23/11/06 - TSX Venture Exchange Bulletins
ARGENTINA LITHIUM & ENERGY CORP. ("LIT")
BULLETIN TYPE: Property-Asset or Share Disposition Agreement
BULLETIN DATE: November 6, 2023
TSX Venture Tier 2 Company
TSX Venture Exchange (the "TSXV") has accepted for filing documentation with respect to a transaction (the "Transaction") between the Company, Argentina Litio y Energia S.A., a wholly owned subsidiary of the Company (the "Subsidiary") and an arm's length party (the "Purchaser"). Pursuant to the terms of the Transaction, the Purchaser shall make the equivalent of USD $90,000,000, in ARS$, investment in the Subsidiary to acquire 19.9% of the issued and outstanding shares of the Subsidiary, subject to an Exchange Right as described below.
Pursuant to an Exchange Agreement (the "Exchange Agreement"), the Company granted the Purchaser an irrevocable right (the "Exchange Right") to exchange all of its shares in the Subsidiary (the "Subsidiary Shares") for such number of shares of the Company (the "Parent Shares") equaling 24.844% of (i) the outstanding Parent Shares (on an undiluted basis) as of the date of the Exchange Agreement and (ii) Parent Shares issued by the Company (between the date of the Exchange Agreement and the date the Purchaser exercises the Exchange Right) upon the exercise of warrants, stock options or other securities convertible or exchangeable into Parent Shares existing as of the date of the Exchange Agreement ((i) and (ii) together, the "Exchange Shares"), subject to certain exchange conditions. Following the issuance of Exchange Shares, the Purchaser will own at most 19.9% of the Parent Shares (on an undiluted basis). In addition, the Company will grant the Purchaser an irrevocable right (the "Top-Up Right") to subscribe for additional Parent Shares (the "Additional Shares") if necessary for the Purchaser to achieve a 19.9% interest in the Parent Shares (on an undiluted basis), subject to the prior approval of the TSXV. Any Additional Shares the Purchaser elects to purchase pursuant to the Top-Up Right will be issued at the maximum discounted market price permitted under the rules and policies of the TSXV, unless the Top-Up Right is exercised after an acquisition of the Company, in which case the subscription price under the Top-Up Right will be the pre-announcement market price of shares of the Company. The Purchaser will not have the right under the Exchange Right and the Top-Up Right to acquire more than 19.9% of the outstanding Common Shares following the issuance of Exchange Shares and Additional Shares, if any. The Exchange Agreement also provides the Purchaser with observer rights to attend board meetings of the Company for as long as the Purchaser owns at least 10% of the
Pursuant to a Lithium Offtake Agreement (the "Offtake Agreement"), the Subsidiary has agreed to sell to the Purchaser, and the Purchaser has agreed to purchase from the Subsidiary up to 15,000 tonnes per annum of lithium produced by the Subsidiary over a seven-year period (the "Supply Obligation") subject to the terms and conditions set out in the Offtake Agreement. After the initial seven-year term, the Offtake Agreement may be extended by mutual agreement for an additional number of years. The price of lithium products sold by the Subsidiary under the Offtake Agreement will be based on an agreed market-based price formula at the time of each shipment. The commencement of the Supply Obligation of the Subsidiary is conditional on the successful start of commercial production at one or more of its projects.
Pursuant to a Shareholders' Agreement relating to the Subsidiary and the Purchaser's ownership of the Subsidiary Shares: (i) the Purchaser will have the right to nominate one director to the board of directors of the Subsidary (the "Purchaser Director") for as long as the Purchaser has an ownership position of not less than 10% of the issued and outstanding Subsidiary Shares; (ii) certain corporate decisions of the Subsidiary may not be undertaken without the affirmative vote the Purchaser Director or the approval by shareholders holding more than 90% of the issued and outstanding of the Subsidiary Shares; (iii) right of each shareholder to maintain its ownership percentage in any equity offerings by the Subsidiary; (iv) transfer restrictions including, rights of first refusal, drag-along and tag-along rights; and (v) right of first offer for the Purchaser to provide project financing and any other borrowing by the Subsidiary.
Upon exercise of the Exchange Right, the Company will enter into an Investor Rights Agreement (the "IRA") with the Purchaser which will allow the Purchaser to: (i) nominate one director to the board of directors of the Company for as long as the Purchaser has an ownership position of not less than 10% of the issued and outstanding of the Parent Shares; and (ii) pre-emptive right to maintain ownership percentage in certain follow-on issuances of Parent Shares or securities convertible into Parent Shares, subject to the prior approval of the TSXV.
For further details, please refer to the Company's news releases dated September 27, 2023 and October 5, 2023.
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