Northstar Announces Acceleration and Closing of TAMKO's US$1.8 Million Convertible Debenture and Addition of Fourth Facility to U.S. Development Plan

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, BC and CALGARY, AB, May 28, 2024 /CNW/ - Northstar Clean Technologies Inc. (TSXV: ROOF) (OTCQB: ROOOF) ("Northstar" or the "Company") is pleased to announce the acceleration and closing of a non-brokered private placement of US$1.8 million (the "Private Placement") in three-year unsecured convertible debentures (each, a "Convertible Debenture") of the previously announced US$10.0 million arm's length strategic investment (the "Strategic Investment") from Allmine Paving LLC ("Allmine"), a party and subsidiary of TAMKO Building Products LLC ("TAMKO"). In addition, the Company is pleased to announce that Northstar and TAMKO (together, the "Parties") have extended the Memorandum of Understanding ("MOU") exclusivity period from three years to four years and added a fourth facility to the Northstar development plan in the United States ("US").

Strategic Investment Summary

As previously announced by the Company on July 31, 2023, TAMKO agreed to invest US$10.0 million as part of the Strategic Investment, composed of Phase 1 of US$6.4 million of preferred shares at C$0.29 per preferred share ("Phase 1"), and Phase 2 of US$3.6 million in two tranches of Convertible Debentures, each totaling US$1.8 million ("Phase 2").

• Phase 1: US$6.4 million (C$8.5 million) of Preferred Shares (closed on July 31, 2023)
• Phase 2: US$3.6 million of Convertible Debentures to be purchased in two tranches and conditional on the attainment of the milestone criteria agreed a part of the Company's Emissions Reductions Alberta ("ERA") contribution agreement as follows:
  • Tranche 1: US$1.8 million payable when the Company completes the ERA Milestone criteria for commissioning the Empower Calgary Facility ("Milestone 3");
  • Tranche 2: US$1.8 million payable when the Company completes the ERA Milestone criteria for operation of the Empower Calgary Facility ("Milestone 4").

As a result of the acceleration, Tranche 1 of US$1.8 million has now been completed following the Company's completion of ERA Milestone 1 (detailed engineering design) rather than Milestone 3 (Commissioning). Tranche 2, scheduled to be completed following the Company's completion of Milestone 4, remains unchanged.  

As part of the Strategic Investment, the Parties executed the MOU that included exclusivity for three years and an undertaking for Northstar to develop three facilities in the US from which TAMKO would offtake liquid asphalt and aggregate. As part of the acceleration, the Parties have revised the existing MOU to extend exclusivity to TAMKO by one additional year to four years and to include a fourth US facility, at the mutual option of both parties.

Mr. Aidan Mills, President & CEO and Director of Northstar, stated, "TAMKO's support as a lead order in our recent financing, the acceleration of the Phase 2 Strategic Investment from ERA Milestone 3 to ERA Milestone 1, the joint selection of the first US location, and the exclusivity extension and addition of a fourth US facility, demonstrates TAMKO's ongoing and unwavering support for Northstar. These steps are testament to TAMKO's confidence in our progress, our business, and the de-risking that has been achieved since July 2023 when we closed the Strategic Investment. We couldn't have asked for a better partner as we continue to strive towards our goal of creating a circular economy for discard and waste asphalt shingles."

Mr. Jeffrey Beyer, Vice President and Chief Operating Officer of TAMKO, and Director of Northstar, stated, "Northstar has made tremendous progress since July 2023, moving forward to achieve its milestones as the Company nears commercialization of its innovative technology. Our interest in the acceleration of this debenture was based on Northstar's delivery of ERA's Milestone 1, the completion of detailed engineering design for the Empower Calgary Facility, our mutual agreement on the first US plant location, and the extension of our own US market entry of a low carbon asphalt product through extended exclusivity and a fourth facility. All these elements give us confidence in Northstar's progress and their ability to continue deliver on the business plan, objectives, and milestones. We are excited about Northstar bringing the Empower Calgary Facility online in the near-term and are looking forward to working together with Northstar on its development plans for the United States in 2025 and beyond."

Acceleration of Phase 2 Securities

Initially, Phase 2 of the Strategic Investment contemplated Tranche 1 to be conditional upon the completion of the third of four milestones related to the government grant from ERA, previously announced by the Company on February 13, 2023 and July 31, 2023. However, TAMKO and the Company have agreed to accelerate Tranche 1 of Phase 2 of the Strategic Investment and today have closed the Tranche 1 Private Placement of US$1.8 million.

