Electra Battery Materials launches debt-to-equity conversion, $30M financing

Electra Battery Materials (ELBM) entered into a term sheet and transaction support agreement with its Lenders pursuant to which it will launch a debt-to-equity conversion that will reduce its convertible debt outstanding by 60% as part of a comprehensive financial restructuring. In addition, the Company intends to launch a $30M financing, which will include a $10M conditional commitment from the Lenders. Together, the Transaction and Equity Financing are designed to strengthen Electra’s capital structure and provide the funding required to advance the commissioning of North America’s first cobalt sulfate refinery. Electra will convert approximately $40M of its outstanding Notes, plus accrued and unpaid interest, into equity at a price of $0.60 per Common Share. This exchange will reduce total debt under the Notes to approximately $27M. The concurrent Equity Financing will consist of $30M of Units at a price of $0.75 per Unit. Each Unit will consist of one Common Share and one Common Share purchase Warrant, with each Warrant exercisable for one Common Share for $1.25 for a period of three years from the date of issuance. The Equity Financing is expected to close in tandem with the Transaction. Current shareholders will have the right to purchase Units on the same terms as new investors, in proportion to their existing Common Share ownership. The remaining 40% of the Notes, plus accrued and unpaid interest, will be exchanged for a new term loan, maturing three years after completion of the Transaction. To support operations during the restructuring process, the Lenders are providing $2M in short-term bridge debt in the form of 90-day Bridge Notes. In return, the Lenders will gain the right to appoint one director to Electra’s board of directors. The Bridge Notes will fund working capital needs leading up to a meeting of shareholders of the Company, regulatory approvals, and the closing of the Equity Financing, mitigating near-term default risk. Following completion of the Equity Financing and the Transaction, the Company intends to increase its Board size from five to seven members, with the Lenders having the right to appoint up to three Board members, relative to their ownership stake in the Company.