Transeastern Power Trust
TSX VENTURE : TEP.UN
TSX VENTURE : TEP.DB

Transeastern Power Trust

December 12, 2017 08:39 ET

Transeastern Power Trust Announces $40 Million Private Placement Offering, Debt Recapitalization and Proposed Change of Name to Blockchain Power Trust

TORONTO, ONTARIO--(Marketwired - Dec. 12, 2017) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Transeastern Power Trust ("Transeastern" or the "Trust") (TSX VENTURE:TEP.UN)(TSX VENTURE:TEP.DB) is pleased to announce that it has entered into an agreement with a syndicate of agents led by GMP Securities L.P. and Haywood Securities Inc. and including PI Financial Corporation and AltaCorp Capital Inc. (collectively, the "Agents") for a best efforts private placement offering of up to 83,333,333 units ("Units") of the Trust at a price of $0.48 per Unit (the "Issue Price") for aggregate gross proceeds of up to $40,000,000 (the "Offering").

Each Unit shall consist of one trust unit of the Trust (each a "Trust Unit") and one-half of one trust unit purchase warrant (each whole trust unit purchase warrant, a "Warrant"). Each Warrant will entitle the holder thereof to acquire one Trust Unit at an exercise price of $0.80 per Trust Unit for a period of twenty-four months from the closing date of the Offering (the "Closing"). The Warrants contain an acceleration provision pursuant to which the Trust has the option to force conversion at any time after the first four months following closing of the Offering if the weighted average daily trading price of the Trust Units on the TSX Venture Exchange (the "TSXV") is $1.50 or more for 10 consecutive trading days.

The Trust will grant the Agents an over-allotment option (the "Over-Allotment Option"), exercisable in whole or in part at any time up to 48 hours prior to close, to purchase such number of additional Units that is equal to 25% of the Units sold pursuant to the Offering. If the Offering is successfully completed, and the Over-Allotment Option is exercised in full, the aggregate gross proceeds of the Offering will be up to $50,000,000.

Upon Closing, the Trust will pay the Agents a cash fee equal to 7.0% of the aggregate gross proceeds of the Offering. As additional consideration for its services, the Agents shall be issued such number of non-transferrable compensation options (each a "Compensation Option") equal to 7.0% of the number of Units sold pursuant to the Offering (including pursuant to the Over-Allotment Option). Each Compensation Option will entitle the holder thereof to acquire one Unit at the Issue Price at any time prior to the date that is twenty-four months following the Closing.

The net proceeds of the Offering will be used to: (i) pay the remaining portion of the purchase price payable pursuant to the Trust's previously announced acquisition of OMV Petrom Wind Power SRL (the "OMV Wind Project"), which operates a 45 MW wind farm located in the Dobrogea Region of Romania as previously disclosed; and (ii) for general working capital purposes.

The Offering is expected to close in early January 2018, subject to certain conditions typical for a transaction of this nature. Concurrently with the Closing, the Trust anticipates it will change its name to "Blockchain Power Trust" (the "Name Change"). Completion of the Offering and the Name Change are subject to a number of conditions including receipt of all necessary regulatory approvals, including the approval of the TSXV.

Cryptocurrency Mining Data Center

Subsequent to the completion of the Offering and the acquisition of the OMV Wind Project, the Trust intends to establish a data center operation containing hardware (the "Mining Equipment") to mine the digital currency Bitcoin ("BTC") predominantly using electricity produced from the OMV Wind Project. The Trust has received a non-binding term sheet for EUR16,500,000 of project level debt financing from a European bank, which will be used indirectly to acquire the Mining Equipment. It is intended that the Trust will power the Mining Equipment primarily through the electricity generated from the OMV Wind Project. The Mining Equipment is expected to have an installed capacity of 10.05 MW base load and 90.7 PH/s processing power. The Trust has entered into a non-binding purchase order for the Mining Equipment and anticipates the Mining Equipment to be installed in phases and fully operational within six months of entering into the binding purchase order. The Trust currently anticipates the acquisition and installation of the Mining Equipment will cost approximately $23,000,000.

Appointment of Director

The Trust is pleased to announce the appointment of Savneet Singh as a new independent director of the board of Transeastern Power Administrator Inc. Mr. Singh in an entrepreneur and investor having co-founded Gold Bullion International LLC, the first digital platform that allows users to buy, store, and trade precious metals and backed several leading fintech platforms. He has been named to the Forbes Top 30 under 30 and Crain's Top 40 under 40. Mr. Singh received his B.S. in Applied Economics and Management from Cornell University. The appointment of Mr. Singh is subject to the approval of the TSXV.