As part of the Strategic Investment, and subject to the completion of certain milestones by the Company that are tied to milestones set out in the ERA grant announced by the Company on February 13, 2023 and July 31, 2023, TAMKO agreed to purchase two separate tranches of US$1.8 million each, totaling US$3.6 million (the "Principal Amount") of unsecured convertible debentures with a three year term at 10% interest payable semi-annually in cash or payment-in-kind (subject to TSX Venture Exchange ("TSXV") rules) and convertible into units of the Company (the "Units") for no additional consideration at a conversion price equal to C$0.29 per Unit. Each Unit consisted of one Common share in the capital of the Company (a "Common Share") and one-half of one non-transferable Common Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant shall entitle the holder thereof to purchase one additional Common Share (each, a "Warrant Share") at a price of C$0.50 per Warrant Share with such Convertible Debentures containing customary blockers and anti-dilution provisions, until the maturity date, which is 36 months from the date of issuance. The Convertible Debenture issued in Tranche 1 will mature on May 27, 2027 (the "Maturity Date") and will bear interest at a rate of 10% per annum commencing on the date of issuance, with such interest being computed on the basis of a 360-day year composed of twelve 30-day months, and payable in cash semi-annually in arrears on the last day of June and December of each year, commencing on December 31, 2024. Any accrued but unpaid interest may be converted by the holder of the Convertible Debenture into Common Shares at a conversion price equal to the market price in effect on such conversion day (subject to TSXV rules).

In accordance with the terms of the Convertible Debenture, twelve (12) months following the issue date, the Company may provide the holder of the Convertible Debenture with notice of its intention to prepay all or a portion of the principal amount together with any accrued but unpaid interest. Within fifteen (15) days from receipt of such prepayment notice, the holder must elect to: (i) convert all of the prepayment amount into Units at a conversion price equal to C$0.29 per Unit; or (ii) accept the prepayment amount in cash as set out in the prepayment notice.

There are no finder's fees payable on TAMKO's participation in the Private Placement.

Use of Proceeds

The net proceeds received by the Company in connection with the Private Placement will be used for development of the Empower Calgary Facility, additional development for the facilities in the United States, working capital, and general corporate purposes.

The Private Placement remains subject to the final approval of the TSXV. All securities issued in connection with the Private Placement will be subject to a statutory four-month hold period in accordance with applicable securities legislation.

None of the securities sold in connection with the Private Placement will be registered under the United States Securities Act of 1933, as amended, and no such securities may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Northstar

Northstar Clean Technologies Inc. is a Canadian clean technology company focused on the sustainable recovery and reprocessing of asphalt shingles. Northstar has developed a proprietary design process for taking discarded asphalt shingles, otherwise destined for already over-crowded landfills, and extracting the liquid asphalt for use in new hot mix asphalt, shingle manufacturing and asphalt flat roof systems, and aggregate and fiber for use in construction products and other industrial applications. Focused on the circular economy, Northstar plans to reprocess used or defective asphalt shingle waste back into its three primary components for reuse/resale at its first commercial scale up facility in Calgary, Alberta. As an emerging innovator in sustainable processing, Northstar's mission is to be the leader in the recovery and reprocessing of asphalt shingles in North America, extracting the recovered components from asphalt shingles that would otherwise be sent to landfill.

For further information about Northstar, please visit www.northstarcleantech.com.

On Behalf of the Board of Directors,
Aidan Mills
President & CEO, Director

Cautionary Statement on Forward-Looking Information

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release. The TSXV has neither approved nor disapproved the contents of this press release.

This press release may contain forward‐looking information within the meaning of applicable securities legislation, which forward‐looking information reflects the Company's current expectations regarding future events. Forward-looking statements are often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions. Forward-looking statements in this press release include, but are not limited to, statements concerning: (i) final acceptance of the TSXV of the Private Placement; (ii) that Northstar is positioned well to continue its next steps in the development of its Empower Calgary facility; and (iii) the allocation of the use of net proceeds of the Private Placement as anticipated. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including risks related to factors beyond the control of the Company as well as those risks and uncertainties which are more fully described under the heading "Risk Factors" in the Company's annual information form for the year ended December 31, 2022 and in the Company's annual and quarterly management's discussion and analysis and other filings with the Canadian securities regulatory authorities under the Company's profile on SEDAR+. Further, the ongoing labour shortages, high energy costs, inflationary pressures, rising interest rates, the global financial climate and the conflict in Ukraine and surrounding regions are some additional factors that are affecting current economic conditions and increasing economic uncertainty, which may impact the Company's operating performance, financial position, and future prospects. Collectively, the potential impacts of this economic environment pose risks that are currently indescribable and immeasurable. Readers are cautioned that forward-looking statements are not guarantees of future performance or events and, accordingly, are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty of such statements. These forward-looking statements are made as of the date of this news release and, unless required by applicable law, the Company assumes no obligation to update these forward-looking statements.

SOURCE Northstar Clean Technologies Inc.

Northstar Investor Relations Inquiries: Kin Communications, Phone: [phone], Email: [email protected]