EMERGE Announces 100% Debentureholder Approval of Amendments to Convertible Debentures, Provides Notice of Exercise of Redemption Right and Interest Conversion Right

/NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

TORONTO, April 29, 2024 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM) ("EMERGE", or the "Company"), a premium e-commerce brand portfolio, is pleased to announce that, further to its news releases dated March 22, 2024, and April 12, 2024, 100% of the holders (the "Debentureholders") of the 10% senior unsecured convertible debentures (the "Debentures") that were issued by the Company on November 24, 2022, pursuant to a debenture indenture (the "Original Indenture") dated November 24, 2022, between the Company and TSX Trust Company (the "Trustee"), represented in person or by proxy at a meeting of Holders, representing $2,103,000 in principal amount out of an aggregate total of $2,781,000 in principal amount of Debentures issued and outstanding, or approximately 75.6% of such principal amount, have approved an Extraordinary Resolution (as defined in the Original Indenture) approving the proposed amendment of certain terms of the Debentures (the "Amendment") and have authorized the Trustee to enter into a supplemental indenture (the "Supplemental Indenture") giving effect to the Amendment.

Ghassan Halazon, Founder and CEO of EMERGE commented, "We appreciate the strong vote of confidence and unwavering support displayed by our holders in agreeing to restructure the debentures in a manner that we believe is in the best long-term interest of all stakeholders. The approved amendment and the redemption, once completed in May, will effectively reduce our debt by $1.39 million, with approximately 50% of the debentures expected to convert to equity on the redemption date at the agreed $0.135 conversion price. The amendment, the redemption and the conversion of interest are also expected to save EMERGE approximately $140K in annualized interest expense during the extended term of the debentures, with the debentures now being due in November 2026, instead of November 2025. The debentures now have an adjusted conversion price of $0.135, in turn increasing the possibility of further debt reduction down the line."

An aggregate of 2,781 Debentures are issued and outstanding, each with a principal amount of $1,000. The original terms of the Debentures provided the Debentures would mature on November 24, 2025, the principal amount of the Debentures was convertible into common shares of the Company ("Common Shares") at a conversion price of $0.20 per Common Share (the "Original Conversion Price") and, upon the VWAP (as defined in the Original Indenture) for 10 consecutive trading days exceeding $0.50 per Common Share, the Company would have the option to force the conversion of the Debentures at the Original Conversion Price.

Pursuant to the Amendment, the Debentures will mature on November 24, 2026, the principal amount of the Debentures is convertible into Common Shares at a reduced conversion price of $0.135 per Common Share (the "Reduced Conversion Price") and, upon the VWAP (as defined in the Original Indenture) for 10 consecutive trading days exceeding $0.25 per Common Share, the Company will have the option to force the conversion of the Debentures at the Reduced Conversion Price. The Amendment also (a) provides the Company with a redemption right (the "Redemption Right") whereby the Company will have the option to redeem up to 50% (subject to rounding) of the aggregate principal amount of the Debentures (those Debentures redeemed pursuant to the Redemption Right are the "Redemption Debentures") and to pay the principal amount, less any taxes required to by law to be deducted, in cash or in Common Shares, at the Company's discretion, with any Common Shares to be issued at the New Conversion Price; (b) provides the Company with a right (the "Interest Conversion Right") to settle accrued but unpaid interest, less any taxes required to by law to be deducted (the "Interest"), on the Redemption Debentures, up to but excluding the date of redemption, in cash or in Common Shares, at the Company's discretion, with any Common Shares to be issued at a price per share (the "Settlement Price") equal to the greater of the Reduced Conversion Price and the lowest price permitted by the TSX Venture Exchange (the "TSXV") pursuant to TSXV Policy 4.3 – Shares for Debt (the issuance of Common Shares to settle such interest amounts is a "Shares for Debt Settlement"); and (c) provides that, upon notice of the exercise of the Redemption Right being given, the failure for 30 days to pay interest on the Redemption Debentures when due will not be considered an Event of Default.  

All other terms of the Debentures will remain the same.

The TSXV has conditionally approved the Amendment and the Company and the Trustee have executed the Supplemental Indenture with effect as of April 29, 2024.

