CVW CleanTech Announces Maiden Royalty Investment into Northstar Clean Technologies and $15 million Brokered Private Placement
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES
August 7, 2024
CVW CleanTech Announces Maiden Royalty Investment into Northstar Clean
Technologies and $15 million Brokered Private Placement
CALGARY, AB – CVW CleanTech (TSXV: CVW) (OTCQX: CVWFF) (“CVW CleanTech” or the
“Company”) announced today that effective today it is entering into a royalty investment with Northstar
Clean Technologies Inc. (TSXV: ROOF) (OTCQB: ROOOF) (“Northstar”) pursuant to which the
Company has agreed to purchase a five-year $14 million second secured 10% convertible debenture of
Northstar (the “Convertible Debenture”), which will be convertible into a revenue royalty on Northstar’s
next two asphalt shingle reprocessing facilities (the “Transaction”). Upon conversion of the Convertible
Debenture, and pursuant to the terms of the royalty agreement, CVW CleanTech is entitled to receive
recurring royalty payments based on revenues at Northstar’s next two facilities, which will be no less than
12% of such revenues. In connection with the Transaction, CVW CleanTech has made an initial payment
to Northstar in the amount of $1.5 million. The Transaction is expected to close on or around September
30, 2024.
CVW CleanTech also announces that it has entered into an agreement with Canaccord Genuity Corp.
and Eight Capital to act as co-lead agents and joint bookrunners, on behalf of a syndicate of agents (the
“Agents”), which also includes Ventum Financial Corporation, in connection with a “commercially
reasonable efforts” private placement offering (the “Offering”), consisting of up to 16,666,667 common
shares (each, a “Common Share”) at an issue price of $0.90 per Common Share (the “Offering Price”)
for total gross proceeds of up to $15 million. CVW CleanTech has also granted the Agents an option,
exercisable in whole or in part, prior to the closing of the Offering, to sell up to an additional 15% of the
Common Shares offered under the Offering (“Agents' Option”). Proceeds from the Offering will fund the
Transaction and associated costs. The Offering is expected to close on September 5, 2024.
Directors and Special Advisor to the Company Pierre Lassonde are supportive of the Transaction. The
Offering is anchored by Mr. Lassonde who intends to personally invest $1,000,000 bringing his ownership
in the Company to approximately 8% of the Company. Certain directors of the Company have committed
an additional $1,750,000 to the Offering. The Offering is supported by a robust president’s list including
Pierre Lassonde, Darren Morcombe, other board members and management as well as a Canadian long
only fund totaling approximately $9,000,000.
“At CVW CleanTech, our vision is to accelerate clean technologies that sustainably recover valuable
commodities, helping drive the world’s move to net zero,” said Darren Morcombe, Chairman of the Board
at CVW CleanTech. “We see a significant market opportunity for CVW CleanTech to partner with clean
technology operators and provide strategic financing via royalty structures to create a leading, diversified
royalty platform in a sector with strong macroeconomic tailwinds alongside the immense value we expect
to create through the commercialization of our own Creating Value from Waste™ technology.”
“We are delighted to announce our maiden royalty transaction, and are very pleased to have Northstar
Clean Technologies as our first royalty partner. As we diversify our company into a clean tech royalty
platform, it presents a transformative opportunity to create shareholder value and accelerate growth,” said
Akshay Dubey, CEO of CVW CleanTech. “This first royalty transaction clearly illustrates the significant
opportunity to provide our shareholders with positive commodity-linked returns by investing alongside
clean technology companies supporting the decarbonized and circular economy while generating strong
returns and accelerating cash flow generation.”
