Vertiqal Studios Announces Amendment of Debentures and Entering into of Amended and Restated Debenture Indenture

Rhea-AI Summary

Vertiqal Studios Corp. (TSX: VRTS) (OTCQB: VERTF) has announced significant amendments to its debentures issued in November 2022. The key changes include:

1. Maturity date extended to September 9, 2025
2. Interest rate increased from 12% to 15% per annum
3. Principal amount to be automatically converted to common shares at $0.025 per share on maturity
4. Debentures changed from secured to unsecured

These amendments, approved by over 66 2/3% of debenture holders, are viewed as a vote of confidence in the company. CEO Jon Dwyer stated that this allows Vertiqal to focus on growth without the pressure of immediate repayment, benefiting shareholders in the long run.

Positive

• Extension of debenture maturity date from 2027 to 2025, providing more time for company growth
• Automatic conversion of principal to common shares at maturity, potentially reducing cash outflow
• Strong support from debenture holders, with over 66 2/3% approving the amendments
• Removal of security on debentures, potentially improving company's financial flexibility

Negative

• Increase in interest rate from 12% to 15% per annum, raising the cost of debt
• Potential significant dilution for existing shareholders due to automatic conversion at maturity
• Conversion price of $0.025 per share indicates a low valuation of the company

Toronto, Ontario--(Newsfile Corp. - September 10, 2024) - Vertiqal Studios Corp. (TSX: VRTS) (OTCQB: VERTF) (FSE: 9PY0) (the "Company" or "Vertiqal") - Vertiqal is pleased to announced that it has received the necessary debenture holder approval to amend certain terms of its debentures issued on November 3, 2022 and November 24, 2022 (collectively, the "Debentures") pursuant to the debenture indenture dated November 3, 2022 and first supplemental indenture dated November 24, 2022 (collectively, the "Original Indentures").

"We are delighted to announce the Debenture amendments which we view as a strong vote of confidence in the Company from the largest Debentureholder, Max Desmarais. This will allow us to remain entirely focused on growing clients and revenues for the near future without the undue pressure to repay the Debentures under the original debenture terms. These amendments are incredibly meaningful and accretive for all shareholders in the long run, such that the Company can aggressively pursue its short term future goals," shared Jon Dwyer, CEO and Chairman.

Pursuant to the terms of the Original Indentures, the Company has received the requisite debenture holder approval to amend the terms of Debentures as follows: (i) the maturity date of the original debentures has been amended from November 3, 2027 and November 24, 2027 to September 9, 2025 (the "Maturity Date"); (ii) the interest rate has been amended from 12% per annum to 15% per annum payable on the Maturity Date; (iii) the principal amount of the Debentures will be automatically converted on the Maturity Date into common shares of the Company (the "Common Shares") at a conversion price of $0.025 per Common Share (subject to certain TSX restrictions imposed to ensure no more than 63,111,335 Common Shares are issued to any one debenture holder and no more than 157,778,339 Common Shares are issued in the aggregate unless Toronto Stock Exchange ("TSX") and/or shareholder approval is obtained and no more than ten percent (10%) of the issued and outstanding Common Shares as of the date of conversion are issued to any one debenture holder (collectively, the "TSX Thresholds"), unless in all respects TSX and/or shareholder approval is obtained by the Company); and (iv) the Debentures being amended to unsecured debentures of the Company (collectively, the "Amendments").

Further, as part of the Amendments the accrued and unpaid interest of the Debentures may automatically convert into Common Shares at a price equal to the higher of: (i) $0.025; or (ii) the volume weighted average trading price of the common shares on the TSX for the five business days preceding the conversion date, less applicable discounts in accordance with the policies of the Toronto Stock Exchange, subject to the TSX Thresholds.

The Company has obtained approval of the Amendments by more than 66 2/3% of the Debenture holders by way of a written resolution signed by the Debenture holders and has entered into an Amended and Restated Debenture Indenture with Computershare Trust Company of Canada, as Trustee, in respect of the same.

About Vertiqal Studios

Vertiqal Studios is a leading digital-channel network and video-production studio specializing in the creation and distribution of viral videos. With a daily output of 100+ videos across 138 owned-and-operated channels, Vertiqal leverages TV economics to monetize content on platforms like TikTok and Instagram and revenue-share on platforms such as Snapchat. The company's focus on producing and broadcasting performative organic content to an audience of over 52 million followers and subscribers, generating over 2 billion monthly video views, positions Vertiqal as a key player in scalable marketing concepts with brands, agencies, and creators for full production and distribution brand campaigns on major social platforms.

For more information and to join our email subscriber list for direct press releases and newsletters, visit https://vertiqalstudios.com/.

For media inquiries, please contact:

Jon Dwyer
Chairman and Chief Executive Officer

+1 (416) 627-8868;
Email: jon@vertiqalstudios.com;
Investor Relations Email: ir@vertiqalstudios.com

Forward Looking Information

This news release contains forward‐looking statements and forward‐looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward‐looking statements or information. The forward‐looking statements and information are based on certain key expectations and assumptions made by management of the Company. Although management of the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward‐looking statements and information since no assurance can be given that they will prove to be correct.

Forward-looking statements and information are provided for the purpose of providing information about the current expectations and plans of management of the Company relating to the future. Readers are cautioned that reliance on such statements and information may not be appropriate for other purposes, such as making investment decisions. Since forward‐looking statements and information address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Accordingly, readers should not place undue reliance on the forward‐looking statements and information contained in this news release.

The forward‐looking statements and information contained in this news release are made as of the date hereof and no undertaking is given to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/222862

FAQ

What are the key amendments to Vertiqal Studios' (VERTF) debentures announced on September 10, 2024?

The key amendments include extending the maturity date to September 9, 2025, increasing the interest rate to 15% per annum, automatic conversion of principal to common shares at $0.025 per share at maturity, and changing the debentures from secured to unsecured.

How does the debenture amendment affect Vertiqal Studios' (VERTF) financial obligations?

The amendment extends the repayment timeline, increases interest costs, but potentially reduces cash outflow at maturity through automatic conversion to shares. It also removes security on the debentures, potentially improving financial flexibility.

What is the new conversion price for Vertiqal Studios' (VERTF) debentures after the September 10, 2024 announcement?

The new conversion price for the principal amount of the debentures is $0.025 per common share, subject to certain TSX restrictions.

How did Vertiqal Studios (VERTF) shareholders react to the debenture amendments announced on September 10, 2024?

The press release doesn't provide direct shareholder reaction. However, CEO Jon Dwyer stated that the amendments are viewed as beneficial for shareholders in the long run, allowing the company to focus on growth.