MagIndustries (TSX: MAA), a Toronto-based company with potash assets in the Republic of Congo, announced today that it has entered into a letter of intent to complete a private placement worth up to C$185 million with investment firm TSC Capital.
Under the letter of intent, TSC Capital, if due diligence is satisfactory, will agree to buy 222.4 million units of MagIndustries at C$0.335 per unit.
Each unit consists of one MagIndustries common share and one warrant. The warrant, with an expiration date of one year after the units are issued, allows the holder to buy one MagIndustries common share for C$0.335.
As consideration for entering into the letter of intent, MagIndustries has agreed to issue to TSC Capital roughly 113.48 million warrants, which individually entitles TSC Capital to acquire one MagIndustries common share for C$0.32.
If TSC Capital subscribes to the units offering and additionally exercises all warrants, it would own 55% of MagIndustries, giving MagIndustries $185 million in gross proceeds.
MagIndustries said the proceeds will help the company finance the construction of its Mengo potash project, while also allowing it to retain its 90% interest in the property. The Congo government holds the remaining 10% of the Mengo project.
In addition, under the terms of the agreement, a C$2.6 million due diligence fee is payable to TSC Capital from MagIndustries.
The offering is subject to regulatory and shareholder approvals, expected in the first quarter of next year.