Northstar has developed a patented, proprietary process to recover liquid asphalt (effectively bitumen),
aggregate, and fiber from end-of-life and waste asphalt shingles, which would otherwise be destined for
landfills. Northstar’s unique revenue model includes receiving tipping fees from the collection of asphalt
shingles as feedstock supply, alongside sales of liquid asphalt, aggregate and fiber. Northstar’s
proprietary clean technology has been significantly de-risked by the advancement of its pilot plant in
Delta, British Columbia. Northstar is currently constructing a commercial asphalt shingle reprocessing
facility in Calgary, Alberta which is expected to commence commissioning by the end of 2024. Northstar
has significant expansion plans across Canada and the United States.
Akshay Dubey continued “At the same time, we continue to enthusiastically pursue the commercial
deployment of our proprietary Creating Value From Waste™ (“CVW™”) technology. The CVW™
technology is a Tier 1 opportunity advanced to the precipice of commercialization, potentially offering
tremendous value to our investors with the ability to generate consistent long-term cash flow streams. We
believe diversifying into other clean technologies will strengthen our financial position as we pursue the
commercial deployment of our proprietary technology.”
According to Aidan Mills, President and CEO of Northstar, “The proposed Transaction with CVW
CleanTech will be transformational for Northstar. Firstly, the closing of the $14 million in funding will
rapidly accelerate the development of our next two facilities and reduce Northstar’s requirement for near
term equity capital raising to fund our growth. Secondly, the Transaction will add considerable financing
optionality to the Northstar development program, offering Northstar the option, but not the obligation, to
work with CVW CleanTech to add royalty financing to future facilities. Finally, the Transaction will add a
reputable and sophisticated long-term partner in CVW CleanTech who has both technical expertise and
support from the highly successful entrepreneurs that make up its leadership team.”
In connection with the announcement of its first royalty transaction, CVW CleanTech has updated its
website and investor presentation. Investors are encouraged to view the Company’s updated materials
which can be found at www.cvwcleantech.com.
Terms of the Transaction
Upon announcement of the Transaction, CVW CleanTech has purchased from Northstar an initial five-
year unsecured convertible debenture (the “Initial Convertible Debenture”) in the amount of $1.5 million.
Subject to closing of the Transaction, the Initial Convertible Debenture will be replaced by the larger $14
million Convertible Debenture. The closing of the Transaction is conditional on, among other things, the
Company raising not less than $12.5 million in net proceeds under the Offering.
The Convertible Debenture is second lien secured with protections afforded via an intercreditor
agreement and a security interest in Northstar's present and after-acquired property. The Convertible
Debenture carries a 10% annual coupon rate, with semi-annual interest payments, and a five year term to
maturity. Northstar has the option to capitalize the coupon payments for the first three years from the
closing of the Transaction.
The royalty percentage will be determined at the conversion date based on the principal amount of
Convertible Debenture outstanding at the time, and therefore will increase proportionally with the amount
of interest capitalized by Northstar prior to conversion. The Convertible Debenture will automatically
convert in two tranches into royalties once either of the next two facilities of Northstar reach agreed-upon
volume and revenue thresholds. Upon conversion of the Convertible Debenture, CVW CleanTech will
receive a royalty of no less than 12% on the revenue of each of Northstar’s next two commercial facilities.
In the event that Northstar does not reach agreed-upon volume and revenue thresholds within three years
from the closing date of the Transaction for their next two operating facilities, CVW CleanTech may, at its
sole discretion, convert half the Convertible Debenture into a royalty on Northstar’s Calgary, Alberta
facility. Royalty payments to CVW CleanTech are subject to a fixed charge coverage ratio test on the
given facility, and any unpaid amounts would accrue for future payment.
The Offering is subject to the receipt of all necessary regulatory approvals including the final approval of
the TSX Venture Exchange. All Common Shares issued in connection with the Offering will be subject to
a statutory hold period expiring four months and one day following the closing date of the Offering.
