EDITOR: | November 8th, 2013

Orbite Announces Filing of $10 to $16 Million Preliminary Prospectus and Binding Commitment for $40 Million in Additional Funding

| November 08, 2013 | No Comments
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Orbite-Aluminae-IncNovember 8, 2013 (Source: Marketwired) — NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Orbite Aluminae Inc. (TSX:ORT)(OTCQX:EORBF) (“Orbite” or the “Corporation“) announced today that it has filed a preliminary short form prospectus (the “Prospectus”) with the securities regulatory authorities in Quebec, Ontario, Alberta and British Columbia, in connection with a “best efforts” marketed offering of up to $16 million in Units comprised of Convertible Unsecured Debentures and Share Purchase Warrants of Orbite (the “Offering”). The Corporation also announced it has secured a binding subscription commitment for $40 million in additional Units, subject to certain conditions, in additional funding from Crede Capital Group (“Crede”), a U.S. based institutional investor, to be completed subsequent to closing of the Offering via private placement. Crede has also agreed to purchase $10 million of Units under the Offering. Euro Pacific Canada Inc. has been retained as lead placement agent for the Offering (the “Agent”). The Corporation has granted the Agent an option, for a period of 30 days from the closing date, to purchase a number of additional Units equal to 15% of the number of Units issued under the Offering.

“We are pleased to report to our shareholders, who have been extremely patient over the last four months, that we now have a binding funding commitment that should allow us to access the capital required for the finalization of our high-purity alumina facility in Cap-Chat, Quebec,” said Glenn Kelly, Orbite’s Chief Operating Officer. “However, we also remain focused on other financing initiatives, including our discussions with the Government of Quebec which have progressed well.”

Short Form Prospectus

The Prospectus qualifies the distribution of a minimum of $10,000,000 and a maximum of $16,000,000 aggregate principal amount of units (the “Units”). Each Unit consists of $1,000 principal amount of 7.5% convertible unsecured unsubordinated debentures (the “Debentures”) and share purchase warrants (a “Warrant”) of the Corporation equivalent to 35% of the number of Class A Shares (“Common Shares”) into which the Debentures are convertible. Each full Warrant entitles the holder to purchase one Common Share at the price of $0.558 (which is equal to a 20% premium over the conversion price) for a period of 36 months following issuance.

The Debentures will have a term of 5 years and will bear interest at a rate of 7.5% per annum payable semi-annually in arrears on May 31 and November 30 of each year (the “Interest”). Each Debenture will be convertible into Common Shares of the Corporation at the option of the holder at any time at a conversion price of $0.465 per Common Share (the “Conversion Price”). Holders who convert their Debentures will receive accrued and unpaid interest to the date of conversion in addition to a make-whole payment equal to the interest amount that such holder would have received if such holder had held the Debentures until the maturity date (the “Make-Whole Amount”). Such Make-Whole Amount shall be reduced by 1% for each 1% that the five (5) day Volume Weighed Average Price (“VWAP”) of the Common Shares on the Toronto Stock Exchange at time of conversion exceeds the Conversion Price. The Interest may be paid, at the sole option of the Corporation, in cash or in Common Shares whereas the Make-Whole Amount (if any) will be paid in Common Shares.

The Corporation may, at its sole discretion, require a Debenture holder to convert, in whole or in part, the Debentures held at any time beginning on the one year anniversary of issuance. Upon such forced conversion, the Corporation will be required to pay the Interest, in cash or Common Shares at its option, and the Make-Whole Amount, if any, in Common Shares.

The Debentures and Warrants are non-voting securities of the Corporation and may not be exercised by the holder if such exercise would result in the holder holding over 9.9% of the then outstanding Common Shares.

Closing of the Offering is subject to regulatory approval, including the Toronto Stock Exchange and the regulatory authorities in each of the provinces of Quebec, Ontario, Alberta and British Columbia.

Commitment for Additional Funding

Orbite and Crede have entered into a binding agreement (the “Subscription Commitment”) providing for the future subscription by way of private placement of up to $40 million in additional Units, subject to certain conditions listed hereinafter. The additional Units will have identical terms to those of the Units, with the exception that the conversion price shall be based on the 5 day VWAP of the Corporation’s shares on the last trading day prior to the date on which the Subscription Rights in respect of which the additional Units are issued first become exercisable, and the Warrants granted shall be equivalent to 45% of the number of Common Shares into which the Debentures are convertible, exercisable at a 20% premium over such conversion price.

