Semcan Inc.
TSX VENTURE : STT

Semcan Inc.

April 15, 2011 09:49 ET

Semcan Inc. Announces Closing of the First Tranche of Financing for Gross Proceeds of $2,014,520 and Converts $3,743,363 of Debt to Equity

TORONTO, ONTARIO--(Marketwire - April 15, 2011) - Semcan Inc. (TSX VENTURE:STT) ("Semcan or the "Company") today announced that it has successfully closed the first tranche of the previously-announced financing.

On April 14, 2011, the Company closed the first tranche of the financing for gross proceeds of $2,014,520 through a private placement to accredited investors (collectively, the "Lenders") of a secured convertible loan (the "Loan").

David Deacon, CEO commented, "The closing of this first tranche of the financing plus the conversion of over $3.7 million of debt to equity represents a major step forward in rebuilding the Company's financial strength. The working capital it has provided will allow the Company to continue to execute the growing order backlog, and also invest in the resources needed to take the Company to its next stage of development."

The Loan interest rate is 10% per annum, paid quarterly in cash. The term is three (3) years, with the Company having the right to repay the Loan in cash after the first twelve (12) months of the term upon providing the Lenders with forty-five (45) days' written notice. Any such early repayment must apply to the full outstanding balance of the Loan. The early repayment privilege will be available to the Company only if the Company's common shares have traded at or above $0.25 per share for the twenty (20) business days prior to the date of the Company providing notice to the Lenders of its intent to repay the Loan. The Loan is convertible in full or in part at any time until maturity into units (the "Units"), at the option of the Lenders at a conversion price of $0.14 per Unit. Each Unit is comprised of one (1) common share and one-half (½) of a common share purchase warrant (each whole warrant, a "Warrant"). Each full warrant received on conversion will be exercisable to receive one (1) common share at a price of $0.14 per share, with the warrants expiring at the original maturity date of the Loan. The Loan is subject to TSXV approval.

Further to the Company's press release dated March 23, 2011, Semcan has converted $3,743,363 of debt into 7,506,976 common shares at a deemed price of $0.40 per share, 294,118 common shares at a deemed price of $0.34 per share. 1,859,943 common shares at a deemed price of $0.30 per share, 262,950 common shares at a deemed price of $0.20 per share and 214,286 common shares at a deemed price of $0.14 per share. The conversion of debt to common shares has been done in order to conserve cash and fund ongoing working capital needs.

In addition, lenders have agreed that the Company can defer the repayment of approximately $1,500,000 of other term debt until the Company's senior debt has been repaid.

The net proceeds from the first tranche of the Loan, net of filing fees, was approximately $2,000,000, of which $100,000 was used to repay existing debt. The balance will be used for working capital purposes. The effect of the Loan, conversion of existing debt to equity and the deferral of existing debt will improve the Company's working capital position by approximately $7,200,000. The securities issued pursuant to the Loan and debt conversion transactions are subject to a four-month hold period from the date of issuance.

About Semcan Inc.

Semcan is a supplier of industrial processes and environmental solutions with specific emphasis on water remediation and emission control systems to the North American markets.

Caution Regarding Forward-Looking Information and Non-GAAP Measures

Forward-Looking Information

This news release contains certain forward-looking statements. These statements relate to future events or future performance and reflect management's current expectations and assumptions regarding the growth, results of operations, performance, and business prospects and opportunities. Such forward-looking statements reflect management's current beliefs and expectations and are based on information currently available to management of Semcan. In particular, statements regarding the future operating results and economic performance are forward-looking statements. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements, including risks outlined under "Risk Factors" in our Annual Information Form, which is posted at www.sedar.com. In evaluating these statements, investors should specifically consider various factors, including such risks as Investment Risk; Business Valuations; Condition of Capital Markets; Dependence on Key Personnel; General Economic Factors; Interest Rate Risk; Competition; and Reliance on Key Suppliers. One or more of these "Risk Factors" could cause actual events or results to differ materially from any forward-looking statement. These factors should not be considered exhaustive. Although the forward-looking statements contained in this press release are based on what management of Semcan considers to be reasonable assumptions based on information currently available to them, there can be no assurance that actual events or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release, and none of Semcan nor its directors assume any obligation to update or revise them to reflect new events or circumstances. Undue reliance should not be placed on forward-looking statements.

Non-GAAP Measures

The term "backlog" is a financial measure used in this document which is not a standard measure under GAAP. Semcan's method of calculating backlog may differ from the methods used by other issuers. Therefore, Semcan's measure of backlog, as presented in this press release, may not be comparable to similar measures presented by other issuers.

Backlog is the value of revenue remaining to be earned from purchase orders received from customers. The projects represented in backlog are executed according to a schedule agreed with each customer which could range in duration from one month to eighteen months. Revenues are earned on a percentage of completion basis. Management uses this measure to i) monitor the Company's success in securing new orders, and ii) gauge the likelihood of meeting revenue objectives in future periods.

Investors are cautioned that backlog, as a non-GAAP measure, is not an alternative to measures under GAAP and should not, on its own, be construed as an indicator of performance or cash flows, a measure of liquidity or as a measure of actual return.

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

Contact Information

  • Semcan Inc.
    David Deacon
    CEO
    (905) 875-5577