FS INVESTORS ANNOUNCES UPDATE OF EARLY WARNING REPORT REGARDING LEDDARTECH HOLDINGS INC.

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MONTREAL, Aug. 20, 2024 /CNW/ - FS LT Holdings L.P. and FS LT Holdings II L.P. (collectively, "FS Investors") announce that the early warning report filed by FS LT Holdings L.P. on January 3, 2024 with respect to its investment into LeddarTech Holdings Inc. ("LeddarTech") is being updated to reflect FS Investors' participation in a bridge financing offer ("Bridge Financing Offer") dated August 16, 2024 by FS Investors and two other lenders, as initial bridge lenders, which provides, among other things and subject to certain conditions, that the bridge lenders agree to make available to LeddarTech secured bridge loans in the aggregate principal amount of US$9,000,000 for the purpose of providing LeddarTech with the cash necessary to complete one or more follow-on offerings after August 16, 2024 (collectively, the "Follow On Offering"). 

Pursuant to the Bridge Financing Offer, FS Investors granted LeddarTech a bridge to equity term loan (the "FS Bridge Loan") in an aggregate amount of US$3,000,000, of which US$2,000,000 was advanced on August 19, 2024. The second advance of US$1,000,000 will be available on October 15, 2024 (or shortly thereafter) once LeddarTech satisfies the conditions precedent set forth in the Bridge Financing Offer.

The FS Bridge Loan is issued at an issue discount (the "FS Issue Discount") such that an amount representing 1/3 of any outstanding principal amount under the FS Bridge Loan is payable concurrently with any outstanding principal amounts due under the FS Bridge Loan. Accordingly, if the entire amount of the FS Bridge Loan is disbursed, then the total amount due and payable by LeddarTech to FS Investors shall be US$4,000,000. The FS Bridge Loan matures on November 15, 2024, and will be due and payable earlier upon the occurrence of certain other events, such as a change in control.

The Bridge Financing Offer provides that following the closing of a Follow On Offering for aggregate gross proceeds of US$35,000,000 or more, FS Investors shall be required to convert the FS Bridge Loan into the securities it would have received had FS Investors invested 1.125 times the amount of all outstanding principal amounts under the FS Bridge Loan and all other amounts owed to FS Investors under the Bridge Financing Offer (including the FS Issue Discount).  At this time, it is not possible to calculate the number of Common Shares that could be issuable to FS Investors pursuant to such a forced conversion of the FS Bridge Loan.

In addition, and notwithstanding the terms of the existing secured convertible notes in the aggregate principal amount of US$9,200,000 that were issued to FS Investors in 2023 (the "Convertible Notes"), FS Investors converted US$1,500,000 of its holding of the Convertible Notes into Common Shares at a conversion price of US$2.00, representing 750,000 Common Shares, the whole in accordance with the Bridge Financing Offer. The remaining principal amount of Convertible Notes held by FS Investors, namely US$7,700,000, continue to be convertible at the original conversion price of US$10.00 per share.

Finally, before conversion or repayment in full of the FS Bridge Loan in accordance with the Bridge Financing Offer, FS Investors may elect, in its sole discretion, to convert the FS Bridge Loan in full into such number of Common Shares equal to the quotient of (i) the outstanding principal amount under the FS Bridge Loan and all other amounts owed to it under the Bridge Financing Offer (including the FS Issue Discount), divided by (ii) US$5.00, representing the right for FS Investors to acquire an additional 800,000 Common Shares during such period (assuming the disbursement of the entire amount of the FS Bridge Loan (US$3,000,000) plus the FS Issue Discount (US$1,000,000)).

Immediately prior to the entering into of the Bridge Financing Offer, FS Investors held (i) 5,212,325 Common Shares, (ii) 1,303,330 Common Shares issuable upon conversion of certain non-voting special shares of LeddarTech, and (iii) Convertible Notes in the aggregate principal amount of US$9,200,000 (convertible into 920,000 Common Shares), which represent 17.7% of the 29,453,672 Common Shares issued and outstanding as at August 16, 2024, and 17.23% of the 35,585,997 Common Shares issued and outstanding on a partially diluted basis taking into account only those securities held by FS Investors that are capable of being converted into Common Shares within the next 60 days.

As a result of the Bridge Financing Offer, and assuming the disbursement of the entire amount of the FS Bridge Loan (US$2,000,000 advanced on August 19, 2024 and US$1,000,000 to be advanced in accordance with the terms and conditions of the Bridge Financing Offer) plus the FS Issue Discount (US$1,000,000), FS Investors will hold (i) 5,212,325 Common Shares, (ii) 1,303,330 Common Shares issuable upon conversion of certain non-voting special shares of LeddarTech, (iii) Convertible Notes in the aggregate principal amount of US$7,700,000 convertible into 770,000 Common Shares, and (v) the FS Bridge Loan in the principal amount of US$4,000,000 (convertible into 800,000 Common Shares), which represent 17.7% of the 29,453,672 Common Shares issued and outstanding as at August 16, 2024, and 18.72% of the 36,235,997 Common Shares issued and outstanding on a partially diluted basis taking into account only those securities held by FS Investors that are capable of being converted into Common Shares.

FS Investors will file an early warning report relating to the foregoing on SEDAR+ at www.sedarplus.ca under LeddarTech's profile.

SOURCE FS Investors

For further information or to obtain a copy of any of the early warning reports, please contact: FS Investors, 1250 Prospect St., Suite 200, La Jolla, CA 92037, Attention: Nick Stone, Email: [email protected]