Kadestone Capital Corp. Announces Private Placement of Convertible Notes and Warrants

Core Viewpoint - Kadestone Capital Corp. is initiating a non-brokered private placement of secured convertible notes and common share purchase warrants, aiming for gross proceeds of approximately $5.0 million, pending regulatory approvals [1]. Group 1: Private Placement Details - The private placement will involve secured convertible notes maturing in 36 months, with a 10% annual interest rate, compounded monthly [2]. - The principal amount of the convertible notes can be converted into common shares at a conversion price of $0.50 per share, subject to TSXV approval [2]. - Investors will receive warrants equal to the principal amount of convertible notes divided by the conversion price, allowing them to purchase common shares at $0.60 per share for 36 months [3]. Group 2: Automatic Conversion and Repayment - The convertible notes will automatically convert into common shares upon certain events, such as an equity financing yielding at least $25 million or a change of control transaction [4]. - In the case of a qualifying transaction, the conversion will occur at a 20% discount to the applicable price per security [4]. - The company can repay the principal and accrued interest of the convertible notes at any time without penalty [5]. Group 3: Insider Participation and Regulatory Compliance - Certain insiders of Kadestone are expected to subscribe for securities in the private placement, which will be treated as related party transactions [6]. - The company plans to rely on exemptions from formal valuation and minority shareholder approval requirements, as the insider participation will not exceed 25% of the company's market capitalization [6]. - The closing of the private placement is anticipated within 21 days of the announcement, without filing a material change report prior to closing [6]. Group 4: Securities Regulations - Securities issued in the private placement will be subject to a four-month statutory hold period in accordance with Canadian securities laws [7]. Group 5: Company Overview - Kadestone focuses on investment, acquisition, development, and management of residential and commercial income-producing properties, as well as procurement and sale of building materials in urban centers and emerging markets in Canada [8]. - The company operates five complementary business lines, aiming to become a leading vertically integrated property company [8].