Champion Bear to issue 3.52 million shares for debt
2020-02-04 17:19 ET
Mr. Richard Kantor reports
Champion Bear Resources Ltd. has filed a shares-for-debt application with the TSX Venture Exchange to satisfy an aggregate of $528,445.97 of Champion Bear's outstanding debts. Champion Bear has reached agreements with certain of its creditors who have either provided loans or services to the Company to extinguish, or partially extinguish, certain of the Corporation's outstanding debts owing to them in exchange for the issuance of common shares ("Shares") of the Corporation. The creditors include certain related parties of the Company, including Richard Kantor, the Company's President and Jason Hastie, the Company's Chief Financial Officer and Frederick Plomp and Jessica Borysenko each of whom are directors (collectively, the "Related Parties"). Every other creditor, with the exception of the Related Parties, is an arm's length party who is either a creditor or provided consulting services to the Company.
An aggregate of 3,522,972 Shares at a deemed price of $0.15 per Share are proposed to be issued to the creditors pursuant to this Application which includes an aggregate of 2,206,232 Shares to be issued to the Related Parties. An aggregate of 1,000,000 Shares are proposed to be issued to the Company's Chairman and President representing $150,000 in partial extinguishment of the aggregate amount of $1,266,069.66 owing to him personally and to a holding company he controls and directs for services rendered in his capacity as the President. An aggregate of 200,000 Shares are proposed to be issued to the Company's Chief Financial Officer representing $30,000 in extinguishment of the debt owing to him personally and to a holding company he controls and directs for services rendered in his capacity as Chief Financial Officer. An aggregate of 116,740 Shares are proposed to be issued to two directors representing an aggregate of $17,511.07 in extinguishment of the debt owing to them and/or holding companies they control for consulting services rendered.
The Application is subject to the approval of the TSX Venture Exchange (the "TSXV"). The Shares issued pursuant to the shares for debt agreements will be subject to a four month plus one day hold period in accordance with applicable securities laws.
The shares for debt transactions involving the Related Parties will constitute a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions ("MI 61-101"). The Company intends to rely on the exemptions from the valuation and the minority approval requirements of MI 61-101 provided for in subsections 5.5(a) and 5.7(a) of MI 61-101, respectively, as the fair market value of the subject of, and the consideration paid in the shares for debt transactions, in relation to the interested parties, will not represent more than 25% of the Company's market capitalization, as determined in accordance with MI 61-101. The participation by the Related Parties in the shares for debt transactions has been approved by directors of the Company who are independent in connection with such transactions. A material change report will be filed less than 21 days before the closing date of the transactions contemplated by this news release. The Company believes this shorter period is reasonable and necessary in the circumstances as the Company wishes to improve its financial position by reducing its accrued liabilities as soon as possible.
We seek Safe Harbor.