CRAiLAR Technologies Inc. announces additional commitments of up to $3 million
of secured convertible debentures
VICTORIA, BC and PORTLAND, OR, Feb. 12, 2013
VICTORIA, BC and PORTLAND, OR, Feb. 12, 2013 /PRNewswire/ - CRAiLAR
Technologies Inc. (TSXV: CL) (OTCBB: CRLRF) ("CL" or the "Company") is pleased
to announce that it has received commitments from a small group of
institutions to raise an aggregate of not less than $3.0 million, on a
non-brokered deal basis, by way of a private placement offering of up to $5.0
million 10.0% secured subordinated convertible debentures (the "Debentures")
of the Company at a price of $1,000 per Debenture (the "Offering").
"This funding is an important step in the growth strategy for the Company as
we apply to move to a senior U.S. exchange platform," said Ken Barker, CEO of
CRAiLAR. "The assurance that this private investor confidence provides to the
public market, while we simultaneously prepare to deliver finished fiber at
increased capacities from our Pamplico, S.C. manufacturing facility, puts
CRAiLAR in an ideal position for introduction on a more visible and globally
The Offering is intended to be completed on essentially the same terms as the
offering previously announced by the Company on August 23, 2012 (the "Previous
Private Placement"). Under the Previous Private Placement, the Company sought
to raise an aggregate of $18.0 million and closed on approximately $12.5
million of debentures and equity units. The Offering at minimum $3 million
will substantially complete the funding goal of the Previous Private
Placement. The Offering is expected to close on or about February 19, 2013.
Terms of Financing
The Debentures will mature on September 30, 2017 (the "Maturity Date") and
will accrue interest at a rate of 10.0% per annum payable semi-annually in
arrears on March 31^st and September 30^th in each year commencing September
30^th, 2013. The September 30^th, 2013 interest payment will represent accrued
interest for the period from the Closing Date (as defined below). At the
holder's option, the Debentures may be converted into common shares in the
capital of the Company (each a "Share") at any time up to the earlier of the
Maturity Date and the business day immediately preceding the date specified by
the Company for redemption of the Debentures. The conversion price, subject to
adjustment in certain circumstances, will be $2.90 per Share (the "Conversion
Price"), being a conversion rate of approximately 344.828 Shares for each
$1,000 principal amount of Debentures.
The Debentures will be direct obligations of the Company. Crailar Inc., a
wholly-owned U.S. subsidiary of the Company ("Crailar US"), will provide a
limited guarantee of the obligations of the Company under the Debentures and a
security interest over certain assets of Crailar US having an initial
acquisition cost of approximately $5.5 million (the "Secured Assets"). The
security granted in respect of the Debentures will be subordinated to the
security granted in respect of the Company's secured convertible debentures
issued on September 20, 2012 and will be limited to the Secured Assets. The
Debentures will otherwise rank subordinate in right of payment of principal
and interest to all present and future senior obligations of the Company and
rank equally to all present and future unsecured indebtedness of the Company.
The Debentures will not be redeemable before September 30, 2015. On or after
September 30, 2015, and prior to Maturity, the Company may, at its option,
subject to providing not more than 60 and not less than 30 days' prior notice,
redeem the Debentures, in whole or, from time to time, in part, at par plus
accrued and unpaid interest provided that the volume weighted average trading
price of the common shares of the Company on the TSX Venture Exchange (the
"Exchange") during the 20 consecutive trading days ending five trading days
preceding the date on which the notice of redemption is given is not less than
125% of the Conversion Price.
The Debentures contain a change of control provision, whereby upon a change of
control, as set forth in the Debentures, the Company shall make an offer in
writing to the holders of the Debentures to, at the Debenture holder's
election, either (i) purchase the Debentures at 100% of the principal amount
thereof plus accrued and unpaid interest, or (ii) convert the Debentures at
the change of control conversion price, which is a declining discount to the
Conversion Price the closer the change of control occurs to the Maturity Date.
The Offering is scheduled to close on or about February 19, 2013 (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 Exchange.
It is anticipated that the Company will pay cash finders' fees equal to 7.0%
of the gross proceeds of the Offering.
The net proceeds of the Offering will be used to fund the Company's capital
program and for general corporate purposes.
The Debentures have not been and will not be registered under the United
States Securities Act of 1933, as amended (the "U.S. Securities Act"), and may
not be offered or sold in the United States absent registration or applicable
exemption from the registration requirements. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the Debentures in any jurisdiction in which such offer,
solicitation or sale would be unlawful. Any public offering of the Debentures
to be made in the United States must be made by means of a prospectus
containing detailed information about the Company and management, as well as
The Debentures to be issued by the Company will be "restricted securities" as
defined under Rule 144(a)(3) of the U.S. Securities Act and will contain the
appropriate restrictive legends as required under the U.S. Securities Act,
National Instrument 45-102 and as required by the Exchange.
Neither the Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the Exchange) accepts responsibility for the
adequacy or accuracy of this release.
About CRAiLAR Technologies Inc.
CRAiLAR® Technologies Inc., previously known as Naturally Advanced
Technologies Inc., offers cost-effective and environmentally sustainable
natural fiber in the form of flax, hemp and other best fibers for use in
textile, industrial, energy, medical and composite material applications.
Produced using a fraction of water and chemical inputs compared with other
natural fibers, CRAiLAR Flax is used primarily as a compliment to cotton
today, and aims to supplement the impending natural fiber gap caused by the
increased use of cotton and other natural fibers in emerging global markets.
The Company supplies its CRAiLAR Flax to HanesBrands, Georgia-Pacific,
Brilliant Global Knitwear, Tuscarora Yarns, and Target for commercial use, and
to Levi Strauss & Co., Cintas, Carhartt, Ashland, Target, PVH Corp and Lenzing
for evaluation and development. The Company was founded in 1998 as a provider
of environmentally friendly, socially responsible clothing. For more
information, visit www.crailar.com.
ADVISORY: This press release contains forward looking statements which may
include statements concerning completion of any proposed acquisitions, capital
programs, debt, funds flow from operations, closing date of the Offering and
the anticipated use of the net proceeds of the Offering. Although CL believes
that the expectations reflected in these forward looking statements are
reasonable, undue reliance should not be placed on them because CL can give no
assurance that they will prove to be correct. Since forward looking statements
address future events and conditions, by their very nature they involve
inherent risks and uncertainties. Any proposed acquisition may not be
completed if required approvals or some other condition to closing is not
satisfied. The closing of the Offering could be delayed if CL is not able to
obtain the necessary regulatory and stock exchange approvals on the timelines
it has planned. The Offering will not be completed at all if these approvals
are not obtained or some other condition to the closing is not satisfied.
Accordingly, there is a risk that any proposed acquisition or offering will
not be completed within the anticipated time or at all. The intended use of
the net proceeds of the Offering by CL might change if the board of directors
of CL determines that it would be in the best interests of CL to deploy the
proceeds for some other purpose.
The forward looking statements contained in this press release are made as of
the date hereof and CL undertakes no obligations to update publicly or revise
any forward looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
The Exchange has neither approved nor disapproved the contents of this press
SOURCE Crailar Technologies Inc.
CRAiLAR Technologies Inc.
Chief Financial Officer
CRAiLAR Technologies Inc.
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