$10.0 Million Private Placement Added to Previously Announced Rights Offering
NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO UNITED STATES NEWSWIRE SERVICES
OAKVILLE, ON / ACCESSWIRE / January 31, 2022 / Spark Power Group Inc. (TSX:SPG), parent company of Spark Power Corp. ("Spark Power" or the "Company"), is pleased to announce that it has completed the previously announced rights offering (the "Rights Offering"), which expired at 5:00 pm (Toronto time) on January 26, 2022.
Upon closing of the Rights Offering, Spark Power issued approximately 24.7 million common shares of the Company ("Common Shares") at a price of $1.20per Common Share for aggregate gross proceeds of approximately $29.6 million. Pursuant to the terms of the Rights Offering, each eligible shareholder was entitled to subscribe for 0.4393346119 of a Common Share for every right held by such shareholder.
An aggregate of 14,123,786 Common Shares were issued under the basic subscription privilege. Of these Common Shares, 5,874,961 were distributed to persons who are insiders of Spark Power and 8,248,825 Common Shares were issued to the remaining subscribers under the basic subscription privilege.
An aggregate of 2,191,568 Common Shares were distributed under the additional subscription privilege. Of these Common Shares, 1,217 were distributed to persons who are insiders of Spark Power and 2,190,351 Common Shares were issued to the remaining subscribers under the additional subscription privilege.
As previously announced in the Company's press release dated December 15, 2021, in connection with the Rights Offering, the Company entered into standby guarantee agreements (the "Standby Agreements") with certain holders of promissory notes (the "First Standby Guarantors") and Red Jar Capital Corp.("Red Jar") (a company jointly controlled by Jason Sparaga, Andrew Clark and Eric Waxman). The First Standby Guarantors acquired an aggregate of 3,858,779 Common Shares pursuant to their Standby Agreements. Red Jar acquired an aggregate of 10,166,667 Common Shares, pursuant to the exercise of its rights and the acquisition of 4,500,000 Common Shares under its standby commitment under the Rights Offering.
As of the closing date, the Company currently has 89,941,701 Common Shares issued and outstanding, reflecting the 24,674,133 Common Shares issued pursuant to the Rights Offering and the 8,333,333 Common Shares issued in the Private Placement (as described below).
Spark Power has used a portion of the net proceeds to (i) repay certain indebtedness under the various promissory notes held by the First Standby Guarantors in connection with past acquisitions and (ii) to satisfy an earn-out payment that is owing by the Company. Spark Power also intends to use certain net proceeds to reduce its line of credit to support working capital purposes.
The Company is also pleased to announce the closing of a non-brokered private placement ("Private Placement") of 8,333,333 Common Shares issued at a price of $1.20 per Common Share for aggregate gross proceeds of approximately $10 million. The entire Private Placement was subscribed for by funds managed by Stornoway Portfolio Management Inc. ("Stornoway").
"We are proud to partner with the Spark team and support the Company's revitalization," said Scott Reid, President and Chief Investment Officer of Stornoway. "This fresh capital significantly strengthens Spark's balance sheet and provides it with the financial flexibility to capitalize on its many opportunities to create shareholder value."
All Common Shares issued pursuant to the Private Placement are subject to a four-month hold period from the closing date of the Private Placement, in accordance with applicable securities law.
Spark Power intends to use the proceeds of the Private Placement to reduce its line of credit to support working capital purposes.
"We are extremely pleased with the results of the Rights Offering and the additional capital from the Private Placement," said Jason Sparaga, Co-Founder and Board Chair of Spark Power. "This $39.6 million equity injection significantly deepens the capital structure of the business, and further enhances our ability to execute our strategic priorities in 2022 and beyond," he added.
"This is an incredible outcome. We are extremely grateful for the continued support of the Company's founders and other existing shareholders, and the additional capital from our new institutional investors," said Richard Jackson, President & CEO of Spark Power. "It is a huge show of confidence in our team and our strategy," he added.
Early Warning Disclosure
Each of Jason Sparaga, Andrew Clark and Eric Waxman (collectively, the "Red Jar Parties") have an understanding at this time that in connection with their investment in the Company they are acting as "joint actors". Mr. Sparaga, Mr. Clark, and Mr. Waxman, together with certain additional shareholders, through Red Jar exercised 12,898,294 Rights for 5,666,667 Common Shares. Red Jar also subscribed for 4,500,000 Common Shares pursuant to its Standby Agreement, resulting in a total of 10,166,667 Common Shares being purchased in connection with the Rights Offering.
Immediately prior to the completion of the Rights Offering, each of Mr. Sparaga and Mr. Clark held 12,012,073 Common Shares and options to purchase 189,000 Common Shares and Mr. Waxman held 1,566,651 Common Shares, options to purchase 308,000 Common Shares and RSUs representing 355,859 Common Shares. In addition to the direct or indirect holdings held by each of Mr. Sparaga, Mr. Clark and Mr. Waxman, they also jointly through Red Jar beneficially owned or exercised control or direction over, 1,658,768 Common Shares and 12,937,131 Rights. Collectively, the Red Jar Parties held 27,249,565 Common Shares, or approximately 47.9% of the issued and outstanding Common Shares, on a non-diluted basis.
Following completion of the Rights Offering, each of Mr. Sparaga and Mr. Clark holds 12,012,073 Common Shares and options to purchase 189,000 Common Shares and Mr. Waxman holds 1,566,651 Common Shares, options to purchase 308,000 Common Shares and RSUs representing 355,859 Common Shares. In addition to the direct or indirect holdings held by each of Mr. Sparaga, Mr. Clark and Mr. Waxman, they also jointly through Red Jar beneficially own or exercise control or direction over, 10,166,667 Common Shares, Collectively, the Red Jar Parties now hold 37,416,232 Common Shares, or approximately 41.6% of the issued and outstanding Common Shares, on a non-diluted basis.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities of the Company. There shall be no offer or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of such securities under the laws of any such jurisdiction.
About Spark Power Group Inc.
Spark Power is a leading independent provider of end-to-end electrical contracting, operations and maintenance services, and energy sustainability solutions to the industrial, commercial, utility, and renewable asset markets in North America. We work to earn the right to be our customers' Trusted Partner in PowerTM. Our highly skilled and dedicated people, located in the communities we serve, combined with our knowledge of the power industry, technology expertise, and commitment to safety, ensures we deliver the right solutions that keep our customers' operations up and running today and better equipped for tomorrow. Learn more at www.sparkpowercorp.com.
This news release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions and includes information regarding the anticipated use of proceeds from the Rights Offering and the Private Placement. Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Key factors that could cause actual results to differ materially from those projected in the forward-looking information include, but are not limited to, the risk factors set out in the Circular and the Company's AIF, filed with Canadian securities regulators and available on the Company's profile on SEDAR at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Kim Samlall, Director, Marketing Communications
+1 (905) 829-3336 x185
Executive Vice President and Chief Financial Officer
+1 (416) 388-4546
SOURCE: Spark Power Group Inc.