Vancouver, British Columbia–(Newsfile Corp. – June 4, 2021) – Axion Ventures Inc. (TSXV: AXV) (OTC Pink: AXNVF) (“Axion” or the “Company“) is pleased to announce that it has been granted a conditional approval for the initial tranche of C$8,000,000 (the “Initial Tranche“) under the convertible debenture investment agreement (the “Investment Agreement“) that the Company entered into with KUAM (Hong Kong) Investment 01 Ltd. (“KUAM“) for up to C$20 million by way of unsecured convertible debentures.
The Initial Tranche will be completed by issuing to KUAM a convertible debenture (the “Debenture“) having a term of twelve (12) months with interest accruing at a rate of 4% per annum. The Debenture will also allow KUAM to convert the outstanding principal into common shares of the Company at the conversion price of $0.20 per share pursuant to the terms of the Investment Agreement. If KUAM converts the full amount of the Debenture, KUAM will be entitled to receive 40,000,000 common shares of the Company.
Upon closing of the Initial Tranche, the Company intends to use the proceeds to: (a) address its working capital deficiency; (b) pay audit, accounting and legal fees; (c) pay filing fees with the securities commissions and the Exchange; (d) partly repay convertible debentures; (e) pay outstanding salaries, consulting fees and professional fees, and other accounts payable; and (f) provide general working capital. Following the closing of the Initial Tranche, the Company plans to make payment to its external auditors promptly as the Company is in the final stages of waiting for its external auditors to provide its audit report for the Company’s annual financial statements for the year ended December 31, 2019. The Company is also working on completing the interim financial statements and related MD&A for the subsequent periods toward obtaining a full revocation of the Cease Trade Order on August 4, 2020 (the “Cease Trade Order“).
The Debenture and all securities of the Company issued pursuant to the closing of the Initial Tranche will be subject to a four-month hold period from the closing date. The Company confirms that there has been no undisclosed material information since the issuance of the Cease Trade Order.
The completion of the Initial Tranche will constitute a “related party transaction” as such term is defined by Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101“), given that Yasuyo Yamazaki, the Executive Chairman of Axion, is the President and controlling shareholder of KUAM. On completion of the Initial Tranche, assuming that KUAM converts the full amount of the Debenture, Mr. Yamazaki would control 14.54% of Axion’s issued common shares. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a), (b) and (c) and 5.7(1)(a) of MI 61-101, given that the Company’s common shares are not listed on specified markets, the Initial Tranche is a distribution of securities for cash, and that the fair market value of the Initial Tranche does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Initial Tranche has been approved by the independent directors of the Company. The Company expects that it will not file a material change report in respect of the Initial Tranche more than 21 days before the expected closing date of the Initial Tranche as the Company wishes to close the Initial Tranche on an expedited basis for sound business reasons and in a timeframe consistent with usual market practice for transactions of this nature.
The Initial Tranche is the first draw-down pursuant to the Investment Agreement, which provides for further tranches for up to a total of C$20 million. Completion of any subsequent tranche will be subject to additional approval of the Exchange. If all of the C$20 million are drawn down and converted by KUAM, a new Control Person of the Company may be created. KUAM has provided an undertaking not to convert any part or whole of debentures prior to receiving applicable shareholders’ approval if such conversion would create a new Control Person.
For further information:
Axion Ventures Inc.
Interim Chief Executive Officer
Cautionary Statement Regarding Forward-Looking Information
This news release may contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities legislation. All information contained herein that is not historical in nature may constitute forward-looking information. Forward-looking statements herein are necessarily based upon a number of assumptions that, while considered reasonable by management, are inherently subject to business, market and economic risks, uncertainties and contingencies that may cause actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. Except as required by law, the Company disclaims any obligation to update or revise any forward-looking statements. Readers are cautioned not to put undue reliance on these forward-looking statements.
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.
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