Elixxer Ltd. Announces Revised Debt Settlement Transactions

Rhea-AI Summary

Elixxer Ltd. (TSX-V: ELXR, OTC-QB: ELIXF) proposes a debt settlement of $8,568,333 through the issuance of shares to two lenders. AIP Convertible Private Debt Fund will receive 198,241,300 shares and warrants, while Arlington Capital LP will receive 230,175,350 shares and warrants, both at $0.02 per share. After these settlements, AIP is projected to control 30.47% of shares, and Arlington 38.69%. Shareholder approval is required for these transactions, alongside TSX Venture Exchange consent, with each lender entitled to nominate two directors upon completion.

Positive

• Proposed debt settlement of $8,568,333 reduces financial liabilities.
• AIP and Arlington becoming control persons may bring strategic insight.

Negative

• AIP and Arlington's control may limit current shareholders' influence.
• Potential dilution of existing shares due to new common shares issued.

MONTRÉAL, March 02, 2021 (GLOBE NEWSWIRE) -- Elixxer Ltd. (the “Corporation” or “Elixxer”) (TSX-V: ELXR and OTC-QB: ELIXF) announces revised terms of its proposed debt settlement transactions. The Corporation proposes to settle a total of $8,568,333 of debt owed by the Corporation through the issuance of securities.

The debt to be settled includes $3,964,826, including interest and fees, owed to AIP Convertible Private Debt Fund LP (“AIP”) pursuant to a loan agreement dated November 8, 2019 (the “AIP Debt”). The Corporation proposes to settle the AIP Debt by issuing to AIP a total of 198,241,300 common shares at a deemed issue price of $0.02 per share and 198,241,300 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 253,474,633 common shares and 233,241,300 common share purchase warrants of the Corporation, representing approximately 30.47% of the Corporation’s issued and outstanding common shares on an undiluted basis and 45.70% 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.

The Corporation also proposes to settle a total of $4,603,507, including interest and fees, owed to Arlington Capital LP (“Arlington”) pursuant to a loan agreement dated August 29, 2019 (the “Arlington Debt”). The Corporation proposes to settle the Arlington Debt by issuing to Arlington a total of 230,175,350 common shares at a deemed issue price of $0.02 per share and 230,175,350 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 334,175,350 common shares and 230,175,350 common share purchase warrants, representing approximately 38.69% of the Corporation’s issued and outstanding common shares on an undiluted basis and 51.59% 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. 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 1,061,924,681 common shares issued and outstanding with (i) AIP holding approximately 23.87% on an undiluted basis and approximately 37.58% on a partially diluted basis; and (ii) Arlington holding approximately 31.47% on an undiluted basis and approximately 43.68% 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 1, 2021 was $0.02.

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: 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 debt is Elixxer settling with AIP Convertible Private Debt Fund?

Elixxer is settling $3,964,826 owed to AIP through the issuance of 198,241,300 shares and warrants.

What is the total amount of debt Elixxer plans to settle?

Elixxer plans to settle a total of $8,568,333 in debt owed to two lenders.

How will the debt settlements affect shareholders of Elixxer (ELIXF)?

The settlements will dilute existing shares as new shares will be issued, and both AIP and Arlington will become control persons.

What are the proposed terms for the Arlington Capital LP debt settlement?

Elixxer will issue 230,175,350 common shares and warrants at $0.02 per share to settle $4,603,507 owed to Arlington.

What approvals are needed for Elixxer's debt settlements?

Elixxer must obtain shareholder approval and TSX Venture Exchange consent to complete the proposed debt settlements.