Spark Power Completes Founder-Led Non-Brokered $5.6 Million Private Placement; Closes on Upgraded Credit Facility

Rhea-AI Summary

Spark Power Group Inc. (OTC PINK:SKPGF) announced the completion of a non-brokered private placement raising approximately $5.6 million through the issuance of 2,654,028 common shares at $2.11 per share. This capital mainly comes from the company's founders and senior executives to strengthen working capital and reduce debt. Additionally, Spark Power has upgraded its credit facility with Bank of Montreal, enhancing its borrowing capacity by $5 million and extending the maturity date to September 30, 2023.

Positive

• Successfully raised $5.6 million through a private placement.
• Founders and executives showed confidence by investing significant personal funds.
• Upgraded credit facility increases working capital availability by $5 million.

Negative

• None.

Founders and Senior Executive invest $5.6 million in Growth Equity Upgraded BMO Credit Facility provides additional Capital for Growth

OAKVILLE, ON / ACCESSWIRE / June 28, 2021 / Spark Power Group Inc. (TSX: SPG) (OTC PINK:SKPGF) (" Spark Power " or the " Company "), the parent company of Spark Power Corp., is pleased to announce the closing of a non-brokered private placement (" Private Placement ") of 2,654,028 common shares of the Company (" Common Shares ") issued at a price of $2.11 per Common Share (the " Issue Price ") for aggregate gross proceeds of approximately $5.6 million. The majority of the equity capital was provided by the three founders of the business, with additional investment from the other members of the Company's senior executive team. The Company intends to use the gross proceeds of the Private Placement to reduce its revolving line of credit and to provide additional working capital.

"Andrew Clark, Eric Waxman and I are pleased to be leading this financing that, along with the amended banking facility will provide the business with additional capital to support growth," said Jason Sparaga, Co-Founder and Executive Board Chair of Spark Power. "We continue to work closely with the Special Committee of Spark Power to find the right long-term capital partner for the Company and remain committed to, and confident in, that process. However, as the pandemic starts to fade and the business enters its busy season, it is equally important that the Company have sufficient working capital to execute on its business plan; we are happy to step up" he added.

Upgraded Credit Facility with Bank of Montreal

In conjunction with the Private Placement, the Company has also closed on the previously announced upgraded credit facility with its lender, Bank of Montreal.

This amended banking facility includes the following upgrades: (i) consolidates the existing term debt facilities, (ii) increases the operating line of credit by $5.0 million and expands the borrowing base, (iii) revises the amortization period for all of the long-term debt to 8 years , (iv) provides covenant relief by moving the basis of calculation to IFRS accounting standards, (v) provides additional temporary Total Debt covenant relief to allow for maximum use of the operating line of credit, and (vi) extends the maturity date of the debt facility to September 30, 2023.

In addition, the Bank has agreed to waive its right to apply the proceeds of the Private Placement to permanent repayment of its Term Debt facility. Instead, the Bank has agreed to apply the entire amount to the Company's operating line of credit, making it fully available for current operating needs.

"We are very appreciative of the continued support of our lender and our Founders," said Dan Ardila, Executive Vice President & Chief Financial Officer. "The amended banking facility will provide the Company with incremental capital to support the business as we head into our busiest period of the year" added Ardila.

MI 61-101 Disclosure

The Private Placement constitutes a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (" MI 61-101 ") as certain directors and officers of the Company purchased an aggregate of 710,900 Common Shares, and Red Jar Capital, a holding company controlled by the three founders of the business and a related party to the Company, purchased 1,658,768 Common Shares. The Company has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in respect of related party participation in the Private Placement as neither the fair market value (as determined under MI 61-101) of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involved the related parties, exceeded 25% of the Company's market capitalization (as determined under MI 61-101). Further details will be included in a material change report to be filed by the Company. A material change report will be filed in connection with the related party participation in the Private Placement less than 21 days in advance of closing of the Private Placement as approval of the Private Placement occurred less than 21 days prior to closing. The Private Placement and Issue Price were considered by the Special Committee of the Company and approved by the board of directors of the Company, with directors participating in the Private Placement recusing themselves from the discussion and the vote in respect thereof. The Issue Price represents the "market price" under the policies of the Toronto Stock Exchange as at June 25, 2021.

Early Warning Update

Each of Mr. Sparaga, Mr. Clark and Mr. Waxman are acting as "joint actors" in connection with their investment in the Company at this time. As previously disclosed in the Company's press release dated May 26 each of Jason, Andrew and Eric have indicated to the Board of their preference to sell their entire interest in the Company in a value enhancing transaction and are in support of the sales process undertaken by the Company.

Each of Jason Sparaga, Andrew Clark and Eric Waxman respectively subscribed for 189,573 Common Shares and Red Jar Capital, a company jointly controlled by the three individuals, subscribed for 1,658,768 Common Shares for total gross proceeds of $4.7 million.

Immediately prior to the completion of the Private Placement, each of Mr. Sparaga and Mr. Clark held 11,822,500 Common Shares and options to purchase 189,000 Common Shares, and Mr. Waxman held 1,377,078 Common Shares, options to purchase 308,000 Common Shares and RSUs representing 355,859 Common Shares, representing collectively approximately 46.6% of the issued and outstanding Common Shares on a non-diluted basis.

Following completion of the Private Placement, 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. Collectively with Red Jar Capital, the three individuals control 27,249,566 Common Shares, options to purchase 686,000 Common Shares and RSUs representing 355,859 Common Shares, representing approximately 48.4% of the issued and outstanding Common Shares on a non-diluted basis and representing approximately 49.3% of the issued and outstanding Common Shares on a partially diluted basis.

About Spark Power

Spark Power is a leading independent provider of end-to-end electrical services, 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 Power™. 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 .

Forward-Looking Statements

This news release may contain forward-looking statements (within the meaning of applicable securities laws), which reflect Spark Power's current expectations regarding future events. Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. The forward-looking statements in this press release include statements regarding the Company's opportunities for future growth, acquisitions, future liquidity and other statements that are not historical fact, and without limitation, include statements regarding the use of proceeds, the Company's growth and ability to execute its business plan. The forward-looking statements in this news release are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Several factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Such factors include, among others: the ability of the Company to find a suitable strategic partner; potential buyer or participants for a financing; currency fluctuations; disruptions or changes in the credit or security markets; results of operations; and general developments, market and industry conditions. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, Spark Power assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Investor and Regulatory Inquiries:

Dan Ardila, Executive Vice President & Chief Financial Officer
dardila@sparkpowercorp.com
+1 (905) 829-3336 x127

Media Inquiries:

Kim Samlall, Director, Marketing Communications
media@sparkpowercorp.com
+1 (905) 829-3336 x185

SOURCE: Spark Power Group Inc.

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FAQ

What is the significance of the $5.6 million raised by Spark Power (SKPGF)?

The $5.6 million raised through a private placement will enhance Spark Power's working capital and reduce its revolving credit line.

How has Spark Power (SKPGF) upgraded its credit facility?

Spark Power has upgraded its credit facility with Bank of Montreal, increasing its operating line of credit by $5 million and extending the maturity date to September 30, 2023.

Who are the primary investors in the recent private placement by Spark Power (SKPGF)?

The primary investors in the private placement are the company's founders and senior executives.

What is the new share price for Spark Power (SKPGF) following the private placement?

The new share price for Spark Power following the private placement is set at $2.11 per share.