Royal Helium Ltd. Announces Election to Issue Common Shares in Satisfaction of Convertible Debenture Interest Payment Obligations and for Conversion

Rhea-AI Summary

Royal Helium (TSXV: RHC) (OTCQB: RHCCF) has announced its decision to issue 19,446,667 common shares at $0.030 per share to satisfy interest payments on two convertible debentures. The company will issue 9,846,667 shares for the 14% Debentures ($4,220,000 principal) and 9,600,000 shares for the 12% Debentures ($4,800,000 principal). The interest payments amount to $295,400 for the 14% Debentures and $288,000 for the 12% Debentures, both due December 31, 2024. This share issuance is subject to TSX Venture Exchange approval and follows the terms of debenture indentures dated February 8 and June 12, 2023.

Positive

• Ability to satisfy interest payments through share issuance preserves cash

Negative

• Share issuance of 19.4M shares represents dilution for existing shareholders
• High interest rates on convertible debentures (12% and 14%)
• Substantial debt burden with $9.02M in outstanding convertible debentures

Saskatoon, Saskatchewan--(Newsfile Corp. - December 20, 2024) - Royal Helium Ltd. (TSXV: RHC) (OTCQB: RHCCF) ("Royal" or the "Company") announces that in accordance with the terms of the two separate debenture indentures entered into between the Company and Computershare Trust Company of Canada (the "Trustee") dated February 8, 2023 (the "February Indenture") and dated June 12, 2023 (the "June Indenture" and collectively with the February Indenture, the "Debenture Indentures"), the Company has elected to issue an aggregate of 19,446,667 common shares in the capital of the Company (the "Common Shares") at a price of $0.030 to the holders of the 14.0% Senior Unsecured Convertible Debentures due December 31, 2025 (the "14% Debentures") and the holders of the 12.0% Senior Unsecured Convertible Debentures due June 30, 2025 (the "12% Debentures", together with the 14% Debentures, the "Convertible Debentures"), as payment for the satisfaction of the interest payment of $70.00 for each $1,000 principal amount of 14% Debentures and the interest payment of $60.00 for each $1,000 principal amount of 12% Debentures.

As of the date hereof, the outstanding principal amount under the February Indenture amounts to $4,220,000 and the outstanding principal amount under the June Indenture amounts to $4,800,000. The Company delivered two separate Notices (as defined herein) to the Trustee on December 18, 2024 pursuant to the terms of the February Indenture and the June Indenture. Each of the Notices delivered to the Trustee on December 18, 2024 provides that all of such interest obligations under each of the Debenture Indentures shall be paid by the Company in Common Shares. An aggregate of 9,846,667 Common Shares shall be issued for each $1,000 principal amount of 14% Debentures in respect of interest owing of $295,400 payable by December 31, 2024. An aggregate of 9,600,000 Common Shares shall be issued for each $1,000 principal amount of 12% Debentures in respect of interest owing of $288,000 payable on December 31, 2024.

Pursuant to the Debenture Indentures, the Company shall have the right, from time to time (including following conversion, at the time of redemption or at the time of maturity), to make a Common Share interest payment election in respect of any interest obligation under the Debenture Indentures by delivering a notice (the "Notice") to the Trustee. The Notice shall provide that all or a portion of such interest obligation may be paid by the Company in Common Shares by the delivery of Common Shares, as provided in the Debenture Indenture, in an amount equal to: (A) the amount of interest payable pursuant to such interest obligation divided by (B) the VWAP of the Common Shares for two trading days immediately prior to, and the two trading days immediately following delivery of the Notice.

Pursuant to the Debenture Indentures, holders converting their Debentures will receive, in addition to the applicable number of Common Shares, accrued and unpaid interest (less any taxes required to be deducted) in respect of the Debentures surrendered for conversion up to but excluding the date of conversion from, and including, the most recent Interest Payment Date (as defined in the Debenture Indentures). For clarity, payment of such interest, whether in cash or by delivery of Common Shares pursuant to the exercise of the Common Share Interest Payment Election (as defined in the Debenture Indentures), may, at the option of the Company, be paid on the next regularly scheduled Interest Payment Date (as defined in the Debenture Indentures) following the date of conversion.

The issuance of the Common Shares as payment for interest owing on the Convertible Debentures will be subject to the terms and conditions of the Debenture Indentures as well as the receipt of all requisite approvals, including, without limitation, the approval of the TSX Venture Exchange.

About Royal Helium Ltd.

Royal is an exploration, production and infrastructure company with a primary focus on the development of helium and associated gases. The Company's extensive footprint includes prospective helium permits and leases across Southern Saskatchewan and southeastern Alberta. Given the current and foreseeable global undersupplied nature of this critical and non-renewable product, Royal is well positioned to be a leading North American producer of this increasingly high-value commodity

Royal's helium reservoirs are carried primarily with nitrogen. Nitrogen is not considered a greenhouse gas (GHG) and therefore has a low GHG footprint when compared to other jurisdictions that rely on large scale natural gas production for helium extraction. Helium extracted from wells in Saskatchewan and Alberta can be up to 90% less carbon intensive than helium extraction processes in other jurisdictions. For more information, please visit SEDAR+ (www.sedarplus.ca) and the Company's website (https://royalheliumltd.com).

Forward-Looking Information

This news release includes certain statements that may be deemed to be "forward-looking statements". All statements in this news release, other than statements of historical facts, that address events or developments that management of the Company expects, are forward-looking statements, including, the issuance of the Common Shares in settlement of the amounts owing under the Debenture Indentures. Although management believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results or developments may differ materially from those in the forward-looking statements. The Company undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause actual results to differ materially from those in forward-looking statements, include market prices, exploration and development successes, continued availability of capital and financing, and general economic, market or business conditions. Please see the public filings of the Company at www.sedarplus.ca for further information on the risks and uncertainties associated with the Company's business. Readers should not place undue reliance on forward-looking information and statements, which speak only as of the date made. The forward-looking information and statements contained in this release represent our expectations as of the date of this release. The Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information or statements whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.

For further information:
Royal Helium Ltd.
David Young, CEO
Email: info@royalheliumltd.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/234818

FAQ

How many shares will Royal Helium (RHCCF) issue for the December 2024 interest payment?

Royal Helium will issue a total of 19,446,667 common shares at $0.030 per share to satisfy the interest payments on both convertible debentures.

What is the current outstanding principal amount of Royal Helium's (RHCCF) convertible debentures?

The total outstanding principal amount is $9.02 million, with $4,220,000 under the February Indenture and $4,800,000 under the June Indenture.

What are the interest rates on Royal Helium's (RHCCF) convertible debentures?

The company has two convertible debentures: 14% Senior Unsecured Convertible Debentures due December 31, 2025, and 12% Senior Unsecured Convertible Debentures due June 30, 2025.

When are the interest payments due for Royal Helium's (RHCCF) convertible debentures?

The interest payments of $295,400 for the 14% Debentures and $288,000 for the 12% Debentures are both payable by December 31, 2024.