Mr. J. Colter Eadie, Chief Executive Officer of Transeastern, commented: "We are very pleased to announce the private placement financing required to complete the acquisition of the OMV Wind Project, adding a further 45 MW of operating renewables to our existing portfolio of 38 MW of operating wind, hydro and solar projects. We are also very excited to unveil our new strategy of integrating cryptocurrency mining with the OMV Wind Project, which we believe will maximize the value of the low-cost, 100% renewable energy to be produced by the OMV Wind Project. Blockchain-based technologies and cryptocurrencies, in particular, are changing the global dynamic for energy consumption. We believe that the vertical integration of cryptocurrency mining with our renewable energy platform has the potential to become a large, efficient and environmentally sustainable mining operation."

Debt Recapitalization

The Trust is also pleased to announce that it has received the consent, by ordinary resolution, of the holders of its initial series (the "Series 1 Debentures") and its second series (the "Series 2 Debentures") of 7.5% unsecured convertible debentures maturing on May 28, 2019 (the "Maturity Date") to waive the existing events of default relating to accrued and past due interest payments.

In addition, the Trust has received the consent of the holders of its Series 1 Debentures, by extraordinary resolution, to amend the terms of the Series 1 Debentures pursuant to a fourth supplemental debenture indenture and the Trust has received the consent of the holders of its Series 2 Debentures, by extraordinary resolution, to amend the terms of the Series 2 Debentures pursuant to a fifth supplemental debenture indenture. Pursuant to the supplemental indentures, if the Trust completes equity financings prior to the Maturity Date which, in aggregate, equal not less than $1,000,000 (a "Qualified Equity Offering"), the Trust may redeem the Series 1 Debentures, Series 2 Debentures and all accrued and unpaid interest thereon in whole or in part and may elect to satisfy such amount by issuing Units at the Issue Price pursuant to the Qualified Equity Financing. The Trust anticipates that the Offering will constitute a Qualified Equity Offering. The aggregate principal amount plus the estimated accrued and unpaid interest for the Series 1 Debentures and Series 2 Debentures to be redeemed is approximately $34,500,000.

Pursuant to the terms of promissory notes issued in May 2017, the Trust anticipates satisfying the outstanding aggregate principal amount and accrued and unpaid interest thereon of approximately $3,780,000 through the issuance of Trust Units at the Issue Price. In addition, pursuant to the terms of promissory notes issued in December 2017, the Trust anticipates satisfying the outstanding aggregate principal amount and accrued and unpaid interest thereon of approximately $943,000 through the issuance of such number units of the Trust, with each unit being comprised of one Trust Unit and Trust Unit purchase warrants in such number and on such terms as permitted by the TSXV. Finally, the Trust also anticipates entering into agreements with certain creditors of the Trust to settle approximately $3,100,000 of debt owed to such creditors through the issuance of Trust Units at a price to be determined. The settlement of such debts is subject to certain conditions including the approval of the TSXV.

About Transeastern

The Trust, through its direct and indirect subsidiaries in Canada, the Netherlands and Romania, has been formed to acquire interests in renewable energy assets in Romania, other countries in Europe and abroad that can provide stable cash flow to the Trust and a suitable risk-adjusted return on investment. The Trust seeks to provide investors with long-term, stable distributions, while preserving the capital value of its investment portfolio through investment, principally in a range of operational assets, which generate electricity from renewable energy sources, with a particular focus on solar and hydro power. The Trust intends to qualify as a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act), provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). All material information about the Trust may be found under Transeastern's issuer profile at www.sedar.com.

Forward-Looking Statements

Statements in this press release contain forward-looking information. Such forward-looking information may be identified by words such as "anticipates", "plans", "proposes", "estimates", "intends", "expects", "believes", "may" and "will". The forward-looking statements are founded on the basis of expectations and assumptions made by the Trust. Details of the risk factors relating to Transeastern and its business are discussed under the heading "Risks and Uncertainties" in Transeastern's annual management's discussion & analysis dated May 3, 2017 and Annual Information Form for the year ended December 31, 2016, a copy of each is available on Transeastern's SEDAR profile at www.sedar.com. Most of these factors are outside the control of the Trust. Investors are cautioned not to put undue reliance on forward-looking information. These statements speak only as of the date of this press release. Except as otherwise required by applicable securities statutes or regulation, Transeastern expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.

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.

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