Lignol Energy Corporation ("LEC" or the "Company"), a leading technology company in the advanced biofuels and renewable chemicals sector, announced that further to its announcement of February 27, 2013, the Company has replaced its secured credit facility of $5 million, which was amended on July 9, 2013 for up to $6.25 million (the "Amended Loan"), with a new secured revolving credit facility (the "Note") of up to $12.5 million with Difference Capital Financial Inc. ("DCF"), who prior to this transaction owns 33.9% of LEC on a partially diluted basis, assuming the exercise of only DCF's warrants.
"This support from one of our major shareholders provides us timely access to the funds needed to capitalize on commercial opportunities in our sector. Today's announcement is another step forward in executing our strategy to transform our company in to a global biorefining and biochemicals company", said Ross MacLachlan, CEO and Chairman of LEC.
Under the terms of the Note, 50% of the unpaid principal amount and accrued and unpaid interest on such amount will be payable on the closing of an equity financing of at least $20 million (as long as none of the outstanding Warrants (as defined below) remain unexercised) and the remaining unpaid principal amount and accrued and unpaid interest on such amount be payable on December 31, 2014. Amounts drawn under this facility will bear interest at 9% per annum and any amount owing under the Amended Loan (the "Drawn Amount") is deemed to be a borrowing under the Note. The Company shall pay to DCF a commitment fee of $200,000, of which $100,000 has already been paid in respect of the earlier credit facilities. The Note provides DCF with a security interest in all of the shares owned by LEC of each of Australian Renewable Fuels Limited ("ARW") and of Territory Biofuels Limited ("TBF").
In connection with providing the Note, DCF is entitled to receive 3,555 warrants to purchase common shares in the capital of LEC (each a "Warrant Share") for each $1,000 drawn down, which allows for up to approximately 44.4 million warrants (the "Warrants") to be issued and if fully exercised, would result in DCF owning 48.3 percent of LEC on a partially diluted basis, assuming the exercise of only DCF's warrants. DCF has received 21,418,875 Warrants in respect of the Drawn Amount. Each Warrant is non-transferrable, shall expire on December 31, 2014 and entitle the holder to purchase one Warrant Share at an exercise price of $0.15 per share, subject to any adjustments necessary to comply with applicable securities laws and requirements of the TSX Venture Exchange or any other stock exchange in which the Lender's securities are listed.
The Company has made a draw down request for which it received $2.5 million from DCF and in accordance with the Note has issued to DCF 8,887,500 Warrants. These funds have been requested by LEC in order to meet current and short term financial obligations. If DCF were to exercise the Warrants issued in respect of this withdrawal, the Drawn Amount and all other warrants currently owned by DCF, then DCF would potentially own 44.4 percent of LEC.
Difference Capital Financial Inc. is a publicly-listed, Toronto-based specialty finance company focused on creating shareholder value through strategic investments in, and advisory services for, growth companies, particularly in the technology, media and healthcare sectors, as well as through opportunistic investments in undervalued financial assets and real property.