Distinct Infrastructure Group announces closing of private placement of convertible debentures and amended bank debt agreement

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TSXV: DUG │OTCQX: DSTFF

TORONTO, Sept. 12, 2018 /CNW/ - Distinct Infrastructure Group Inc. ("DIG" or the "Company") today announced the closing of a $10 million private placement offering (the "Offering") of unsecured subordinated convertible debenture units (the "Debenture Units"), and an amended banking agreement with the Royal Bank of Canada ("RBC") including revised pricing and financial covenants.

"This mezzanine financing is a very positive step forward for DIG. It provides additional financial flexibility to the Company, better positioning us to take advantage of the significant opportunities in our core markets and to continue building market share," said Joe Lanni, DIG's Co-Chief Executive Officer. "Proceeds are expected to be used for reduction of senior debt, working capital, acquisitions and for general corporate purposes."

Each Debenture Unit consists of $1,000 principal amount (the "Principal Amount") of unsecured subordinated convertible debt (the "Debentures") and 225 common share purchase warrants (the "Warrants"). Each Warrant entitles the holder to acquire one common share of the Company at an exercise price of $0.70 at any time up to September 12, 2020 (subject to adjustment in certain customary events). 

The Debentures will mature on September 12, 2020 (the "Maturity Date"), at which time any outstanding Principal Amount and any accrued and unpaid interest will be due. Subject to certain conditions, the Company may redeem all or any portion of the outstanding Debentures prior to the Maturity Date (the "Redemption Date"). The Debentures carry interest of 12.5% per annum for the first six months and 15% per annum thereafter until paid in full. Interest shall be calculated and accrue monthly in arrears and shall be paid on the earlier of the Redemption Date or Maturity Date. In addition, a commitment fee of 1% of the initial Principal Amount was paid at closing to subscribers of the Debenture Units.

The Debentures are convertible at the option of the holders into Common Shares at a price of $0.70 per Common Share, up to a maximum of $500 for each $1,000 of Principal Amount of Debentures.

If the Debentures are not redeemed by the Company on or before March 12, 2019, the Company will issue 50 additional Warrants for each $1,000 of Principal Amount of Debentures outstanding (the "Penalty Warrants"). Each Penalty Warrant entitles the holder to acquire one Common Share, for an exercise price equal to the 10 day Volume-Weighted Average Price on the date of issuance, at any time up to 18 months following the issuance date of the Penalty Warrants (subject to adjustment in certain customary events). The Offering is subject to TSX Venture Exchange ("TSXV") final acceptance of requisite regulatory filings.

AltaCorp Capital Inc. acted as sole Agent and exclusive financial advisor for the transaction.

The updated banking agreement revises the Company's Revolving Loan and Term Loan with RBC dated November 21, 2017. It includes a $35 million Senior Secured Revolving Facility (the "Revolver"), a $20 million Senior Secured Term Loan Facility (the "Term Loan") and a $10 million accordion option at RBC's discretion. The Revolver reverts back to $30 million by March 31, 2019. In addition, RBC has agreed to amend certain financial covenants for the quarters ending June 30, 2018, September 30, 2018, December 31 2018, and March 31, 2019.

The Revolver matures on May 26, 2020, and the Term Loan matures on May 26, 2022 (as per the November 21, 2017 agreement). The interest rate for the Revolver and Term Loan remain unchanged.

"This updated agreement illustrates the cooperative relationship we have with our lender as we work toward the common goal of continuing the Company's growth story and increasing shareholder value." said William Nurnberger, Interim Chief Financial Officer.

The securities subject to the Offering, including the securities underlying the Debenture Units, have not been and will not be registered under the U.S. Securities Act of 1933, as amended, (the "U.S. Securities Act") and may not be offered or sold in the United States absent registration under or an applicable exemption from the registration requirements of the U.S. Securities Act. This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities herein described, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

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

About Distinct Infrastructure Group:

Distinct Infrastructure Group Inc. is a 100% Canadian-owned and operated firm providing design, engineering, construction and maintenance services to telecommunication firms, utilities and governments. Our service offerings include the design, engineering and delivery of underground and aerial construction, as well as inventory management and technical services.

Our mission is to be responsive to the current and future needs of our clients by delivering safe, turnkey solutions that positively impact the communities in which we live and work. We work wherever our clients need us, from our bases in Toronto and Winnipeg.

Forward Looking Statements

This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "anticipated", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Inspiration is subject to significant risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements contained in this release. Inspiration cannot assure investors that actual results will be consistent with these forward looking statements and Inspiration assumes no obligation to update or revise the forward looking statements contained in this release to reflect actual events or new circumstances.

SOURCE Distinct Infrastructure Group Inc.

For further information: William Nurnberger, Interim Chief Financial Officer, Distinct Infrastructure Group, Email: [email protected]