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DJ European Lithium Limited Winance Convertible Notes

TIDMEUR

RNS Number : 1007N

European Lithium Limited

20 September 2019

European Lithium Ltd

("European Lithium", "EUR" or "the Company")

Winance Convertible Notes

On 31 July 2019 European Lithium Limited (Company) announced a $10 million funding facility with Winance Investment LLC. The Company has elected to draw down on this facility and following this notice will issue 2,000 convertible notes (each with a face value of $1,000) (Convertible Notes) to Winance Investment LLC.

Effect of the issue of the Convertible Note on the Company

The Convertible Notes were issued under a convertible security agreement (Agreement) with Winance Investment LLC (Winance) announced to ASX on 31 July 2019 under which Winance will subscribe for convertible securities issued by the Company with a total face value of up to A$10 million (Convertible Notes) over the term of the facility.

Funds raised under the Agreement will be used to repay the residual amount owing to MEF I, L.P. (Magna ), to fast-track the completion of a DFS at the Company's Wolfsberg Lithium Project in Austria and for general working capital purposes.

The facility is available through the issue of convertible securities in the Company. An initial amount of A$2.0m is available for immediate drawdown, with this to occur at the Company's election prior to 31 October 2019. Further drawdowns of $1,000,000 each are available upon full conversion of the notes from the previous drawdown, subject to a cooling off period.

The principle effects of the issue are to:

   (a)        increase the Company's cash reserves by $1,840,000 (after costs); 
   (b)       increase the number of convertible notes on issue by 2,000; 
   (c)        increase the Company's indebtedness by $2,000,000; 

(d) in the event the Convertible Notes are converted, increase the number of fully paid ordinary shares on issue by that number determined by the then prevailing share price, with maximum number of 36,363,636 Shares issued.

The Company's capital structure following the issue will be as follows:

 
            Shares                                                        593,158,210 
------------------------------------------------------------  ----------------------- 
            Options exercisable at $0.10 each on or before 
             30 June 2020                                                 199,000,000 
------------------------------------------------------------  ----------------------- 
            Options exercisable at $0.125 each on or before 
             27 February 2020                                             2,000,000 
------------------------------------------------------------  ----------------------- 
            Options exercisable at $0.05 each on or before 
             31 March 2020                                                2,394,444 
------------------------------------------------------------  ----------------------- 
            Options exercisable at $0.20 each on or before 
             11 December 2021                                             2,500,000 
------------------------------------------------------------  ----------------------- 
            Convertible notes (in accordance with the terms 
             announced 7 September 2018)                                  538,042 
------------------------------------------------------------  ----------------------- 
 

The number of Shares to be issued on conversion is determined by the then prevailing price at which Shares trade on ASX. The maximum number of Shares that can be issued upon conversion is 36,363,636, assuming conversion at the floor price of $0.055.

Rights and liabilities attaching to Convertible Notes

The material terms of the Convertible Notes are as follows:

 
            Issuer                          European Lithium Limited 
------------------------------  -------------------------------------------------------------- 
            Type and class                  Direct, unsubordinated and unsecured debt 
             of security                     obligations of the Issuer 
------------------------------  -------------------------------------------------------------- 
            Status and ranking              The Convertible Notes rank equally amongst 
                                             themselves and at least equally with all 
                                             other direct, unsubordinated and unsecured 
                                             obligations of the Issuer. 
------------------------------  -------------------------------------------------------------- 
            Tranches                        Initial tranche of $2 million and 8 subsequent 
                                             tranches of $1 million each, subject to a 
                                             cooling off period calculated based on the 
                                             value of the tranche and average trading 
                                             volumes during the preceding 60 day period. 
                                             No penalties in the event no further drawdowns 
                                             are made. 
------------------------------  -------------------------------------------------------------- 
            Facility term                   36 months from the date of the Agreement 
------------------------------  -------------------------------------------------------------- 
            Face Value                      A$1,000 per Convertible Note 
------------------------------  -------------------------------------------------------------- 
            Interest                        Only in the event notes are redeemed, calculated 
                                             at 10% per annum. 
------------------------------  -------------------------------------------------------------- 
            Commitment and                  8% of amounts subscribed for under the Agreement, 
             success fee                     to be paid upon draw down. 
------------------------------  -------------------------------------------------------------- 
            Termination                     None 
             fee 
------------------------------  -------------------------------------------------------------- 
            Conditions to                   Each subsequent tranche is subject to conditions 
             drawdowns                       typically for a facility of this nature, 
                                             including no material adverse change, no 
                                             event of default, compliance with Listing 
                                             Rules (including prior shareholder approval 
                                             to allow conversion at the note holder's 
                                             election), no entry into variable equity 
                                             financings, no change of control, or breach 
                                             of warranty. 
                                             In the event the closing VWAP for any five 
                                             (5) day period falls below 135% of the Floor 
                                             Price, the Investor, at its discretion, has 
                                             the right to decline further drawdowns. Drawdowns 
                                             may resume if the VWAP remains over 135% 
                                             of the VWAP for 20 consecutive days. 
------------------------------  -------------------------------------------------------------- 
            Use of funds                    Repay the residual amount owing to MEF I, 
                                             L.P. (Magna ), to fast-track the completion 
                                             of a DFS at the Company's Wolfsberg Lithium 
                                             Project in Austria and for general working 
                                             capital purposes. 
------------------------------  -------------------------------------------------------------- 
            Note maturity                   24 months from issue 
             date 
------------------------------  -------------------------------------------------------------- 
            Security                        Unsecured. 
------------------------------  -------------------------------------------------------------- 
            Transferability                 The notes are transferable, subject to the 
                                             Corporations Act. 
------------------------------  -------------------------------------------------------------- 
            Conversion                      At the Investor's discretion at any time 
                                             during the term, subject to a minimum conversion 
                                             amount of 20 notes per conversion 
                                             Shares issued on conversion of the Convertible 
                                             Notes will rank equally with the Company's 
                                             existing shares and the Company will ensure 
                                             that the shares can be offered for sale without 
------------------------------  -------------------------------------------------------------- 
            Conversion price                92% of the lowest VWAP during the 10 Trading 
                                             Days prior to giving a conversion notice, 
                                             subject to a floor price of $0.055 per share 
                                             (subject to adjustment in the event of a 
                                             capital restructure) (Floor Price). 
                                             In the event the conversion price is less 

