GFI, within the meaning of Multilateral Instrument 61-101 - Protections of Minority Security Holders in Special Transactions ("MI 61-101") as 35 Oak is a shareholder of the Company. The Company determined that the Transactions are exempt from the formal valuation and minority approval requirements of MI 61-101 in reliance of the exemptions set forth in sections 5.5(e) and 5.7(1)(c) of MI 61-101, respectively, as the Transactions are supported by a control person of the Company in the circumstances described in section 5.5(e) of MI 61-101.
GFI is a fast-growing Canadian plant-based food and ingredients company, connecting the local farm to the global supply chain for peas, beans, lentils, chickpeas and other high protein specialty crops. GFI's vision is to become a vertically integrated farm-to-fork plant-based company providing traceable, locally sourced, healthy and sustainable food and ingredients. GFI is organized into four primary business lines: Core Ingredients, Value-Added Ingredients, Plant-Based Pet Food Ingredients and Downstream Products. Headquartered in Toronto, GFI buys directly from its extensive network of farmers, processes its products locally at its four wholly-owned processing facilities in Western Canada and ships to 37 countries across the world.
Neither the TSXV nor its Regulation Service Provider (as defined policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.
This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact. Forward-looking statements include without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Forward-looking information in this press release includes without limitation statements relating to the use of proceeds of the ABL Facility, the impact of the Transactions on the Company's financial condition and prospects and the business vision of the Company. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. GFI undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of GFI, its securities, or financial or operating results (as applicable). Although GFI believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond GFI's control, including the risk factors discussed in GFI's annual information form for the year ended March 31, 2022, which are incorporated herein by reference and are available through SEDAR at www.sedar.com. The forward-looking information contained in this press release is expressly qualified by this cautionary statement and is given as of the date hereof. GFI disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
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SOURCE: Global Food and Ingredients
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