Elixxer Ltd. Announces Amendment to Proposed Debt Settlement Transactions

Rhea-AI Summary

Elixxer Ltd. (TSX-V: ELXR, OTC-QB: ELIXF) announced amendments to debt settlements with principal lenders AIP and Arlington, prompted by declining share prices. The amendments involve issuing 243,754,000 common shares at $0.015 each to settle $3,656,310 in debts to each lender. This will result in AIP and Arlington becoming 'control persons' of the corporation, holding approximately 34.08% and 39.64% of shares, respectively. Both settlements require shareholder approval. Additionally, certain balances remain outstanding under the AIP and Arlington Loans.

Positive

• Debt settlements will reduce the outstanding debts to AIP and Arlington, strengthening financial position.
• AIP and Arlington's involvement may lead to strategic support given their control over significant shares.

Negative

• Share price decline necessitated lower settlement price, reflecting market uncertainty.
• AIP and Arlington becoming control persons raises concerns about shareholder dilution and reduced influence for existing shareholders.
• Remaining outstanding balances of $308,516 and $947,197 under AIP and Arlington Loans could lead to further financial strain.

MONTRÉAL, March 09, 2021 (GLOBE NEWSWIRE) -- Elixxer Ltd. (the “Corporation” or “Elixxer”) (TSX-V: ELXR and OTC-QB: ELIXF) wishes to announce that, in light of current market uncertainty and the further deterioration in the Corporation’s share price, the Corporation’s principal secured lender has requested that the debt settlement transactions announced on March 2, 2021 be effected at a price of $0.015 per share as opposed to the previously disclosed price of $0.02 per share.

As a result of this amendment, $3,656,310 (the “AIP Debt”) of the $3,964,826, including interest and fees, owed to AIP Convertible Private Debt Fund LP (“AIP”) pursuant to a secured loan agreement dated November 8, 2019 (the “AIP Loan”) will be settled by the Corporation issuing to AIP a total of 243,754,000 common shares at a deemed issue price of $0.015 per share and 243,754,000 common share purchase warrants (the “AIP Debt Settlement”). Each warrant will be exercisable for a period of 60 months from the date of issuance at an exercise price of $0.05 each. AIP currently holds 55,233,333 common shares and 35,000,000 common share purchase warrants of the Corporation. The AIP Debt Settlement will result in AIP becoming a “control person” of Elixxer. Upon completion of the AIP Debt Settlement only, AIP would hold 298,987,333 common shares and 278,754,000 common share purchase warrants of the Corporation, representing approximately 34.08% of the Corporation’s issued and outstanding common shares on an undiluted basis and 49.98% on a partially diluted basis. As such, the AIP Debt Settlement as proposed is subject to the Corporation obtaining shareholder approval which will be sought at the Corporation’s next annual and special meeting of shareholders.

As a condition to Elixxer agreeing to this amendment, AIP has agreed not to request any further pricing changes, regardless of the share price going forward.

The Corporation also proposes to settle $3,656,310 (the “Arlington Debt”) of the $4,603,507, including interest and fees, owed to Arlington Capital LP (“Arlington”) pursuant to a loan agreement dated August 29, 2019 (the “Arlington Loan”). The Corporation will settle the Arlington Debt by issuing to Arlington a total of 243,754,000 common shares at a deemed issue price of $0.015 per share and 243,754,000 common share purchase warrants (the “Arlington Debt Settlement”). Each warrant will be exercisable for a period of 60 months from the date of issuance an exercise price of $0.05 each. The Arlington Debt Settlement will result in Arlington becoming a “control person” of Elixxer. Upon completion of the Arlington Debt Settlement only, Arlington would hold 347,754,000 common shares and 243,754,000 common share purchase warrants, representing approximately 39.64% of the Corporation’s issued and outstanding common shares on an undiluted basis and 52.77% on a partially diluted basis. As such, the Arlington Debt Settlement as proposed is subject to the Corporation obtaining shareholder approval which will be sought at the Corporation’s next annual and special meeting of shareholders. The Arlington Debt Settlement also constitutes a “related party transaction” as such term is defined in Regulation 61-101 respecting Protection of Minority Securityholders in Special Transactions given that Arlington currently holds 104,000,000 common shares of the Corporation. The Corporation relies on the exemption from the valuation requirement pursuant to subsection 5.5(b) of Regulation 61-101 as the securities of the Corporation are not listed or quoted on enumerated stock exchanges.