(MORE TO FOLLOW) Dow Jones Newswires

September 20, 2019 04:43 ET (08:43 GMT)

DJ European Lithium Limited Winance Convertible Notes -2-

                                             than the Floor Price the Company will issue 
                                             that number of shares equal to the conversion 
                                             amount divided by the Floor Price, with the 
                                             balance (equal to the difference between 
                                             the conversion amount and 92% of value of 
                                             shares issued) payable in cash. 
------------------------------  -------------------------------------------------------------- 
            Redemption                      On at the holder's election in the event 
                                             of a material adverse change or event of 
                                             default, or if shares are not issued upon 
                                             conversion. 
------------------------------  -------------------------------------------------------------- 
            Events of Default               Events typical for convertible notes, including 
                                             the Company's shares being suspended from 
                                             trading for more than 5 days during any 12 
                                             month period and a material adverse change 
                                             or change of control. 
------------------------------  -------------------------------------------------------------- 
 

Rights and liabilities attaching to new Shares

Shares issued on conversion of Convertible Notes will be fully paid ordinary shares (Shares) and will rank equally in all respects with all of the Company's then existing ordinary shares on issue.

Full details of the rights and liabilities attaching to the Shares are:

-- detailed in the Company's constitution (Constitution), a copy of which can be inspected, free of charge, at the registered office of the Company during normal business hours; and

-- in certain circumstances, regulated by the Act, the ASX Listing Rules and the general law.

The following is a summary of the more significant rights and liabilities attaching to the Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of holders of Shares. To obtain such a statement, persons should seek independent legal advice.

   (a)        Voting rights 

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at a general meeting of members every member has one vote on a show of hands and one vote per Share on a poll. Voting may be in person or by proxy, attorney or representative.

   (b)        Dividends 

Subject to the rights of holders of shares issued with any special rights (at present there are none), the profits of the Company which the Company's board may from time to time determine to distribute by way of dividend are divisible to each share of a class on which the Company's board resolves to pay a dividend in proportion to the amount for the time being paid on a share bears to the total issue price of the share. All Shares currently on issue and the shares to be issued under this Prospectus are fully paid Shares.

   (c)        Future issues of securities 

Subject to the Corporations Act and the Listing Rules, the Directors may issue, grant options over, or otherwise dispose of unissued shares in the Company at the times and on the terms that the Directors think proper and a share may be issued with preferential or special rights.

   (d)        Transfer of Shares 

A shareholder may transfer Shares by a market transfer in accordance with any computerised or electronic system established or recognised by ASX for the purpose of facilitating transfers in Shares or by an instrument in writing in a form approved by ASX or the Company's board.

   (e)        Meetings and notices 

Each shareholder is entitled to receive notice of, and to attend, general meetings for the Company and to receive all notices, accounts and other documents required to be sent to shareholders under the Constitution, the Corporations Act or the Listing Rules.

Shareholders may requisition meetings in accordance with the Corporations Act.

   (f)        Liquidation rights 

The Company has one class of shares on issue, ordinary shares. Each ordinary Share ranks equally in the event of liquidation.

   (g)        Variation of rights 

Subject to the Listing Rules, the rights attached to the Shares may be varied with the consent in writing of shareholders holding three-quarters of the Shares or by a special resolution passed at a separate meeting of the holders of the Shares in accordance with the Corporations Act

   (h)        Election of directors 

There must be a minimum of 3 Directors. At every annual general meeting one third of the Directors (rounded to the nearest whole number) must retire from office. Any Director who would have held office for more than 3 years if that Director remains in office until the next general meeting must retire. These retirement rules do not apply to certain appointments including the managing director.

   (i)         Indemnities 

To the extent permitted by law the Company must indemnify each past and present Director and secretary against any liability incurred by that person as an officer of the Company and any legal costs incurred in defending an action in respect of such liability.

   (j)        Winding up 

Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions attached to a class of shares, on a winding up of the Company any surplus must be divided among the shareholders of the Company.

   (k)        Shareholder liability 

As the Shares under the Prospectus are fully paid Shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

   (l)         Alteration to the Constitution 

The Constitution can only be amended by a special resolution passed by at least three quarters of shareholders present and voting at the general meeting. At least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

   (m)       Listing Rules 

If the Company is admitted to trading on the Official List, then despite anything in the Constitution, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Constitution to contain a provision and it does not contain such a provision, the Constitution is deemed to contain that provision. If the Listing Rules require the Constitution not to contain a provision and it contains such a provision, the Constitution is deemed not to contain that provision. If a provision of the Constitution is inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.

The full ASX announcement can be seen at: https://www.asx.com.au/asx/share-price-research/company/EUR

- END -

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014

Visit the Company's website to find out more about the advanced Wolfsberg Lithium Project located in Austria.

For further information please contact:

 
 European Lithium Ltd     +61 861 819 792 
 Tony Sage                info@europeanlithium.com 
 NEX Corporate Adviser    +44 207 220 1666 
 James Joyce 
 James Sinclair-Ford 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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September 20, 2019 04:43 ET (08:43 GMT)