Certain subscribers under the Offering are considered to be a "related party" of the Company. Each
subscription by a "related party" of the Company is considered to be a "related party transaction" for
purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). Pursuant to MI 61-101, the Company will file a material change report
providing disclosure in relation to each "related party transaction" on SEDAR+ under the Company's
profile at www.sedar.com. The Company is relying on exemptions from the formal valuation and minority
shareholder approval requirements available under MI 61-101. The Company is exempt from the formal
valuation requirement in section 5.4 of MI 61-101 in reliance on sections 5.5(a) and (b) of MI 61-101 as
the fair market value of the transaction, insofar as it involves interested parties, is not more than the 25%
of the Company's market capitalization, and no securities of the Company are listed or quoted for trading
on prescribed stock exchanges or stock markets. Additionally, the Company is exempt from minority
shareholder approval requirement in section 5.6 of MI 61-101 in reliance on section 5.7(a) as the fair
market value of the transaction, insofar as it involves interested parties, is not more than the 25% of the
Company's market capitalization. The Offering was approved by the board of directors of the Company.
The Common Shares being offered pursuant to the Offering have not been, nor will they be, registered
under the U.S. Securities Act and may not be offered or sold in the United States or to, or for the account
or benefit of, U.S. persons absent registration or an applicable exemption from the registration
requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of the Common Shares in any state in which such offer, solicitation or sale would
be unlawful. “United States” and “U.S. person” are as defined in Regulation S under the U.S. Securities
Act.
–ENDS–
About CVW CleanTech
CVW CleanTech‘s vision is to invest in innovative technologies which provide returns linked to
commodities and which operate in a sustainable manner that helps accelerate the world’s transition to net
zero. CVW CleanTech is in the process of building a portfolio of royalty-based cash flow streams by
partnering with clean technology innovators in the commodity space. CVW CleanTech is the 100% owner
of its proprietary technology, Creating Value from Waste™ (“CVW™”), which is designed to recover
bitumen, solvents, critical minerals, and water from oil sands froth treatment tailings, which would reduce
tailings pond fugitive methane emissions, volatile organic compounds (“VOCs”), and enhance tailings
management.
About Northstar Clean Technologies
Northstar Clean Technologies Inc. is a Canadian clean technology company focused on the sustainable
recovery and reprocessing of asphalt shingles. Northstar has developed a proprietary design process for
taking discarded asphalt shingles, otherwise destined for already over-crowded landfills, and extracting
the liquid asphalt for use in new hot mix asphalt, shingle manufacturing and asphalt flat roof systems, and
aggregate and fiber for use in construction products and other industrial applications. Focused on the
circular economy, Northstar plans to reprocess used or defective asphalt shingle waste back into its three
primary components for reuse/resale at its first commercial scale up facility in Calgary, Alberta. As an
emerging innovator in sustainable processing, Northstar’s mission is to be the leader in the recovery and
reprocessing of asphalt shingles in North America, extracting the recovered components from asphalt
shingles that would otherwise be sent to landfill.
Investor Inquiries
Joshua Grant
403-460-8135
Media Contact
Kayla Moyes
250-218-9276
Disclosure Regarding Forward-Looking Information
This news release contains forward-looking statements and information within the meaning of applicable
Canadian securities laws (collectively, "forward-looking information") that reflect the current expectations
of management about the future results, performance, achievements, prospects, or opportunities for CVW
CleanTech (the “Company”).
Forward-looking statements are frequently, but not always, identified by words such as “expects”,
“anticipates”, “believes”, “intends”, “estimates”, “potential”, “possible” and similar expressions, or
statements that events, conditions or results “will”, “may”, “could” or “should” occur or be achieved. The
forward-looking statements may include statements regarding the intention to complete the Offering and
the expected use of proceeds of the Offering, the issuance of the Common Shares, the expected closing
dates of the Offering and the Transaction and the Company’s objectives, goals or future plans, the
potential for the Transaction and the Company’s royalty investment strategy to create value, the terms of
the Transaction, including the proposed royalty percentages and the facilities subject to such royalty,
expected deployment and results of deployment of CVW™ technologies, the adoption of CVW™
technologies by industry participants, estimated recoveries, environmental impacts, benefits and financial
results from the implementation and adoption of CVW™ technologies, the prospective terms of the
involvement of joint venture and the of the proposed joint venture and all other statements regarding the
benefits and implications of the implementation of our technologies and the joint venture or other
statements that are not statements of fact. Forward-looking statements are statements about the future
and are inherently uncertain, and actual achievements of the Company may differ materially from those
reflected in forward-looking statements due to a variety of risks, uncertainties and other factors. For the
reasons set forth above, investors should not place undue reliance on forward-looking statements.
