REG - European Lithium Ltd - Winance Convertible Notes

European LithiumAnnouncement

20/09/2019 09:45

RNS Number : 1007N
European Lithium Limited
20 September 2019
 


European Lithium Ltd
("European Lithium", "EUR" or "the Company")
Winance Convertible Notes
On 31 July 2019 European Lithium Limited (Company) announced a $10 million funding facility with Winance Investment LLC. The Company has elected to draw down on this facility and following this notice will issue 2,000 convertible notes (each with a face value of $1,000) (Convertible Notes) to Winance Investment LLC. 
Effect of the issue of the Convertible Note on the Company
The Convertible Notes were issued under a convertible security agreement (Agreement) with Winance Investment LLC (Winance) announced to ASX on 31 July 2019 under which Winance will subscribe for convertible securities issued by the Company with a total face value of up to A$10 million (Convertible Notes) over the term of the facility.
Funds raised under the Agreement will be used to repay the residual amount owing to MEF I, L.P. (Magna ), to fast-track the completion of a DFS at the Company's Wolfsberg Lithium Project in Austria and for general working capital purposes.
The facility is available through the issue of convertible securities in the Company.  An initial amount of A$2.0m is available for immediate drawdown, with this to occur at the Company's election prior to 31 October 2019.  Further drawdowns of $1,000,000 each are available upon full conversion of the notes from the previous drawdown, subject to a cooling off period.
The principle effects of the issue are to:
(a)        increase the Company's cash reserves by $1,840,000 (after costs);
(b)       increase the number of convertible notes on issue by 2,000;
(c)        increase the Company's indebtedness by $2,000,000;
(d)       in the event the Convertible Notes are converted, increase the number of fully paid ordinary shares on issue by that number determined by the then prevailing share price, with maximum number of 36,363,636 Shares issued.
The Company's capital structure following the issue will be as follows:



Shares


593,158,210




Options exercisable at $0.10 each on or before 30 June 2020


199,000,000




Options exercisable at $0.125 each on or before 27 February 2020


2,000,000




Options exercisable at $0.05 each on or before 31 March 2020


2,394,444




Options exercisable at $0.20 each on or before 11 December 2021


2,500,000




Convertible notes (in accordance with the terms announced 7 September 2018)


538,042



The number of Shares to be issued on conversion is determined by the then prevailing price at which Shares trade on ASX.  The maximum number of Shares that can be issued upon conversion is 36,363,636, assuming conversion at the floor price of $0.055.
Rights and liabilities attaching to Convertible Notes
The material terms of the Convertible Notes are as follows:



Issuer


European Lithium Limited




Type and class of security


Direct, unsubordinated and unsecured debt obligations of the Issuer




Status and ranking


The Convertible Notes rank equally amongst themselves and at least equally with all other direct, unsubordinated and unsecured obligations of the Issuer.




Tranches


Initial tranche of $2 million and 8 subsequent tranches of $1 million each, subject to a cooling off period calculated based on the value of the tranche and average trading volumes during the preceding 60 day period.
No penalties in the event no further drawdowns are made.




Facility term


36 months from the date of the Agreement




Face Value


A$1,000 per Convertible Note




Interest


Only in the event notes are redeemed, calculated at 10% per annum.




Commitment and success fee


8% of amounts subscribed for under the Agreement, to be paid upon draw down.




Termination fee


None




Conditions to drawdowns


Each subsequent tranche is subject to conditions typically for a facility of this nature, including no material adverse change, no event of default, compliance with Listing Rules (including prior shareholder approval to allow conversion at the note holder's election), no entry into variable equity financings, no change of control, or breach of warranty.
In the event the closing VWAP for any five (5) day period falls below 135% of the Floor Price, the Investor, at its discretion, has the right to decline further drawdowns.  Drawdowns may resume if the VWAP remains over 135% of the VWAP for 20 consecutive days.




Use of funds


Repay the residual amount owing to MEF I, L.P. (Magna ), to fast-track the completion of a DFS at the Company's Wolfsberg Lithium Project in Austria and for general working capital purposes.




Note maturity date


24 months from issue




Security


Unsecured.




Transferability


The notes are transferable, subject to the Corporations Act.




Conversion


At the Investor's discretion at any time during the term, subject to a minimum conversion amount of 20 notes per conversion
Shares issued on conversion of the Convertible Notes will rank equally with the Company's existing shares and the Company will ensure that the shares can be offered for sale without




Conversion price


92% of the lowest VWAP during the 10 Trading Days prior to giving a conversion notice, subject to a floor price of $0.055 per share (subject to adjustment in the event of a capital restructure) (Floor Price).
In the event the conversion price is less than the Floor Price the Company will issue that number of shares equal to the conversion amount divided by the Floor Price, with the balance (equal to the difference between the conversion amount and 92% of value of shares issued) payable in cash.




