Environmental Clean Technologies Limited (ASX: ECT) (ECT or Company) is pleased to announce that its subsidiary, ECT Finance Limited (ECTF), has agreed to enter into an AUD 800,000 convertible loan with the proceeds of the loan to be used to repay the wholesale loan to ECT which in turn will be used to fund the Company’s operating expenses and capital works requirements over the coming months.
- AUD 800,000 loan to ECTF which then repays the wholesale loan to ECT
- 12-month term with interest paid quarterly in advance
- Interest rate 15% per annum
- Security to be a second ranking registered security over the ECTF’s Equity Lending Facility (ELF)
- At the lender’s request the loan can be converted to equity
In July 2017, ECTF successfully executed the ELF, facilitating the conversion of options to fully paid ordinary shares via the issue of limited recourse loans secured against the shares. This facility was again applied to a subsequent options series in June 2018.
Proceeds from the loan to ECTF will be used to repay part of the wholesale loan from ECT, which in turn will be used to fund operating expenses and capital works.
The Company’s largest shareholder, LJ & K Thomson Pty Ltd, has agreed to provide the above loan which is expected to be drawn down in the next 3 days.
Interest will be paid quarterly in advance with the first payment of AUD 30,000 being made when the loan is settled.
The security for the loan will be a second ranking registered security over the ECTF ELF loan book which will rank behind the loan provided by Challenge Bricks and Roofing Pty Ltd in December 2018.
At the lender’s request the loan can be converted in part or in full to ECT shares at 1.5c per share or at a 20% discount to the 30-day volume weighted average price (VWAP), whichever is the lower at the date of electing to convert.
Early repayment of the loan is possible provided the Company makes good all interest for the 12-month term and the pre-emptive right to convert to equity is relinquished by the lender.
ECTF director Glenn Fozard commented “This loan is consistent with the securitisation program that ECT Finance had undertaken against the repayments of the ELF loan book and this loan continues to reinforce the approach we take in managing cash flow needs of the Company against dilution impacts by securitising the ELF loan book and repaying the wholesale loan to ECT.”
For further information, contact:
Glenn Fozard – Chairman [email protected]