UGE Announces Initial Closing of C$1.42m Private Placement of Green Bonds
Toronto, Ontario–(Newsfile Corp. – March 30, 2023) – UGE International Ltd. (TSXV: UGE) (OTCQB: UGEIF) (the “Company” or “UGE”), a leader in the commercial and community solar sector, is pleased to announce that it has completed a first tranche closing of the brokered private placement of green bonds of the Company (“Green Bonds”), previously announced in its March 8, 2023 press release, for aggregate gross proceeds of C$1,423,545 (the “Offering”). The Offering comprised of a brokered “best efforts” private placement led by Canaccord Genuity Corp., on behalf of a syndicate of agents including iA Private Wealth Inc. and Raymond James Ltd. (collectively, the “Agents”) in accordance with the terms and conditions of an agency agreement (the “Agency Agreement”) entered into on March 30, 2023 (the “Closing Date”) by the Company and the Agents, for gross proceeds of C$604,095 and a concurrent issuer-direct offering for aggregate proceeds of US$607,000. The aggregate gross proceeds in Canadian funds were calculated based on an exchange rate of $1.35 Canadian dollars for every U.S. dollar raised in the Offering. A second tranche is expected to close by the end of April 2023.
The Green Bonds were issued in a Canadian dollar denominated series, each having a face value of C$1,000 and a subscription price of C$977.50, and a U.S. dollar denominated series, each having a face value of US$1,000 and a subscription price of US$977.50. The Green Bonds mature on June 30, 2027 (the “Maturity Date”), and bear interest at a rate of 9% per annum, payable semi-annually in arrears calculated on the last calendar day of June and December, with the first interest payment to be made on December 31, 2023. At the Maturity Date, the Company will repay the Green Bonds in full, including any accrued and unpaid interest. Commencing on July 1, 2026 and ending on the Maturity Date, the Company will have the option, in its sole discretion, to repay all or any portion of the outstanding principal and accrued interest on the Green Bonds at the end of each calendar month by paying one additional months’ interest to the holder.
The Green Bonds are issued pursuant to a fourth supplemental trust indenture (the “Supplemental Indenture”) entered on the Closing Date with Computershare Trust Company of Canada (“Computershare”), as trustee and collateral agent (“Collateral Agent”) thereunder, supplementing the debenture indenture entered into on July 28, 2022, between the Company and the Computershare.
The Green Bonds are secured against a pool of the Company’s solar and energy storage development projects (the “Pledged Projects”), which are indirectly held by UGE Capital LLC (“UGE Capital”), a wholly-owned subsidiary of UGE USA Inc., a wholly-owned subsidiary of the Company, through its membership interests in special purpose companies (each, a “Project Subsidiary”) that are the owners of the assets comprising the Pledged Projects. As security for the Green Bonds, Computershare, in its capacity as Collateral Agent, entered into a pledge agreement on the Closing Date with UGE Capital, pursuant to which UGE Capital pledged its equity interests in the applicable Project Subsidiaries to the Collateral Agent for the benefit of the holders of Green Bonds. UGE Capital also guarantees the obligations of the Company pursuant to the Green Bonds.
The Company also entered into a deposit account control agreement with the Collateral Agent on March 23, 2023 covering one or more deposit accounts (the “Blocked Account”), pursuant to which the Collateral Agent has perfected a security interest in cash held in such accounts. UGE has covenanted to maintain a minimum coverage ratio of the value of the Secured Projects and any cash in the Blocked Account equal to 150% of the aggregate amount of obligations outstanding under the Green Bonds.
Net proceeds from the Offering (the “Proceeds”) will be utilized for the development of solar and energy storage projects of UGE and its subsidiaries. The Green Bonds will be subject to a four month hold period from their date of issuance. The Company intends to seek to list the Green Bonds for trading on the TSX Venture Exchange (the “Exchange”) after the four month hold period expires, on a best efforts basis.
In consideration for the Agents’ services under the Agency Agreement, the Company paid to the Agents on the Closing Date a fee equal to 7% of the principal amount issued from the sale of the Canadian dollar denominated Green Bonds and 14,067 common share purchase warrants of the Company (each, an “Agents’ Warrant”), with each Agents’ Warrant entitling the holder thereof to purchase one Common Share at an exercise price of $1.5031 (subject to adjustment in certain circumstances) for a period of 24 months from the Closing Date. The Company also reimbursed the Agents on the Closing Date for their reasonable expenses in connection with the Offering.
The Green Bonds were issued in a Canadian dollar denominated series, each having a face value of C$1,000 and a subscription price of C$977.50, and a U.S. dollar denominated series, each having a face value of US$1,000 and a subscription price of US$977.50. The Green Bonds mature on June 30, 2027 (the “Maturity Date”), and bear interest at a rate of 9% per annum, payable semi-annually in arrears calculated on the last calendar day of June and December, with the first interest payment to be made on December 31, 2023. At the Maturity Date, the Company will repay the Green Bonds in full, including any accrued and unpaid interest. Commencing on July 1, 2026 and ending on the Maturity Date, the Company will have the option, in its sole discretion, to repay all or any portion of the outstanding principal and accrued interest on the Green Bonds at the end of each calendar month by paying one additional months’ interest to the holder.
The Green Bonds are issued pursuant to a fourth supplemental trust indenture (the “Supplemental Indenture”) entered on the Closing Date with Computershare Trust Company of Canada (“Computershare”), as trustee and collateral agent (“Collateral Agent”) thereunder, supplementing the debenture indenture entered into on July 28, 2022, between the Company and the Computershare.
The Green Bonds are secured against a pool of the Company’s solar and energy storage development projects (the “Pledged Projects”), which are indirectly held by UGE Capital LLC (“UGE Capital”), a wholly-owned subsidiary of UGE USA Inc., a wholly-owned subsidiary of the Company, through its membership interests in special purpose companies (each, a “Project Subsidiary”) that are the owners of the assets comprising the Pledged Projects. As security for the Green Bonds, Computershare, in its capacity as Collateral Agent, entered into a pledge agreement on the Closing Date with UGE Capital, pursuant to which UGE Capital pledged its equity interests in the applicable Project Subsidiaries to the Collateral Agent for the benefit of the holders of Green Bonds. UGE Capital also guarantees the obligations of the Company pursuant to the Green Bonds.
The Company also entered into a deposit account control agreement with the Collateral Agent on March 23, 2023 covering one or more deposit accounts (the “Blocked Account”), pursuant to which the Collateral Agent has perfected a security interest in cash held in such accounts. UGE has covenanted to maintain a minimum coverage ratio of the value of the Secured Projects and any cash in the Blocked Account equal to 150% of the aggregate amount of obligations outstanding under the Green Bonds.
Net proceeds from the Offering (the “Proceeds”) will be utilized for the development of solar and energy storage projects of UGE and its subsidiaries. The Green Bonds will be subject to a four month hold period from their date of issuance. The Company intends to seek to list the Green Bonds for trading on the TSX Venture Exchange (the “Exchange”) after the four month hold period expires, on a best efforts basis.
In consideration for the Agents’ services under the Agency Agreement, the Company paid to the Agents on the Closing Date a fee equal to 7% of the principal amount issued from the sale of the Canadian dollar denominated Green Bonds and 14,067 common share purchase warrants of the Company (each, an “Agents’ Warrant”), with each Agents’ Warrant entitling the holder thereof to purchase one Common Share at an exercise price of $1.5031 (subject to adjustment in certain circumstances) for a period of 24 months from the Closing Date. The Company also reimbursed the Agents on the Closing Date for their reasonable expenses in connection with the Offering.
