Vancouver-based bioplastics company Good Natured Products Inc (TSX-V: GDNP) has secured about $13 million (US$10 million) in financing from BDC Capital.
BDC invested through its $700 million clean technology practice. Comerica Bank also agreed to supply a US$1 million operating line of credit.
The funding from BDC will be drawn down by Good Natured in three tranches. The proceeds of the first tranche will be used for organic growth, and the rest for acquisitions.
Formerly known as Solegear Bioplastics, Good Natured makes and distributes a range of consumer products and packaging using renewable, plant-based materials.
Its other investors include Yaletown Partners.
good natured(R) Announces Closing of $10 Million USD Financing from Business Development Bank of Canada (BDC)
Vancouver, British Columbia–(Newsfile Corp. – June 11, 2019) – good natured Products Inc. (TSXV: GDNP) (the “Company” or “good natured®”), is pleased to announce that it has secured $10 million USD (approximately $13 million CAD) in growth capital from BDC Capital Inc. (“BDC” and the “BDC Financing”) to further accelerate organic growth and, in the longer term, expand the Company’s customer base, product assortment and market reach.
The BDC Financing will be drawn down in up to three tranches. The first tranche of $5 million USD is expected to be advanced to the Company upon receipt of final TSX Venture Exchange approval regarding the related amendments to the Company’s outstanding convertible debentures, described below. The first tranche will be used for working capital to further accelerate organic growth. The remaining $5 million USD may be advanced at a later date for use in funding acquisition opportunities to expand the Company’s customer base, product assortment and market reach, subject to satisfaction of certain conditions described below.
“BDC has recognized the significant business opportunity in our mission to reduce reliance on fossil fuels and remove toxicity from everyday products and packaging,” stated Paul Antoniadis, CEO of good natured®. “As we announced in May 2019, our team continues to set new growth records each quarter, demonstrating how well good natured® products are meeting market demands. This funding positions us to expand our existing footprint as well as build and acquire the relevant systems, capabilities and product offerings to achieve our goal of becoming the leading plant-based product and packaging company in North America. Our expansion, while impressive, has been limited by availability of capital. This BDC Financing is a milestone in our corporate development and lays the foundation for major sales growth in the United States and Canada.”
In 2018, BDC’s Cleantech Practice announced a $700-million, five-year commitment to help high-potential Canadian cleantech companies with market-ready products meet the capital-intensive needs of scaling and achieving timely growth.
“Petroleum-based plastics continue to be a significant environmental concern with strong interest for an environmentally friendly alternative from governments, corporations and individuals,” said Susan Rohac, Vice President, Cleantech Practice at BDC. “good natured® is poised to be that alternative with its proprietary plant-based bioplastic products and packaging, along with commercially competitive pricing and performance compared to incumbent plastics.”
Terms of the BDC Financing
The Company may borrow from the BDC Financing the aggregate principal amount of up to USD$5,000,000, which has been approved by the holders of the Company’s existing unsecured convertible Debentures due February 2022 (the “Debentures”). The BDC Financing also contemplates up to two additional tranches for a combined USD$5,000,000 in acquisition financing. However, such tranches may only be advanced if the Debentures have been repaid, fully converted to equity, refinanced in accordance with the terms of the BDC Financing, amended to extend the maturity date thereof (which would be subject to a separate consent requirement of the debenture holders) or any combination thereof.
The terms and conditions of the BDC Financing are set forth in the Letter of Offer (the “LOO”) and related documents, copies of which have been posted to the Company’s SEDAR profile at: www.sedar.com.
$1,000,000 USD Operating Credit Line
Comerica Bank will remain as a Senior lender to the Company and will provide the Company with a $1 million USD operating line of credit with a variable interest rate of prime + 1% at the closing of the initial $5 million USD first tranche of the BDC Financing. BDC has entered into a Fifth Loan Extension Agreement (the “Extension”) with Comerica Bank, the current Senior Lender to the Company. In accordance with the provisions of this Extension and of the LOO. The proceeds will be used to repay an existing $325,000 CAD term loan with Comerica and for procurement of raw materials, production molds and increase in safety stock levels of inventories.
Amendment to Convertible Debentures Due 2022
Obtaining the BDC Financing required approval of the holders of the Debentures (the “Debenture Holders”) by extraordinary resolution pursuant to the Debenture terms.
As part of obtaining Debenture Holder consent, the Company agreed to amend the terms of the Debentures and, indirectly, the warrants that were issued as part of a unit with the Debentures in February 2018.
The Debenture Holders, by written resolution, have agreed with the Company as follows (such amendments subject to final approval of the TSX Venture Exchange): (a) that the first tranche (US$5mm) of the BDC Financing is approved; (b) in the event of any failure to pay amounts due, or other event of default under the BDC Financing (or any other senior debt facility), the interest payments on the Debentures will be temporarily suspended; (c) the price at which the Debentures can be forced to convert into common shares of the Company is increased to $0.25 from $0.15; and (d) each warrant certificate held by a Debenture Holder (to the extent not previously expired or exercised) will be deemed to have been amended, so that the number of common shares that are subject to purchase under the warrant certificate is increased by 122.22% (provided that, for greater certainty, the exercise price per common share will not decrease). By way of example, a warrant certificate which previously represented warrants to purchase 1,500 common shares of the Company will, as of and following the effectiveness of such amendment, represent warrants to purchase 3,333 common shares of the Company.
The TSX Venture Exchange has conditionally approved the amendment to the Debentures set forth above, however the transaction remains subject to final exchange approval.
About good natured Products Inc.
With over 100 plant-based food packaging applications, 10 grades of bioplastic rollstock sheets, 30 home & business organizational products and a world class team of scientists, business builders and retailers, good natured® is producing and distributing one of North America’s widest assortments of consumer products and packaging made from the highest possible percentage of renewable, plant-based materials and no BPAs, phthalates or other chemicals of concern.
Committed to doing what’s right for the planet and right for business, good natured® is creating better everyday products® that combine cutting-edge bioplastic technology and the latest sustainable design features that not only look good, but maximize shelf space, drive incremental sales, enhance logistics and boost environmental benefits, all bundled up in a fresh and friendly brand.
For more information: goodnatured.ca
BDC is the only bank devoted exclusively to entrepreneurs. It promotes Canadian entrepreneurship with a focus on small and medium-sized businesses. With its 123 business centres from coast to coast, BDC provides businesses in all industries with financing and advisory services. Its investment arm, BDC Capital, offers equity, venture capital and flexible growth and transition capital solutions. BDC is also the first financial institution in Canada to receive B Corp certification.
To find out more, visit bdc.ca
On behalf of the Company:
Paul Antoniadis – Executive Chair & CEO