(TSXV: HEO) – H2O Innovation Inc. (“H2O
Innovation” or the “Corporation”) is pleased to report the
closing of its previously announced equity offering of aggregate
amount of $22 M, which combines a $8 M brokered private placement
and a $14 M overnight marketed public offering. BDC Capital Inc.,
Caisse de dépôt et placement du Québec and Investissement Québec,
insiders of the Corporation, have subscribed in the brokered
private placement.
Under the public offering (the “Public
Offering”), the Corporation issued 13,335,000 units (the “Units”)
at a price of $1.05 per Units (the “Offering Price”) for aggregate
gross proceeds of $14,001,750, exclusive of the Over-Allotment
Option described below. Under the brokered private placement, the
Corporation issued 7,647,619 Units for aggregate gross proceeds of
approximately $8,030,000 under the same terms and conditions as the
Units issued under the Public Offering (the “Concurrent Private
Placement” and, collectively with the Public Offering, the
“Offerings”). The Offerings were conducted by a syndicate of
underwriters led by Desjardins Capital Markets and Canaccord
Genuity Corp. (the “Co-Lead Underwriters”) and included Acumen
Capital Finance Partners Limited, Beacon Securities Limited,
Industrial Alliance Securities Inc. and Haywood Securities Inc.
(collectively, the “Underwriters”).
Prior to the closing of the Offerings, the
Corporation gave notice to the Co-Lead Underwriters confirming that
the closing conditions set forth in the sale and purchase agreement
entered into by the Corporation in connection with the acquisition
of Genesys Holdings Limited, Genesys International Limited, Genesys
Manufacturing Limited and Genesys North America, LLC by a
wholly-owned subsidiary of the Corporation (the “Acquisition”) have
been satisfied, other than the payment of the purchase price, which
will be satisfied with, among others, the proceeds of the
Offerings. The closing of the Acquisition is scheduled to occur
shortly after the closing of Offerings. Given the delivery of the
escrow release condition notice, Units, composed of one (1) common
share in the capital of the Corporation (a “Common Share”) and
one-half (1/2) of one common share purchase warrant (each whole
common share purchase warrant, a “Warrant”), were issued directly
to the subscribers instead of subscription receipts of the
Corporation. Each Warrant shall entitle the holder to purchase an
additional Common Share at an exercise price of $1.40 at until
November 15, 2021.
The Corporation has granted the Underwriters an
option to purchase up to an additional 952,380 Units under the
Public Offering at the Offering Price, exercisable in whole or in
part at the sole discretion of the Co-Lead Underwriters, at any
time up to thirty (30) days after the date hereof
(the “Over-Allotment Option”), for additional gross proceeds
of up to $ 1.0 M.
In connection with the Offerings, the
Corporation paid to the Underwriters an aggregate cash commission
of approximately $970,000 and also issued, as additional
compensation, 923,796 non-transferable common share purchase
warrants (the “Broker Warrants”). The Broker Warrants will be
exercisable at a price per Common Share equal to the Offering Price
until May 14, 2021.
The securities offered pursuant to the Public
Offering were distributed under a short from prospectus of the
Corporation dated November 6, 2019, which is available on SEDAR at
www.sedar.com. The Warrants will commence trading on the TSX
Venture Exchange today under the symbol HEO.WT.
The securities issued and issuable to the
Concurrent Private Placement Offering are subject to a statutory
resale restriction until March 15, 2020.
Certain insiders of H2O Innovation have
participated in the Offerings, which participation constitutes a
“related party transaction” as defined under Regulation 61-101
respecting Protection of Minority Security Holders in Special
Transactions (“Regulation 61-101”) and TSXV Corporate Finance
Policy 5.9 – Protection of Minority Security Holders in Special
Transactions. The Offerings will be exempt from the formal
valuation and minority shareholder approval requirements of
Regulation 61-101 as neither the fair market value of securities
being issued to insiders nor the consideration being paid by
insiders exceeds 25% of the Corporation’s market capitalization.
None of the Corporation’s directors has expressed any contrary
views or disagreements with respect to the foregoing. The
Corporation did not file a material change report 21 days prior to
the expected closing date of the Offerings as the details of the
participation of the insiders of the Corporation had not been
confirmed at that time.
The following insiders have entered into a
subscription agreement with the Corporation and the Co-Lead
Underwriters for a total of 7,019,048 Units in the Offerings
amounting to $7,370,000, as follows:
- BDC Capital Inc. subscribed for 2,619,048 Units (for an amount
of $2,750,000);
- Caisse de dépôt et placement du Québec subscribed for 2,304,762
Units (for an amount of $2,420,000); and
- Investissement Québec subscribed for 2,095,238 Units (for an
amount of $2,200,000).
Other insiders of the Corporation, including
directors or officers of the Corporation, may have participated in
the Public Offering.
The securities offered pursuant to the Offerings
have not and will not be registered under the United States
Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable exemption
from the registration requirements. This news release shall not
constitute an offer to sell or the solicitation of an offer to buy
securities nor shall there be any sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful.
Prospective disclosures
Certain statements set forth in this press
release regarding the operations and the activities of
H2O Innovation as well as other communications by the
Corporation to the public that describe more generally management
objectives, projections, estimates, expectations or forecasts may
constitute forward-looking statements within the meaning of
securities legislation. Forward-looking statements concern analysis
and other information based on forecast future results, performance
and achievements and the estimate of amounts that cannot yet be
determined. Forward-looking statements include the use of words
such as “anticipate”, “if”, “believe”, “continue”, “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “potential”,
“predict”, “project”, “should” or “will”, and other similar
expressions, as well as those usually used in the future and the
conditional. Those forward-looking statements, based on the current
expectations of management, involve a number of risks and
uncertainties, known and unknown, which may result in actual and
future results, performance and achievements of the Corporation to
be materially different than those indicated. Factors that could
cause or contribute to such differences include, but are not
limited to, failure to obtain final TSX Venture Exchange approval
of the Public Offering and those risk factors discussed in the
Annual Information Form of the Corporation dated
September 24, 2019 available on SEDAR (www.sedar.com).
Certain of the forward-looking statements included in this press
release may be considered “financial outlook” for purposes of
applicable Canadian provincial and territorial securities laws.
Readers are cautioned that such financial outlook information
contained in this press release should not be used for the purposes
other than for which it is disclosed herein or therein, as the case
may be. Unless required to do so pursuant to applicable securities
legislation, H2O Innovation assumes no obligation to update or
revise forward-looking statements contained in this press release
or in other communications as a result of new information, future
events and other changes.
About H2O Innovation
H2O Innovation designs and provides
state-of-the-art, custom-built and integrated water treatment
solutions based on membrane filtration technology for municipal,
industrial, energy and natural resources end-users. The
Corporation’s activities rely on three pillars which are
i) water and wastewater projects and services;
ii) specialty products, which include a complete line of maple
equipment and products, specialty chemicals, consumables and
specialized products for the water treatment industry; and
iii) operation and maintenance services for water and
wastewater treatment systems and utilities. For more information,
visit www.h2oinnovation.com.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Source:
H2O Innovation Inc. www.h2oinnovation.com
Contact:
Marc Blanchet +1 418-688-0170
marc.blanchet@h2oinnovation.com
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