In accordance with the Original Indenture, as amended by the Supplemental Indenture (together, the "Indenture"), the Company hereby provides notice to the Debentureholders of its decision to exercise the Redemption Right and to redeem 50% of the aggregate principal amount of the 2,781 Debentures currently outstanding, subject to rounding, in accordance with the Indenture. As a result of this rounding, an aggregate of $1,391,000 of principal amount (the "Redemption Amount") will be redeemed on a pro rata basis. The Company has elected to settle the Redemption Amount by the issuance of 10,303,703 Common Shares, which shares will be issued at the Reduced Conversion Price.

The date fixed for the redemption is May 6, 2024 (the "Redemption Date").

Completion of the redemption remains subject to final TSXV approval of the Amendment. In the event final TSXV approval of the Amendment is not received on or before the second Business Day (as defined in the Indenture) preceding the Redemption Date, then the redemption will not proceed.

An aggregate of $48,685 (the "Interest Amount") in unpaid interest is expected to have accrued on the Redemption Amount as of the Redemption Date, calculated in accordance with the Indenture. Interest on the principal amount of the redeemed Debentures will be payable on the Redemption Date and interest on the redeemed Debentures will cease to accrue on and after the Redemption Date.

In accordance with the Indenture, the Company hereby also provides notice to the Debentureholders of its decision to exercise the Interest Conversion Right, and to settle the Interest Amount by the issuance of 360,629 Common Shares, which shares will be issued at the Reduced Conversion Price. This settlement will be a Shares for Debt Settlement and it remains subject to TSXV approval. In the event that conditional TSXV approval of the Shares for Debt Settlement is not received on or before the second Business Day preceding the Redemption Date, then the Interest Amount will be paid in cash on the Redemption Date.

Based on the register of Debentures maintained by the Trustee, all of the Debentures are registered in the name of CDS & CO, the registration name for The Canadian Depository for Securities Limited ("CDS"). As such, CDS is the sole registered Debentureholder and the redemption will take place in such manner as may be agreed upon by CDS, the Company and the Trustee.

None of the securities issuable in connection with the Amendment, the Company's exercise of the Redemption Right, the Company's exercise of the Interest Conversion Right or otherwise pursuant to the Indenture will be registered under the United States Securities Act of 1933, as amended, or state securities laws and none may be offered or sold in the United States, except under circumstances that do not require registration under the U.S. Securities Act or any applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About EMERGE

EMERGE is a premium e-commerce brand portfolio in Canada and the U.S. Our subscription and marketplace e-commerce properties provide our members with access to unique offerings across grocery and golf verticals. Our grocery businesses include truLOCAL.ca, our premium meat subscription brand, and Carnivore Club, our artisanal meat brand. Our golf businesses include UnderPar, our discounted experiences business, and JustGolfStuff, our golf products & apparel brand.

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Cautionary notice

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Notice regarding forward-looking statements

This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including, without limitation, statements related to the anticipated benefits of the Amendment, the redemption and the conversion of interest to the Company and to the Company's stakeholders, the possibility of further debt reduction, the Company receiving final approval of the Amendment from the TSXV on or before the second Business Day preceding the Redemption Date, the Company receiving conditional approval of the Shares for Debt Settlement from the TSXV on or before the second Business Day preceding the Redemption Date, the completion of the redemption and the completion of the Shares for Debt Settlement, the issuance of common shares in settlement of the Redemption Amount, the issuance of common shares in settlement of the Interest Amount or the settlement of such amount in cash, as applicable, and the agreement of the Company, CDS and the Trustee as to the manner of the redemption, as well as other statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The forward-looking information contained herein is based on the assumptions of management of the Company as of the date hereof including, without limitation, assumptions with respect to the financial position and working capital of the Company, macro-economic factors including interest rate changes, and the conditions of the financial markets and the e-commerce markets generally, among others. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including risks that the anticipated benefits of the Amendment, the redemption and the conversion of interest to the Company and the Company's stakeholders, including the possibility of further debt reduction, will not be realized, that the TSXV will not provide final approval of the Amendment and/or conditional approval of the Shares for Debt Settlement, in each case, on or before the second Business Day preceding the Redemption Date, that the redemption may not be completed as contemplated or at all, and that the Company, CDS and the Trustee may not agree as to the manner of the redemption,  changes to general economic factors, as well as the risk factors discussed in the Company's MD&A, and other public disclosure filings which are available through SEDAR+ at www.sedarplus.ca. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

On Behalf of the Board
Ghassan Halazon
Director, President, and CEO

SOURCE EMERGE Commerce Ltd.

Kyle Burt-Gerrans, EMERGE Commerce Ltd., 416-479-9590, [email protected]