Under the terms of the Subscription Commitment, Crede has undertaken to subscribe, 3 months from the closing of the Offering, to two series of subscription rights (“Subscription Rights”). Upon exercise, the Subscription Rights will require Crede to purchase additional Units in the total amount of up to $40 million, as follows:

  • Series X Subscription Rights, requires Crede upon exercise to purchase additional Units in the amount of $10 million, exercisable on the earlier of (i) 4 months following the closing of the Offering, provided the additional Units underlying such Series X Subscription Rights have been qualified by prospectus, and (ii) 4 months following the issuance of the Series X Subscription Rights; and
  • Series Y Subscription Rights, exercisable 10 months from closing of the Offering, requires Crede upon exercise to purchase additional Units in the amount of up to $30 million in tranches based on aggregate trading value benchmarks of the Common Shares.

Should the Series X or Series Y Subscription Rights not be exercised by Crede within 15 calendar days from the time they first become exercisable, Orbite shall have 15 calendar days to force their exercise by Crede, otherwise, such Series X and Series Y Subscription Rights shall expire.

The Common Shares issuable or issued upon conversion of the additional Units and related Debentures and Warrants shall not exceed 25% of the number of Common Shares outstanding at the date of issuance of the Subscription Rights unless approval of the Corporation’s shareholders is obtained.

The Subscription Rights and underlying additional Units, Debentures and Warrants are non-voting and may not be converted or exercised if their conversion or exercise would result in Crede holding over 9.9% of the outstanding Common Shares

The obligations of Crede under the Subscription Commitment and the Subscription Rights are subject to the Corporation’s compliance with certain customary conditions set forth therein, including carrying on the business of the Corporation in the ordinary course in a manner consistent with past practice, the absence of material adverse change and obtaining certain regulatory approvals, including approval of the Toronto Stock Exchange. As the case may be, shareholder approval may also be required if certain dilution thresholds are exceeded (as described above).

Information provided in this press release is entirely qualified by the disclosure provided in the Prospectus, a copy of which is available on the SEDAR website at www.sedar.com.

This release does not constitute an offer for sale of securities nor a solicitation for offers to buy any securities. The securities referred to in this press release have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities law and may not be offered or sold to, or for the account or benefit of, persons in the United States or “U.S. persons”, as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Orbite

Orbite Aluminae Inc. is a Canadian cleantech company whose innovative and proprietary processes are expected to produce alumina and other high-value by-products, such as rare earth and rare metal oxides, at one of the lowest costs in the industry, and in a sustainable fashion, using feedstocks that include aluminous clay, kaolin, nepheline, bauxite, red mud and fly ash. Orbite is currently finalizing its first commercial high-purity alumina (HPA) production plant in Cap-Chat, Québec and has completed the basic engineering for a proposed smelter-grade alumina (SGA) production plant, which would use clay mined from its Grande-Vallée deposit. The Corporation’s intellectual property portfolio contains 15 intellectual property families, and the Corporation owns the intellectual property rights to 10 patents and 46 pending patent applications in 10 different countries. The first intellectual property family is patented in Canada, USA, Australia, China, and Russia.

Forward-looking statements

Certain information contained in this document may include “forward-looking information”. Without limiting the foregoing, the information and any forward-looking information may include statements regarding projects, costs, objectives and future returns of the Corporation or hypotheses underlying these items. In this document, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. Forward-looking statements and information are based on information available at the time and/or the Corporation management’s good-faith beliefs with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond the Corporation’s control. These risks uncertainties and assumptions include, but are not limited to, those described in the section of the Management’s Discussion and Analysis (MD&A) entitled “Risk and Uncertainties” as filed on August 9, 2013 on SEDAR, and also include satisfaction of closing conditions and failure to complete the Offering and/or the financing contemplated by the Subscription Commitment for any other reason, and could cause actual events or results to differ materially from those projected in any forward-looking statements.

For instance, in connection with anticipated results of future financings, including the equity offering, management expectations are based on ongoing discussions with its financial advisors and a number of potential third party investors. The ability of securing any financing will depend on market conditions, investors’ financial objectives and tolerance to risk, investors’ assessment of the Corporation, including its financial position and prospects, all of which are not within the control of the Corporation. There can be no assurance that the Corporation will be successful in raising any capital and that any capital raised will be in amounts sufficient to complete the construction and optimization of the Corporation’s HPA production facility.

The Corporation does not intend, nor does it undertake, any obligation to update or revise any forward-looking information or statements contained in this document to reflect subsequent information, events or circumstances or otherwise, except as required by applicable laws.


Raj Shah

Editor:

Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>


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