VANCOUVER, March 30, 2020 /CNW/ - 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.
Forward Looking Information
This release contains certain information which, as presented, constitutes "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking information involves statements that relate to future events and often addresses expected future business and financial performance, containing words such as "anticipate", "plan", and "expect", statements that an action or event "may" or "will" be taken or occur, or other similar expressions and includes, but is not limited to, statements relating to: UrtheCast's expectations with respect to raising capital and continuing as a going concern; expectations regarding UrtheCast's ability to meet its obligations and satisfy its liabilities under its existing indebtedness and to negotiate any necessary extensions to its existing loans or further compliance waivers under funding agreements, such as the SADI funding program; expectations regarding discussions of, and the proposed and/or planned sale of all or substantially all of Deimos Imaging and its related business and the negotiations with interested parties in respect thereof; expectations with respect to its ability to enter into a financing arrangement for the build, launch and commissioning of the proposed UrtheDaily satellite constellation, and to otherwise raise proceeds from a debt or equity offering, achieve the required leverage and contracted value ratios and satisfy the conditions of its indebtedness and business needs generally, and the status and timing of any discussions in respect thereof; UrtheCast's ability to complete the second closing of the acquisition of Geosys; expectations regarding the performance of key subcontractors and the completion of certain customer contracts or achievement of payment milestones under the Company's contracts; expectations regarding its plans, and the timing thereof, to build, launch and operate the UrtheDaily Constellation; and expectations regarding the impact of COVID-19 on the Company, it operations, sales and global markets generally.
Such statements reflect UrtheCast's current views with respect to future events, and are necessarily based upon estimates and assumptions that, while considered reasonable by UrtheCast as at the date of this press release, are inherently subject to significant uncertainties and contingencies. Many factors could cause UrtheCast's actual results or performance to be materially different from expectations that may be expressed or implied by such forward-looking statements, including, among others: the Company's ability, or inability, to rectify its current cash constraints and to continue as a going concern; the Company's ability to enter into a financing arrangement for the UrtheDaily constellation, and any delays or failures in the design, development, construction, launch and operational commissioning of the such constellation; the Company's ability to comply with debt and repayment obligations and avoid the exercise of lenders' rights, including with respect to seizing secured assets; unexpected increases in fixed or variable costs; lower than expected revenues from Geosys or the Company's other products and services; the loss of key personnel; unexpected delays in operations caused by key subcontractors; a worsening crisis caused by COVID-19, such as the mandatory closure of businesses, a disruption in credit markets, declines in sales orders, insolvency of customers or subcontractors, riots, geopolitical tensions, trade restrictions or other adverse and unknown outcomes from this unprecedented situation; the Company's ability to fund its future operations, which is contingent on its efforts to raise additional financing and/or sell certain assets of the Company; legal claims made by lenders, shareholders or suppliers of the Company in connection with its operations and/or performance; the Company's ability to successfully complete a sale of, or other transaction that would monetize, Deimos Imaging on commercially reasonable terms, or at all, or a significant further delay in the sale process; UrtheCast's ability to fund the remaining installments for the purchase price of the Geosys transaction or otherwise successfully complete the final closing of the Geosys acquisition; loss, reduction in scope, termination, failure to satisfy conditions precedent or decline in general of the Company's agreements or relationships with its key partners, including Land O' Lakes, Inc. and purchasers of advance data purchase subscription agreements for the data expected to be provided by the UrtheDaily constellation; risks related to the government funding received by UrtheCast and risks arising from breach or default of obligations under the related agreements with certain government agencies; delays or disputes with customers regarding the payment milestones under the Company's data imagery, engineering services or value-added services contracts, which often include complex criteria and/or performance by third parties to successfully complete the contract and obtain payment; legal and regulatory changes, or the Company's failure to comply with listing requirements and other rules of the TSX and/or regulations of applicable securities authorities in Canada; and; as well as those factors and assumptions discussed in UrtheCast's Annual Information Form dated March 29, 2019 and Management's Discussion & Analysis for the three and nine months ended September 30, 2019, both of which are available under UrtheCast's SEDAR profile at www.sedar.com. UrtheCast cautions readers that such factors and uncertainties are not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual results, performance or achievements may vary significantly from those expected. There can be no assurance that the actual strategies, results, performance, events or activities anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company.
UrtheCast undertakes no obligation to update forward-looking statements except as required by Canadian securities laws. Readers are cautioned against attributing undue certainty to forward-looking statements.
SOURCE UrtheCast Corp.
Renseignements: Sai Chu, Chief Financial Officer, +1 (604) 669-1788