Hillcrest Announces Convertible Debenture Financing

Hillcrest Energy Technologies Ltd. (CSE: HEAT) (OTCQB: HLRTF) (FSE: 7HI), a leader in high-performance power conversion technologies, has announced a convertible debenture financing to support its ongoing growth and expansion. The company has received loan commitments for gross proceeds of up to $900,000, with the loans maturing on the earlier of the sale of certain assets, the date of conversion, or two years from the date of issuance.

The convertible debentures will bear interest at a rate of 15% per annum, payable quarterly, and will be secured by a security agreement pertaining to the assets in favor of the lenders. The loans can be converted into common shares of the Company at a price equal to the market price of the shares for the first 12 months and the greater of the market price and $0.10 per share thereafter.

Proceeds from the loan financing will be used for project costs related to the assets and wells in the Saskatchewan Joint Venture that was previously announced. The Company will update its shareholders as expansion plans of the field materialize.

The convertible debenture financing option offers several advantages for Hillcrest, including lower interest rates compared to traditional debt instruments and the potential for conversion into equity at a later date. This provides investors with the opportunity for capital appreciation if Hillcrest's stock price increases. However, it is essential for Hillcrest to manage its cash flow effectively to ensure it can service the interest payments on the debentures.

Insiders of the Company will participate in the loan financing, which will constitute a "related party transaction" under Multilateral Instrument 61-101. However, the issuance to insiders is exempt from the formal valuation and minority shareholder approval requirements as the consideration paid by such insiders did not exceed 25% of the Company’s market capitalization.

Hillcrest's convertible debenture financing option allows the company to raise capital while offering investors the opportunity for capital appreciation. However, it is crucial for Hillcrest to manage its cash flow effectively and ensure that the conversion feature does not introduce excessive volatility to its stock price. By doing so, Hillcrest can continue to grow and expand its business while providing value to its shareholders.