CoTec Holdings Corp. has completed an initial closing of its non-brokered private placement, issuing unsecured convertible debentures with an aggregate principal amount of $12,059,000.

The debentures carry a 12.5% annual interest rate, payable semi-annually in arrears, with the first payment scheduled for February 28, 2027. Maturing on September 10, 2031, the instruments are convertible into common shares at the holder's option. Accrued interest is payable strictly in cash.

Net proceeds will fund equipment purchases for the HyProMag USA permanent magnet recycling joint venture, alongside working capital and general corporate purposes. CoTec holds a 60.3% interest in the venture, which occupies an approximately 125,000-square-foot Texas Hub facility in Denton County, Texas. HyProMag USA targets commercial production there in the second half of 2027.

The company expects to complete an additional closing subject to necessary approvals, including TSX Venture Exchange clearance. Kings Chapel International Ltd. has agreed to purchase up to $5 million in debentures at the additional closing if CoTec does not secure third-party subscriptions for those backstopped funds.

Subject to regulatory approvals, Kings Chapel will receive a 2% cash finder fee on gross proceeds from third-party subscriptions regarding the backstopped debentures. Kings Chapel is an existing insider and control person. Julian Treger, CoTec's CEO and a director, is a beneficiary of a family trust associated with Kings Chapel.

For the initial closing, CoTec paid cash fees and compensation warrants to certain finders: $275,000 and 157,143 warrants to FM Global Markets Inc., $217,990 and 129,023 warrants to Integrity Capital Group Inc., $7,800 to Kernaghan & Partners Ltd., and $27,100 and 15,486 warrants to Richmond Partners GmbH. Certain insiders also participated, making it a related-party transaction. CoTec is relying on exemptions from formal valuation and minority shareholder approval requirements based on market capitalization thresholds. All securities issued are subject to a statutory four-month-and-a-day hold period under Canadian securities legislation.

Read the full announcement: CoTec Holdings Corp. Announces Initial Closing of Private Placement of Unsecured Convertible Debentures