Electra Provides Corporate Update

Rhea-AI Summary

Electra Battery Materials Corporation (ELBM) receives TSX Venture Exchange approval to issue common shares in satisfaction of interest payable to certain note holders. The issuance of shares is valued at CAD$0.30 or 95% of the average trading price. The agreement was announced on February 27, 2024.

Insights

Financial Analyst

Electra Battery Materials Corporation's decision to issue common shares to satisfy interest obligations on its senior secured convertible notes is a strategic move that can have mixed implications for the company's financial health and stock performance. By opting for a share issuance rather than a cash payout, Electra is conserving cash, which is particularly valuable for a company in the capital-intensive battery materials sector. However, this approach dilutes current shareholders' equity, potentially exerting downward pressure on the stock price. The conversion rate, pegged to the higher of a fixed floor price or a discount to the average trading price, is devised to minimize this impact.

Investors should note that the 8.99% interest rate on the notes is relatively high, reflecting a substantial cost of capital. This could indicate the company's risk profile at the time of the notes' issuance. The conversion of interest into equity is a sign that the company is managing its debt obligations creatively, yet the increase in outstanding shares could be a concern for valuation metrics such as earnings per share (EPS).

Market Research Analyst

From a market perspective, Electra's move aligns with a broader trend in the battery materials industry, where companies are looking for innovative ways to finance their operations without over-leveraging. Given the growing demand for battery components driven by the electric vehicle (EV) boom, Electra's positioning in this market is critical. Investors should assess the company's growth prospects in relation to its financing strategies. If the issuance of shares is perceived as a step towards accelerating growth or achieving a strategic milestone, such as expanding production capacity or investing in R&D, the market might respond favorably despite the dilution.

Moreover, the market will closely monitor the stock's trading volume and price leading up to the issuance date. The five-day volume weighted average trading price will determine the final conversion price, which is crucial for both the note holders and existing shareholders. The company's transparency in these transactions and adherence to the TSX Venture Exchange's regulations will also be under scrutiny to maintain investor confidence.

Legal Expert

It is important to highlight the regulatory aspect of this transaction. Electra's compliance with the TSX Venture Exchange's policies in issuing shares to note holders reflects adherence to the necessary legal frameworks. The company's cautionary note indicates awareness of the regulatory environment and the need to communicate the risks associated with forward-looking statements. Investors should appreciate the company's diligence in this regard, as non-compliance or regulatory missteps could lead to legal repercussions and undermine stakeholder trust.

Furthermore, the company's ability to issue shares as a form of interest payment is contingent upon the approval of the TSX Venture Exchange, which has been granted in this case. This demonstrates Electra's ability to navigate complex financial arrangements within the bounds of securities regulations, which is a positive sign for governance and management's capability to handle sophisticated financial instruments.

TORONTO--(BUSINESS WIRE)-- Electra Battery Materials Corporation (NASDAQ: ELBM; TSX-V: ELBM) (“Electra” or the “Company”) is pleased to announce that the Company has received the approval of the TSX Venture Exchange to issue common shares in the capital of the Company (the “Shares”) in satisfaction of US$400,732 of interest payable to certain of the holders of US$51 million principal amount of 8.99% senior secured convertible notes (the “Notes”) pursuant to the terms of the previously announced agreement (February 27, 2024).

The issuance of Shares is anticipated to occur on March 21, 2024, at a deemed value equivalent to the greater of (i) CAD$0.30 and (ii) 95% of the simple average of the volume weighted average trading price of the Common Shares for each of the five trading days ending on, and including, the trading day immediately prior to the date of issuance.

Neither the 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.

Cautionary Note Regarding Forward-Looking Statements

This news release may contain forward-looking statements and forward-looking information (together, “forward-looking statements”) within the meaning of applicable securities laws and the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are forward-looking statements. Generally, forward-looking statements can be identified by the use of terminology such as “plans”, “expects”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “occur” or “be achieved”. Such forward-looking statements include, without limitation, statements regarding the timing and deemed value of the issuance of Shares. Forward-looking statements are based on certain assumptions, and involve risks, uncertainties and other factors that could cause actual results, performance, and opportunities to differ materially from those implied by such forward-looking statements. Among the bases for assumptions with respect to the potential for additional government funding are discussions and indications of support from government actors based on certain milestones being achieved. Factors that could cause actual results to differ materially from these forward-looking statements are set forth in the management discussion and analysis and other disclosures of risk factors for Electra Battery Materials Corporation, filed on SEDAR+ at www.sedarplus.com and with on EDGAR at www.sec.gov. Other factors that could lead actual results to differ materially include changes with respect to government or investor expectations or actions as compared to communicated intentions, and general macroeconomic and other trends that can affect levels of government or private investment. Although the Company believes that the information and assumptions used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed times frames or at all. Except where required by applicable law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240313984948/en/

Heather Smiles

Vice President, Investor Relations & Corporate Development

info@ElectraBMC.com

1.416.900.3891

Source: Electra Battery Materials Corporation

FAQ

What approval did Electra Battery Materials Corporation receive?

Electra Battery Materials Corporation received approval from the TSX Venture Exchange to issue common shares in satisfaction of interest payable to certain note holders.

What is the value of the shares to be issued?

The shares are valued at the greater of CAD$0.30 or 95% of the simple average of the volume weighted average trading price of the Common Shares for the specified trading days.

When is the issuance of shares expected to occur?

The issuance of shares is anticipated to occur on March 21, 2024.

What type of notes are being settled with the issuance of shares?

The issuance of shares is in satisfaction of US$400,732 of interest payable to certain holders of US$51 million principal amount of 8.99% senior secured convertible notes.