CHARBONE Hydrogen Secures Initial Tranche of US$6 Million in Convertible Notes

(via TheNewswire)

Funding Advances Two North American Green Hydrogen Facilities and Electrolyzer Orders Green Hydrogen Production Scheduled to Commence Within Weeks

Brossard, Quebec – TheNewswire - December 4, 2024 – CHARBONE HYDROGEN CORPORATION (TSXV: CH; OTCQB: CHHYF; FSE: K47) (the “Company” or “CHARBONE”), North America’s only publicly traded pure-play green hydrogen company, is proud to announce that it has closed a $2.1 million CAD (US$1.5M) unsecured convertible debt tranche to accelerate the funding of the construction of its first two green hydrogen production facilities located in Sorel-Tracy, Quebec and Detroit, Michigan, including orders of two electrolyzers for a total capacity of 5,0MW.

The Sorel-Tracy facility will serve as CHARBONE's flagship green hydrogen production site, with operations scheduled to begin in the coming weeks, following delivery of a pre-ordered electrolyzer in Q1 2025. Additionally, the implementation of a second green hydrogen project site is slated to be confirmed in the Detroit vicinity in the near future. In total, CHARBONE plans to build and deliver a network of sixteen (16) green hydrogen production facilities across North America by 2030.

The first tranche of the financing includes US$1.5 million (CA$2.1M) in gross proceeds through unsecured convertible notes with a 36-month term at a 12% annual interest rate, led by its US banker, maturing in December 2027 or convertible earlier, offered to one arm’s length investor.

“Our ability to attract this significant investment solidifies CHARBONE’s position as a first mover and leader in the North American green hydrogen market,” said Dave Gagnon, Chief Executive Officer and Chairman of the Board. “With production at Sorel-Tracy imminent, we are focused on generating near-term revenue, delivering value to shareholders, and advancing our vision of a modular green hydrogen network. This funding ensures we can execute our aggressive growth strategy while meeting industrial best practices and stakeholder expectations.”

The funds will be allocated to capital expenditures for engineering, equipment, infrastructure, and project management costs for the Sorel-Tracy and Detroit facilities. CHARBONE has placed US$1 million in deposits for two 2.5 MW electrolyzers from a leading global manufacturer with 17 years of experience and a proven track record. This industry leader, specializing in Alkaline and PEM technologies, has delivered over 300 units across five continents and holds more than 60 patents, with an annual production capacity exceeding 5 GW.

NOTE OFFERING DETAILS

The note offering closing of US$1.5 million (CA$2.1M) is part of a private placement led by its US banker of an aggregate principal amount up to US$6 million unsecured convertible notes for 36 months which shall bear interest at a rate of 12% per annum, accrued until maturity or conversion and where the principal amount is convertible into common shares of the Company ("Common Shares") at a conversion price of the greater of A) $0.10 CAD (or USD equivalent) or B) a price per share representing a discount of 20% to i) the share price reserved for a capital raise conducted by the Issuer, ii) the Market Price at the time of Change of Control Notice or iii) the Market Price at the time of Maturity, per Common Share, led by its US banker.

Charbone did pay a placement agent cash fee of ten percent (10.00%; US$0.15 million) as well as five-year, equity warrants for Common Shares equal to ten percent (10.00%; 1,500,000 warrants) exercisable at an exercise price of CA$0.10 per Common Share or USD equivalent ("Warrants") in connection with the private placement. The Debentures and Warrants are subject to a restrictive legend expiring after four months and one day, as required by applicable securities laws and the policies of the TSX Venture Exchange.  The private placement is subject to final acceptance by the TSX Venture Exchange and other customary closing conditions. The Company intends to close a second tranche in the coming days, but no later than January 3, 2025.

UPDATE ON THE AMENDMENT TO TERMS OF CONVERTIBLE DEBENTURES

Further to its news release dated June 10, 2024 announcing the agreement of principles to amend certain terms of the secured convertible debentures of the Company (each, a "Debenture") that were issued by the Company in connection with the private placement of debentures of an aggregate principal amount of CA$1.2 million of 14% secured convertible debentures, the Company is pleased to announce that it has met all requirements to request the final approval from TSX Venture Exchange to amend and issue the new Debentures.

About CHARBONE Hydrogen Corporation

CHARBONE is an integrated green hydrogen company focused on creating a network of modular green hydrogen production facilities across North America. Using renewable energy, CHARBONE produces eco-friendly dihydrogen (H2) for industrial, institutional, commercial, and future mobility users. CHARBONE is currently the only publicly traded pure-play green hydrogen company, with shares listed on the TSX Venture Exchange (TSXV: CH); the OTC Markets (OTCQB: CHHYF); and the Frankfurt Stock Exchange (FSE: K47). For more information on CHARBONE Hydrogen and its projects, please visit www.charbone.com

Forward-Looking Statements

This news release contains statements that are “forward-looking information” as defined under Canadian securities laws (“forward-looking statements”). These forward-looking statements are often identified by words such as “intends”, “anticipates”, “expects”, “believes”, “plans”, “likely”, or similar words. The forward-looking statements reflect management's expectations, estimates, or projections concerning future results or events, based on the opinions, assumptions and estimates considered reasonable by management at the date the statements are made. Although Charbone believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on forward-looking statements, as unknown or unpredictable factors could cause actual results to be materially different from those reflected in the forward-looking statements. The forward-looking statements may be affected by risks and uncertainties in the business of Charbone. These risks, uncertainties and assumptions include, but are not limited to, those described under “Risk Factors” in the Corporation’s Filing Statement dated March 31, 2022, which is available on SEDAR at www.sedar.com; they could cause actual events or results to differ materially from those projected in any forward-looking statements.

Except as required under applicable securities legislation, Charbone undertakes no obligation to publicly update or revise forward-looking information.

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.

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