Swiss Water Decaffeinated Coffee Inc. Announces an Amendment to the Existing Senior Debt Facility with Business Development Bank of Canada
May 24, 2021 at 11:30 pm EDT
Share
Swiss Water Decaffeinated Coffee Inc. announced an amendment to the existing senior debt facility with the Company’s senior lender, Business Development Bank of Canada, with participation by a new lender, Farm Credit Canada, which would provide the Company with up to an additional $25 million of senior debt financing at an interest rate of approximately four percent per annum and a favorable payment and amortization schedule by increasing the senior debt facility to $45 million from the current $20 million (the ‘Amended Senior Facility’). The incremental funds available under the Amended Senior Facility, together with the Company’s existing available credit and projected internally generated cash flow, are anticipated to be sufficient to fund the completion of the Company’s Titan 2 production facility. In order to obtain the new financing, the Company requires an amendment to an existing, outstanding convertible debenture (the ‘Mill Road Debenture’) of the Company issued to Mill Road Capital II, L.P. (‘Mill Road’). The terms of the Mill Road Debenture include a restrictive covenant that limits the dollar amount of indebtedness ranking senior to the indebtedness thereunder to a maximum of $45 million. The Company and Mill Road agreed on terms and executed a term sheet on May 20, 2021 (the ‘Term Sheet’) under which Mill Road would amend the restrictive covenant to increase the restriction on senior indebtedness to a maximum of $60 million, and would extend the maturity date of the Mill Road Debenture by one year, to October 31, 2024. In return, the terms of the Mill Road Debenture would be amended to (i) increase the maximum current interest rate from 7.85% to 9%, (ii) provide an additional 1.5% ‘payment in kind’ interest, (iii) amend the conversion feature by (A) cancelling the existing conversion feature and (B) replacing the existing conversion feature with warrants to allow Mill Road to purchase up to 2.25 million common shares at a price of $3.33 per share (representing a premium of 10% over the closing price on the date of execution of the Term Sheet); (iv) provide for a $100,000 amendment fee payable to Mill Road, (v) remove a restriction limiting Mill Road’s holdings, following conversion, to a maximum of 19.99% of the issued and outstanding shares of the Company; and (vi) reimburse Mill Road for its associated legal expenses (the ‘Mill Road Amendment’). The Mill Road Amendment is considered to be a related party transaction under the provisions of Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions and is subject to the approval of the Company’s Shareholders, other than Mill Road. The Company will seek shareholder approval of the Mill Road Amendment at the Company’s upcoming Annual General and Special Meeting of Shareholders, to be held on June 25, 2021. The Mill Road Amendment is also subject to the approval of the Toronto Stock Exchange.
Swiss Water Decaffeinated Coffee Inc. is a Canada-based specialty coffee company and a green coffee decaffeinator that employs the Swiss Water Process to decaffeinate green coffee without the use of solvents such as methylene chloride. The Company leverages science-based systems and quality controls to produce coffee that is approximately 99.9% caffeine free. The Company operates in three geographical areas: Canada, the United States and other international markets. The Company's customers can buy caffeine-free coffee products from its Website, which includes Bridge City Coffee Colombia, Bridge City Coffee Peru, Takelma Roasting Company Arrow Wilaw, DOMA Jackie Oh, Cafe Grumpy Costa Rica Instant and Andytown Coffee Roasters Honduras. Its customers can also buy caffeine-free coffee products directly from its partner roasters and online retailers. The Company owns Seaforth Supply Chain Solutions Inc., which is engaged in the green coffee handling and storage business.