Important factors that could cause actual results to differ materially from the Company’s expectations
include: binding agreements in respect of the joint venture may never be entered into or on the terms set
forth in the non-binding agreement; adoption or use of the Company's technologies by industry
participant; the ability to advance the technologies of the Company on a timely basis or at all; reliance on
estimates prepared by third parties; current estimates and predictions being based on certain
assumptions about the industry in which the Company operates and macroeconomic conditions
generally; uncertainties in the timing and receipt of regulatory and exchange approvals; uncertainties
involved in disputes and litigation; fluctuations in interest rates, commodity prices, currency exchange
rates, and other financial conditions, and the resultant effect on viability of investments; changes in the
availability, and cost, of technical labour required for our business; price escalation and/ or inflationary
pressures affecting the cost of equipment and material required to commercialize our projects; the
uncertainty of estimates of capital and operating costs; the need to obtain additional financing and
uncertainty as to the availability and terms of future financing; the impact on the Company of increasing
inflation; and other risks and uncertainties disclosed in other information released by the Company from
time to time and filed with the appropriate regulatory agencies.
All forward looking statements are based on the Company’s beliefs and assumptions which are based on
information available at the time these assumptions are made, and is necessarily based upon a number
of assumptions that, while considered reasonable by the Company, are inherently subject to significant
operational, business, economic and regulatory uncertainties and contingencies. The Company has made
the following assumptions in relation to the forward-looking statements in this press release: the
successful conclusion of the Offering on the terms as announced; the Transaction and the Company’s
royalty investment strategy will be successfully implemented and will create value for the Company,; that
there will be adoption by industry participants of the Company's technologies; the expected environmental
and economic benefits to be achieved from CVW™ technologies; the ability of the Company to
successfully access various government funding programs; reliance on economic estimations prepared
and assumptions made by third parties; that the Company will continue to be able to protect its intellectual
property and proprietary technologies; assumptions as to various market and commercial opportunities
for the Company and its technologies; and the ability of the Company to continue to develop and
commercialize its technologies. The forward-looking statements contained herein are as of the date set
out above and are subject to change after this date, and the Company assumes no obligation to publicly
update or revise the statements to reflect new events or circumstances, except as may be required
pursuant to applicable laws.
Although management believes that the expectations represented by such forward-looking information or
statements are reasonable, there is significant risk that the forward-looking information or statements may
not be achieved, and the underlying assumptions thereto will not prove to be accurate. Actual results or
events could differ materially from the plans, intentions and expectations expressed or implied in any
forward-looking information or statements, including the underlying assumptions thereto, as a result of
numerous risks, uncertainties and factors including: failure to complete the Offering on the terms as
announced or at all; failure to derive benefits form the Transaction and the Company’s royalty investment
strategy; failure to receive regulatory approvals required for the transactions described in this news
release; failure to enter into agreements with industry participants; ; the possibility that opportunities will
arise that require more cash than the Company has or can reasonably obtain; dependence on key
personnel; dependence on corporate collaborations; potential delays; uncertainties related to early stage
of technology and product development; uncertainties as to fluctuation of the stock market; uncertainties
as to future expense levels and the possibility of unanticipated costs or expenses or cost overruns; and
other risks and uncertainties which may not be described herein.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this
release.