Upon completion of both the AIP Debt Settlement and the Arlington Debt Settlement, the Corporation would have approximately 1,121,016,031 common shares issued and outstanding with (i) AIP holding approximately 26.67% on an undiluted basis and approximately 41.27% on a partially diluted basis; and (ii) Arlington holding approximately 31.02% on an undiluted basis and approximately 43.34% on a partially diluted basis. Upon completion of both settlements, each of AIP and Arlington will have the right to nominate two members to Elixxer’s Board of Directors, with at least two other members being independent.

The pricing of the common shares issuable pursuant to the debt settlements is in reliance of the temporary relief measures established by the TSX Venture Exchange (the “TSXV”) on April 8, 2020 (and extended on September 16 and December 15, 2020) providing for temporary relief measures to its Policy 4.3, lowering the minimum pricing from $0.05 to $0.01 per share for shares issued pursuant to a debt settlement where the market price of an issuer’s shares is not greater than $0.05. The market price of the Corporation’s common shares at close of business on March 9, 2021 was $0.015.

Given the maximum number of shares allowable under the temporary relief measures of the TSXV, Elixxer will not be able to convert the entire amounts owed to AIP and Arlington, with balances of $308,516 and $947,197 remaining outstanding under the AIP Loan and the Arlington Loan, respectively.

Completion of the AIP Debt Settlement and the Arlington Debt Settlement as proposed is, in each case, subject to (i) completion of definitive agreements; (ii) approval of the TSXV; and (iii) shareholder approval as outlined above. All securities issued pursuant to the settlement of the AIP Debt Settlement and the Arlington Debt Settlement will be subject to hold period of four months and one day from the date of issuance.

About Elixxer Ltd. (www.elixxer.com)

Elixxer is a Canadian public company listed on the TSX Venture Exchange (TSX-V: ELXR) and the US OTC-QB exchange (OTCQB: ELIXF).

Through its partners, Elixxer presently has significant interests in Australia, Jamaica, Switzerland, Italy and Canada.

For further information please contact:

Ferras Zalt, Chairman and Interim CEO:  +44 20 7409 6680, ferras@elixxer.com

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.

Notice Regarding Forward Looking Statements

This press release may contain forward-looking statements with respect to Elixxer and its operations, strategy, investments, financial performance and condition. These statements can generally be identified by use of forward-looking words such as “may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue” or the negative thereof or similar variations. The actual results and performance of Elixxer could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Some important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, government regulation and the factors described under “Risk Factors and Risk Management” in Elixxer’s most recent Management’s Discussion and Analysis filed on SEDAR (www.sedar.com). The cautionary statements qualify all forward-looking statements attributable to Elixxer and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release, and Elixxer has no obligation to update such statements, except to the extent required by applicable securities laws.

FAQ

What are the recent debt settlements announced by Elixxer (ELIXF)?

Elixxer announced debt settlements with AIP and Arlington, issuing 243,754,000 shares at $0.015 each to settle debts of $3,656,310 to each lender.

How will the debt settlements affect Elixxer's control structure?

Post-settlement, both AIP and Arlington will become control persons, holding approximately 34.08% and 39.64% of shares, impacting decision-making.

What are the outstanding balances after Elixxer's debt settlements?

Elixxer will have remaining balances of $308,516 under the AIP Loan and $947,197 under the Arlington Loan.

Is shareholder approval required for Elixxer's debt settlements?

Yes, the settlements are subject to approval from Elixxer’s shareholders at the upcoming annual and special meeting.

What was Elixxer's share price before the debt settlement announcement?

Elixxer’s common shares closed at $0.015 on March 9, 2021, before the announcement of the debt settlements.