Medical technology firm Zecotek Photonics has entered into agreements to settle an aggregate of $2,958,019 of debt owed to creditors, including directors, employees and third-party consultants, in consideration for the issuance of common shares of the company. In a statement company informed that the creditors have agreed to a payout discount of up to 40 percent of total debt and will be issued 5,752,653 common shares of the company at a deemed price of $0.32 per share.
A total of $1,033,880 of the debt is held by current insiders of the company and includes management fees and director fees. Insiders will receive a total of 1,938,526 common shares on completion of the debt settlement. The disinterested directors of the company have approved the debt settlements with the respective insiders and their associates and affiliates, said Zecotek.
“This loyal group has full confidence in the Company’s success and have discounted their unpaid wages and fees by up to 40%, which will be paid out in shares in the Company. This shows trust, belief and true commitment in the Company’s future. We start the new year with a substantially improved balance sheet and a business plan to increase value for shareholders,” said Dr. A.F. Zerrouk, Chairman, President, and CEO of Zecotek Photonics Inc.
The debt settlement is subject to TSX Venture Exchange (TSXV) approval. Closing of the debt settlement will occur immediately following approval from TSXV. The insider debt settlements are exempt from the valuation and minority shareholder approval requirements of Multilateral Instrument 61-101 by virtue of the exemptions contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in that the fair market value of the consideration for the securities of the company to be issued to insiders does not exceed 25% of its market capitalization.
Zecotek also informed that for the first time in 4 years it has granted 15,200,000 incentive stock options to directors, employees and consultants for their contributions to the company. This is the first option grant since May 2014. The exercise price of the options is set at $0.36, a 25% premium to today’s closing price, and will expire in five years. The options will vest on the basis of 25% immediately, 25% 6 months after the date of grant, 25% 9 months after the date of grant, and the remaining 25% vesting 12 months following the date of grant.
The stock options are subject to regulatory approval.