MONTRÉAL, QUÉBEC–(Marketwired – May 5, 2017) – Orbite Technologies Inc. (TSX:ORT)(OTCQX:EORBF) (“Orbite” or the “Company”) today provided an additional update on its efforts to emerge from insolvency protection for the benefit of all of its stakeholders.
Amendment to the MidCap Financial Facility
On November 4, 2015, the Company entered into financing agreements with MidCap Financial (“MidCap”) granting the Company access to a credit facility by way of a revolving line of credit and term loans (the “Credit Facilities”). The Company’s obligations under the Credit Facilities stand at USD 5.9 million (excluding USD 3 million in restricted cash).
MidCap and the Company have now entered into an amendment to the Credit Facilities which essentially pushes back the Company’s obligations under the Credit Facilities into early 2018, notably as follows:
- The release to MidCap of the USD 3 million in restricted cash, of which USD 2.5 million will be applied by MidCap in partial repayment of one of the term loans and the remaining USD 0.5 million will be applied in satisfaction of the monthly debt service payments on the Credit Facilities from April 1, 2017 up to and including the payments due and payable on January 1, 2018;
- A moratorium on the monthly principal payments until January 1, 2018;
- The extension to January 15, 2018 of the Company’s compliance date for the covenant to produce at least 1 tonne per day of high purity alumina during three consecutive days;
- The extension to the end of March 2018 of the time period to meet certain financial covenants;
- Until such time Orbite has received proceeds from additional debt or equity issuance or in-kind contributions from an equipment supplier in an aggregate amount of not less than $8 million, Orbite will share with MidCap 50% of any amounts that could be received from its insurer pursuant to its claim under its business interruption insurance policy; and thereafter Orbite will have the right to retain all such amount;
- The forbearance by MidCap from exercising its rights and remedies with respect to the defaults that have occurred or will be occurring under the Credit Facilities as a result of the insolvency proceedings until January 1, 2018 provided that during this period (i) the Company is able to achieve a successful restructuring, or (ii) a court does not grant a motion from a third party creditor to lift the stay imposed by the Companies’ Creditors Arrangement Act (“CCAA”) proceedings and take any action for the purpose of enforcing such creditor’s rights against Orbite or its assets.
Canada Economic Development
Orbite also continued to progress discussions with its other secured creditor. Canada Economic Development has confirmed that it will not invoke any default under its loan agreements with Orbite nor modify any of the present terms of the agreements, other than to push back to 2018 any principal payments due in 2017. The major portion of the principal repayments under these agreements is scheduled to commence in 2020.
“We have progressed well on a variety of fronts. The Company is now under the protection of the CCAA with an initial stay of all proceedings until May 29, 2017. We expect the court will extend this stay until a successful restructuring has been achieved. In addition, we now have agreements in place with our major financial partners, MidCap, Investissement Québec, and Canada Economic Development that allow us to move forward in a structured fashion. On the technical front, we are working very closely with our calcination equipment supplier to address the issues in an expeditious fashion. We continue to evaluate, with all of our partners, available financial alternatives in order to allow us to emerge from protection and resume production,” stated Glenn Kelly, CEO of Orbite.
The Company will continue to provide further updates as developments occur.
There can be no guarantees that the Company will be successful in its restructuring efforts, in obtaining coverage from its insurer, and in maintain the listing of its common shares on the TSX or be able to re-list them on the TSX or on another exchange.
About Orbite
Orbite Technologies Inc. is a Canadian cleantech company whose innovative and proprietary processes are expected to produce alumina and other high-value 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, fly ash as well as serpentine residues from chrysotile processing sites. Orbite is currently in the process of 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 Company’s portfolio contains 15 intellectual property families, including 50 patents and 52 pending patent applications in 11 different countries and regions. The first intellectual property family is patented in Canada, USA, Australia, China, Japan and Russia. The Company also operates a state of the art technology development center in Laval, Québec, where its technologies are developed and validated.
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 include statements regarding projects, costs, objectives and future returns of the Company or hypotheses underlying these items. In particular, statements concerning the setting-up and the success of a task force with the equipment supplier to resolve the issues observed with the Cap-Chat calcination equipment, are forward-looking statements. In this document, words such as “may”,” confident”, “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 Company 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 Company’s control. Factors that could impact the Company’s expectations expressed in the forward looking statements include (i) with respect to the current discussions with its equipment supplier, the inability to provide technical solutions on terms and timelines acceptable to the Company; and (ii) with respect to obtaining support in the restructuring efforts, the inability to find lenders willing to provide financing or at terms acceptable to the Company, a deterioration in market or economic conditions limiting the supply of funds by lenders or increasing the cost thereof, actions or demands for repayment by existing lenders and other factors impacting financing. Risks, uncertainties and other factors that could affect anticipated results and future events also 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 March 31, 2017 on SEDAR, including those under the headings “Going Concerns”, Commercial Operation of HPA Plant”, “We will need to raise capital to continue our growth” and “Development Goals and Time Frames”.
The Company 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.
Marc Lakmaaker, External Investor Relations Consultant
416-848-1397
mlakmaaker@national.ca