The Company also announces that it intends to reduce the exercise price of an aggregate of 36,819,700 outstanding subordinate voting share purchase warrants of the Company (the “Warrants”). 14,794,700 Warrants were issued in connection with a bought deal that closed on March 26, 2021 (the “Bought Deal Warrants”), 16,025,000 Warrants were issued in connection with an offering of convertible debenture units that closed on November 11, 2021 (the “Debenture Warrants”), and 6,000,000 Warrants were issued in connection with private placement of units that closed on June 9, 2022 (the “Unit Warrants”).
The Company intends to reduce the exercise price of the Warrants to C$0.12 and amend the Warrants to include an acceleration provision (the “Amendments”). The Bought Deal Warrants have an original exercise price of C$0.82 and expire on March 26, 2026, and the Debenture Warrants have an original exercise price of C$0.95 and expire on November 11, 2026. The Unit Warrants expire on June 9, 2027, and have various exercise prices, as follows: 1,200,000 Unit Warrants have an original exercise price of C$0.56; 1,200,000 Unit Warrants have an original exercise price of C$0.79; 1,200,000 Unit Warrants have an original exercise price of C$1.04; 1,200,000 Unit Warrants have an original exercise price of C$1.29; and 1,200,000 Unit Warrants have an original exercise price of C$1.54. The expiry date of the Warrants will not be amended.
The Company believes that the repricing of the Warrants will increase the likelihood that the Warrants will be exercised, providing the Company with proceeds that can be used to acquire additional bitcoin, develop and/or purchase data centers, and/or for working capital and general corporate purposes. Additionally, the Company believes that these amendments to the Warrants, which are currently "out of the money" by a significant margin, present only potential upside to holders of Warrants at no additional cost to such holders. As of the date of this news release, no Warrants have been exercised and no insiders of the Company hold or control the Warrants.
The Warrants will also be amended to include a mandatory acceleration provision as required under the policies of the TSX Venture Exchange (the "TSXV"). The acceleration provisions will provide that, if for any 10 consecutive trading days (the "Premium Trading Days") following the effective date of the Amendments, the closing price of the Company's subordinate voting shares (the “Shares”) on the TSXV exceeds C$0.15, being 25% or more of the amended exercise price of the Warrants, the amended Warrants' expiry date will be accelerated such that holders will have 30 calendar days to exercise the Warrants (if they have not first expired in the normal course). The Company will announce any acceleration of the expiry date by press release and the 30-day period will commence seven days after the last Premium Trading Day. The terms of the Warrants will remain otherwise unchanged.
The Amendments are subject to approval by both the TSXV and the holders of Warrants. All of the holders of the Debenture Warrants and Unit Warrants must consent to the Amendments for their respective Warrants. The Bought Deal Warrants were issued under a warrant indenture dated March 26, 2021, and in accordance with the terms thereof, the Company must receive the consent of holders of Bought Deal Warrants representing 66 2/3% of the outstanding Bought Deal Warrants to enter into a supplemental warrant indenture to effect the Amendments with respect to the Bought Deal Warrants. The Company is seeking the written approval of the holders of the requisite number of Warrants for the Amendments. The Company intends to issue an updated news release upon receipt, if any, of the approval of the Amendments.
The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This news release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.
