Posted: Monday, March 30, 2020
UrtheCast Corp. (TSX:UR) ("UrtheCast" or the "Company"), a leading provider of information-rich products and services in the rapidly growing and evolving geospatial and geo-analytics markets, has rescheduled the reporting of its annual financial statements, management discussion and analysis and Annual Information Form in respect of the fiscal year ended December 31, 2019 (the "2019 Disclosure") beyond the previous expected date of March 30, 2020. UrtheCast now expects to release its 2019 Disclosure on or before May 14, 2020.
The logistics of the Company's financial statement preparation and audit processes have been impacted by government action in response to the COVID-19 pandemic, including severe restrictions on movement affecting our employees and operations in France and Spain. In rescheduling the 2019 Disclosure, the Company is relying upon the Canadian Securities Administrators' blanket relief, which, in light of COVID-19 and its impact on market participants, provides a 45-day extension for periodic filings normally required to be made by issuers on or before June 1, 2020. Similar relief has been provided by the Toronto Stock Exchange.
Until the 2019 Disclosure is filed, the Company's management and other insiders will remain subject to a trading blackout pursuant to the Company's Insider Trading Policy, a copy of which is available on our website. The Company will continue to issue press releases and material change reports as required by applicable securities laws and regulations, and, as required by the aforementioned blanket relief orders, will issue a further press release within 30 days to provide an update on the release of its 2019 Disclosure, any expected rescheduling of its Q1 2020 financial disclosure and other business developments.
Material Business Developments
Since the date of the Company's most recently disclosed interim financial statements for the period ending September 30, 2019, there have been the following material business developments:
CAD$1.4 Million SADI Reimbursement
In March 2020, the Company received reimbursement for CAD$1.4 million of eligible costs under its previously announced funding arrangement with the Government of Canada's Strategic Aerospace and Defense Initiative (SADI) Program. The payment was made pursuant to a waiver granted by SADI while the Company continues to seek an alternative credit facility, as required to comply with certain covenants under the SADI Program.
CAD$2.0 Million Financing
As announced on February 3, 2020, the Company completed a CAD$2.025 million financing with SMF Investments Limited, consisting of an unsecured convertible debenture of the Company which accrues interest at 17% per annum and has a maturity date of March 31, 2020. SMF Investments Limited was also issued 4,171,677 common share purchase warrants by the Company. Complete terms of this financing are described in the Company's Material Change Report dated February 10, 2020, available on our SEDAR profile.
Deferral of Second Instalment Payable to Land O'Lakes
As announced on February 3, 2020, the Company and Land O'Lakes agreed to defer the remaining US$4.25 million of the second purchase price instalment for the Geosys acquisition, which had been due February 14, 2020. With this deferral, US$0.75 million is to be paid on April 1, 2020 through a setoff of amounts owed by Land O'Lakes under its 13-year services agreement and US$3.5 million is to be paid by April 14, 2020.
Payment Deferral under €25.0 Million Sabadell Secured Term Loan
In March 2020, Banco de Sabadell, S.A., a lender to UrtheCast in connection with a secured term loan which is secured against the assets of the Deimos Imaging business, agreed to a further deferral to June 1, 2020 of principal repayments of €1.35 million and €4.0 million, respectively, which were previously due on January 31, 2020, in exchange for a partial principal payment of €0.15 million plus accrued interest. The extension will provide the Company with additional time to complete the proposed sale of the Deimos Imaging business.
Extension of Existing Loans
As announced on February 3, 2020, the lenders of the previously announced US$12.0 million one-year term loan entered into on January 14, 2019 extended the maturity date to April 14, 2020, and a fee of US$0.2 million is payable to the lenders. The Company is in constructive discussions with its lenders for extensions of the maturity dates under the Company's (i) US$1.5 million secured term loan entered into in June 2019, (ii) US$1.5 million secured term loan entered into in July 2019 and (iii) convertible debentures in the aggregate principal amount of CAD$6.6 million issued in September 2019.
As previously disclosed, the Company has received a number of indicative term sheets from institutional investors to finance the UrtheDaily satellite constellation project and has been actively working towards satisfying due diligence requirements and to negotiate final terms. The Company continues to make progress in this competitive process and remains focused on finalizing a binding commitment. With regards to the sale of its Deimos Imaging business, the Company continues to engage in due diligence activities with interested parties in order to secure a binding sale agreement.
While management remains confident in its strategy and is pleased with the progress of the above discussions, there can be no assurance that the Company will enter into binding agreements with respect to the financing of the UrtheDaily constellation or the sale of the Deimos Imaging business.
Impact of COVID-19
Like all businesses, the Company is navigating the rapidly changing operating and market dynamics caused by the COVID-19 pandemic and government efforts to mitigate its effects. The Company's highest priority is the health and safety of its employees, and we have taken all recommended steps to allow employees to work remotely while continuing to maintain our operations and serve our customers without interruption.
To date, other than with respect to the aforementioned financial reporting and audit process delays, we have not experienced any material disruption in our business operations as a result of COVID-19. As indicated above, we continue to execute and reach payment milestones under our government contracts and are working closely with our advisors to complete the UrtheDaily constellation financing and sale of the Deimos Imaging business. We are continuing to monitor the situation closely and are prepared to further adjust our operations in Spain, France, the U.S. or Canada as needed to ensure minimal disruption to our business. While we expect that the general market downturn occurring globally may have near-term impacts on new data and geo-analytics services sales and collection of receivables from customers, the Company's medium- and long-term outlook are strong and our strategy remains unchanged.
UrtheCast Corp. is a Vancouver-based company that serves the rapidly growing and evolving geospatial and geo-analytics markets with a wide range of information-rich products and services.
For more information, visit UrtheCast's website at www.urthecast.com.
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