CALGARY, Alberta, April 05, 2024 (GLOBE NEWSWIRE) -- Cielo Waste Solutions Corp. (TSXV:CMC; OTCQB:CWSFF) ("Cielo" or the "Company"), a renewable fuel company leveraging market ready licensed technology to produce low carbon fuel from wood by-products, is pleased to announce the closing of the second tranche ("Tranche 2"), for gross proceeds of C $1,480,000, of its previously announced non-brokered private placement offering of unsecured convertible debenture units of the Company (collectively, the "Convertible Debenture Units") at a price of C $1,000 per Convertible Debenture Unit for aggregate gross proceeds of up to C $5,000,000 (the "Private Placement"). The Company intends to continue to offer the Convertible Debenture Units on the same terms and close one or more subsequent tranches during the month of April 2024.
Each Convertible Debenture Unit is comprised of: (i) one unsecured convertible debenture (each, a "Convertible Debenture") in the principal amount of C $1,000.00 (the "Principal Amount") convertible into common shares of the Company (the "Common Shares" and each such Common Share, a "Conversion Share"); and (ii) 2,500 detachable share purchase warrants (each, a "Warrant") exercisable into Common Shares (each such Common Share, a "Warrant Share"). The minimum subscription amount is C $20,000. Pursuant to the closing of Tranche 2, the Company issued 1,480 Convertible Debenture Units for gross proceeds of C $1,480,000, consisting of 1,480 Convertible Debentures and 3,700,000 Warrants.
The Principal Amount of the Debentures, together with any accrued and unpaid interest, will mature and become due and payable in cash on the date that is 24 months from the date of issue of the Convertible Debenture Units ("Issue Date"), subject to earlier conversion or redemption (the "Maturity Date"). The Principal Amount owing under the Debentures will accrue interest from the date of issuance at 12.0% per annum on a 30/360 calendar basis, payable every six (6) months in cash, except the first payment will be made in November 2024 and will consist of interest accrued from and including the Issue Date. As the Convertible Debentures will be unsecured debt obligations of the Company, each Convertible Debenture will rank subordinate to all secured debt obligations of the Company.
The Principal Amount may be converted, for no additional consideration, into Conversion Shares at the option of the holder of a Convertible Debenture (each, a "Holder") at any time after the Issue Date at a conversion price (the "Conversion Price") of $0.40 per Conversion Share. However, the Company may force the conversion of the Convertible Debentures (the "Forced Conversion"), at the Conversion Price, in the event that the volume weighted average price of the Common Shares on the Exchange is greater than C $1.00 for any ten (10) consecutive trading days. In the event of a Forced Conversion, the Company will provide notice to Holders by issuing a news release announcing the details of the Forced Conversion, including the date upon which the Forced Conversion will occur. In addition, the principal amount of the Convertible Debentures may be redeemed by the Company at any time without penalty.
Each Warrant will entitle the holder thereof to purchase one Warrant Share at a price of $0.70 per Warrant Share for a period of 24 months from the Issue Date. However, the Company may accelerate the expiry of the Warrants (the "Warrant Term Acceleration") in the event that the volume weighted average price of the Common Shares on the Exchange is greater than C $1.00 for any ten (10) consecutive trading days. In the event of a Warrant Term Acceleration, the Company will provide notice to holders of the Warrants by issuing a news release announcing the details of the Warrant Term Acceleration, including the accelerated expiry date of the Warrants.
The Company anticipates using the net proceeds of the Private Placement for the continued advancement of its renewable fuel projects, namely the wood byproduct to Bio-SynDiesel Project in Carseland, Alberta (the "Carseland Project"), which is currently undergoing front-end engineering and design, and the Company's railway tie to Bio-Syndiesel project in Dunmore, Alberta (the "Dunmore Project"), as well as general working capital and corporate growth purposes. The Carseland Project will be situated adjacent to an existing synthetic fuel facility owned and operated by Rocky Mountain Clean Fuels Inc. ("RMCFI"), which deploys patented technology developed by Expander Energy Inc. ("Expander").
The Private Placement is subject to the receipt of all required regulatory approvals, as applicable, including the final approval of the Exchange. The Exchange has conditionally approved the Private Placement. Commissions of cash and/or non-transferrable warrants (each a "Broker Warrant", collectively the "Broker Warrants") may be paid in connection with the Private Placement in accordance with applicable laws. With respect to Tranche 2, the Company paid a cash commission of C $2,100 and issued 5,250 Broker Warrants exercisable for 24 months at an exercise price of C $0.70 per share.
The Debentures and Warrants, as well as Conversion Shares and Warrant Shares, will be subject to a statutory hold period expiring on the date that is four months and one day after the corresponding Issue Date, with respect to Tranche 2 expiring on April 4, 2024.