TSX Venture Exchange: "WUF.V"
VERNON, BC, June 13, 2012 /CNW/ - Darford International Inc. ("Darford" or the "Company") provides the following corporate update.
Private Placement of Convertible Notes
On December 23, 2011, Darford closed a previously announced private placement (the "Private Placement") of convertible notes ("Notes") in the aggregate principal amount of $1,020,000 with Southern Interior Innovation (VCC) Inc. ("SIIF") (refer to press releases dated January 30, 2012, December 23, 2011, December 16, 2011, and September 29, 2011). 50% of the subscription proceeds from the Private Placement were deposited in escrow pursuant to an escrow agreement dated December 22, 2011 between Darford, SIIF and a third party escrow agent (the "Escrow Agreement"). Pursuant to the terms of the Escrow Agreement the escrowed funds were to be released to Darford subject to the Company meeting certain conditions. The Company advises that the escrow release conditions were not satisfied within the time period set forth in the Escrow Agreement and $500,000 together with interest was returned to SIIF. The outstanding principle amount of the remaining Notes is $500,000.
HSBC Credit Facility
HSBC Bank Canada has advised the Company that it is currently in breach of certain financial covenants under its credit facilities with HSBC consisting of a $1,200,000 operating line of credit, a $469,165 non-revolving demand loan, a $504,000 demand revolving loan and a $1,500,000 revolving demand loan facility (collectively, the "Facility"). The Facility is secured by, among other things, a general security agreement over all of the personal property of Darford. As at May 31, 2012, the Company had $1,940,122 drawn under the Facility. The breach puts the Company at risk of having the entire Facility being demanded by HSBC. On May 29, 2012, the Company entered into a forbearance agreement with HSBC pursuant to which HSBC agreed to continue to make the Facility available to Darford and not enforce the security against the Facility until July 31, 2012, or such later date as may be agreed to by HSBC.
Darford markets and manufactures treats and food for dogs under its own Darford® brand name in Canada and in the United States. Darford also contract manufactures products for well known North American brands.
Neither the TSX Venture Exchange nor its Regulation Service provided (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.
For further information:
Chief Financial Officer
Darford International Inc.