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TORONTO - Electra Battery Materials Corporation (NASDAQ:ELBM; TSX-V:ELBM), currently valued at $17.6 million in market capitalization, announced Tuesday amendments to its previously disclosed recapitalization and restructuring initiative aimed at completing North America’s first battery-grade cobalt sulfate refinery. According to InvestingPro data, the company has been facing significant financial challenges, with a concerning current ratio of 0.05.
Under the revised terms, Electra will convert approximately $41.3 million of outstanding secured convertible notes, plus accrued interest, into approximately 55 million units. Each unit, priced at $0.75, consists of one common share and one warrant exercisable at $1.25 per share for 36 months, beginning 60 days after closing. This restructuring comes as InvestingPro analysis shows the company operating with a significant debt burden, with total debt standing at $51.88 million.
The restructuring will reduce Electra’s convertible debt by 60%, lowering the total debt under the notes to approximately $27.5 million. The remaining 40% of notes plus interest will be exchanged into a new three-year term loan.
As part of the agreement, Electra will issue a one-time bonus of 3,822,341 common shares to the lenders at a deemed price of $0.90 per share.
The company had previously applied to the TSX Venture Exchange for a waiver to permit an equitization price of $0.60 for the notes, which was below minimum pricing requirements. The TSXV did not grant the waiver, resulting in the restructuring proceeding at $0.75 per unit.
The revised terms align with Electra’s previously announced brokered private placement offering for gross proceeds of up to $30 million.
Completion of the restructuring remains subject to several conditions, including definitive documentation, shareholder approval, and regulatory clearances from the TSX Venture Exchange and Nasdaq Stock Market.
Electra is currently focused on developing a cobalt sulfate refinery as part of its strategy to reduce North America’s reliance on foreign supply chains for critical battery materials. While InvestingPro analysis indicates the stock is currently undervalued, the company faces significant operational challenges with a weak Financial Health Score of 1.54 out of 10. Subscribers to InvestingPro can access 8 additional key insights about Electra’s financial position and growth prospects.
This article is based on a company press release statement.
In other recent news, Electra Battery Materials Corporation has secured C$17.5 million in funding from Invest Ontario to aid in the construction of its cobalt sulfate refinery in Temiskaming Shores. This facility is set to become North America’s first dedicated to producing battery-grade cobalt sulfate, with a planned annual production of 6,500 tonnes. Additionally, Electra announced a $30 million financing package as part of its financial restructuring, engaging Cantor Fitzgerald Canada Corporation and ECM Capital Advisors Ltd. as co-lead agents for a private placement. The company has completed its early works program at the cobalt refinery, preparing for the full construction restart with advancements in the solvent extraction facility and infrastructure upgrades. In leadership developments, Electra appointed Rear Admiral Gerard Hueber (Retired) and former Alpha CEO David Stetson to its Board of Directors. Hueber previously managed an $8 billion naval portfolio at Raytheon, while Stetson led Alpha Metallurgical Resources through significant financial restructuring. These strategic moves come as Electra seeks to enhance its financial and operational capabilities.
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