Redemption


On at the holder's election in the event of a material adverse change or event of default, or if shares are not issued upon conversion.




Events of Default


Events typical for convertible notes, including the Company's shares being suspended from trading for more than 5 days during any 12 month period and a material adverse change or change of control.



Rights and liabilities attaching to new Shares
Shares issued on conversion of Convertible Notes will be fully paid ordinary shares (Shares) and will rank equally in all respects with all of the Company's then existing ordinary shares on issue. 
Full details of the rights and liabilities attaching to the Shares are:
•           detailed in the Company's constitution (Constitution), a copy of which can be inspected, free of charge, at the registered office of the Company during normal business hours; and
•           in certain circumstances, regulated by the Act, the ASX Listing Rules and the general law.
The following is a summary of the more significant rights and liabilities attaching to the Shares.  This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of holders of Shares.  To obtain such a statement, persons should seek independent legal advice.
(a)        Voting rights
Subject to any rights or restrictions for the time being attached to any class or classes of shares, at a general meeting of members every member has one vote on a show of hands and one vote per Share on a poll.  Voting may be in person or by proxy, attorney or representative.
(b)        Dividends
Subject to the rights of holders of shares issued with any special rights (at present there are none), the profits of the Company which the Company's board may from time to time determine to distribute by way of dividend are divisible to each share of a class on which the Company's board resolves to pay a dividend in proportion to the amount for the time being paid on a share bears to the total issue price of the share.  All Shares currently on issue and the shares to be issued under this Prospectus are fully paid Shares.
(c)        Future issues of securities
Subject to the Corporations Act and the Listing Rules, the Directors may issue, grant options over, or otherwise dispose of unissued shares in the Company at the times and on the terms that the Directors think proper and a share may be issued with preferential or special rights.
(d)        Transfer of Shares
A shareholder may transfer Shares by a market transfer in accordance with any computerised or electronic system established or recognised by ASX for the purpose of facilitating transfers in Shares or by an instrument in writing in a form approved by ASX or the Company's board.
(e)        Meetings and notices
Each shareholder is entitled to receive notice of, and to attend, general meetings for the Company and to receive all notices, accounts and other documents required to be sent to shareholders under the Constitution, the Corporations Act or the Listing Rules.
Shareholders may requisition meetings in accordance with the Corporations Act.
(f)        Liquidation rights
The Company has one class of shares on issue, ordinary shares. Each ordinary Share ranks equally in the event of liquidation.
(g)        Variation of rights
Subject to the Listing Rules, the rights attached to the Shares may be varied with the consent in writing of shareholders holding three-quarters of the Shares or by a special resolution passed at a separate meeting of the holders of the Shares in accordance with the Corporations Act
(h)        Election of directors
There must be a minimum of 3 Directors.  At every annual general meeting one third of the Directors (rounded to the nearest whole number) must retire from office. Any Director who would have held office for more than 3 years if that Director remains in office until the next general meeting must retire. These retirement rules do not apply to certain appointments including the managing director.
(i)         Indemnities
To the extent permitted by law the Company must indemnify each past and present Director and secretary against any liability incurred by that person as an officer of the Company and any legal costs incurred in defending an action in respect of such liability.
(j)        Winding up
Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions attached to a class of shares, on a winding up of the Company any surplus must be divided among the shareholders of the Company.
(k)        Shareholder liability
As the Shares under the Prospectus are fully paid Shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.
(l)         Alteration to the Constitution
The Constitution can only be amended by a special resolution passed by at least three quarters of shareholders present and voting at the general meeting. At least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.
(m)       Listing Rules
If the Company is admitted to trading on the Official List, then despite anything in the Constitution, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Constitution to contain a provision and it does not contain such a provision, the Constitution is deemed to contain that provision. If the Listing Rules require the Constitution not to contain a provision and it contains such a provision, the Constitution is deemed not to contain that provision. If a provision of the Constitution is inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.
The full ASX announcement can be seen at: https://www.asx.com.au/asx/share-price-research/company/EUR
 
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The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014
Visit the Company's website to find out more about the advanced Wolfsberg Lithium Project located in Austria.
For further information please contact:



European Lithium Ltd


+61 861 819 792




Tony Sage


info@europeanlithium.com
 
 




NEX Corporate Adviser


+44 207 220 1666




James Joyce








James Sinclair-Ford







 




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