Exro and SEA Electric Announces Concurrent C$42 Million Capital Raise Transactions

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Jan 30, 2024, 07:13 ET

Concurrent C$42 Million capital raise to fund capital expenditures, working capital, and general business requirements of a combined company in connection with announced merger agreement between Exro and SEA Electric

CALGARY, AB, Jan. 30, 2024 /PRNewswire/ - Exro Technologies Inc. (TSX: EXRO) (OTCQB: EXROF) (the "Company" or "Exro") and SEA Electric Inc. ("SEA" or "SEA Electric") announced today concurrent equity and debt financings for aggregate gross proceeds of C$42 million, comprised of an equity financing through the issuance of subscription receipts of Exro and a debt financing through arrangements by SEA from a Canadian pension fund manager (the "Debt Investor"). The net proceeds are expected to be used by Exro in support of the combined business of Exro and SEA pursuant to the concurrently announced agreement (the "Merger Agreement") providing for the acquisition of SEA by Exro (the "Transaction"). The Transaction is expected to close by the end of Q1 2024, subject to the of approval of Exro shareholders at a special meeting and other customary closing conditions.

Concurrent with the Transaction, Exro will be raising an aggregate amount of approximately C$30 million (US$22 million) through the issuance of subscription receipts of Exro (the "Subscription Receipts"), prior to any exercise of the Underwriters' Option (as defined below). In connection with the Transaction and contemporaneous with the issuance of Subscription Receipts, SEA has also entered into arrangements to receive an aggregate of US$9 million (C$12 million) of debt financing (the "Debt Financing") from the Debt Investor.

In respect of the Subscription Receipts, Exro has entered into an agreement (the "Engagement Agreement") with certain co-lead underwriters, for and on behalf of a syndicate of underwriters (collectively with the co-lead underwriters, the "Underwriters"), for the issuance, on a bought deal basis of 31,600,000 Subscription Receipts at a price of C$0.95 (US$0.7082) per Subscription Receipt for aggregate gross proceeds to the Company of approximately C$30 million (US$22 million) (the "Offering"), prior to any exercise of the Underwriters' Option (as defined below).

The Underwriters have been granted an option on the Offering (the "Underwriters' Option"), exercisable in whole or in part on the same terms as the Offering, no later than two business days before the Closing Date (as defined below), to issue up to an additional 21,100,000 Subscription Receipts for additional gross proceeds of up to approximately C$20 million (US$15 million).

Upon closing of the Transaction, each Subscription Receipt will entitle the holder thereof to receive, without payment of additional consideration and without further action, an Exro Common Share, plus an amount per Exro Common Share, if any, equal to the amount per Exro Common Share of any cash dividends declared by the board of directors of the Company on the Exro Common Shares to holders of record on a date during the period from, and including, the Closing Date (as defined below) to, but excluding, the date of the closing of the Transaction, net of any applicable withholding taxes. If the Transaction does not close by June 30, 2024, the proceeds from the sale of the Subscription Receipts will be returned to the holders of such Subscription Receipts. The Subscription Receipts will be governed by the terms of a subscription receipt indenture (or equivalent document) (the "Subscription Receipt Agreement") containing customary anti-dilution provisions for a transaction of the nature of this Offering.

The Offering is expected to close on February 15, 2024 (the "Closing Date"), and is subject to certain conditions including, but not limited to, the receipt of all necessary corporate and regulatory approvals, including the approval of the TSX.

The net proceeds from the Offering and from the sale of any additional Subscription Receipts pursuant to the exercise of the Underwriters' Option, if applicable, will be held in escrow pursuant to the terms of the Subscription Receipt Agreement and are intended to be used by Exro to support the business plan of the Combined Company, including but not limited to production, capital expenditures, working capital requirements, and normal course corporate and operating needs.

All securities issued in connection with the Offering are subject to a four-month and one day hold period in Canada, during which time the securities may not be traded.

The Subscription Receipts issued pursuant to the Offering and the additional Subscription Receipts, if any, issued pursuant to the Underwriters' Option will be offered by way of private placement in all provinces of Canada to investors who qualify as "accredited investors" under Canadian securities legislation or who are otherwise exempt from prospectus delivery requirements. Subscription Receipts issued pursuant to the Offering and the additional Subscription Receipts, if any, issued pursuant to the Underwriters' Option, if applicable, may also be sold in the United States to, or for the account or benefit of, U.S. Persons (as such terms are defined in Rule 902 of Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")) on a private placement basis pursuant to exemptions from the registration requirements under Rule 144A and/or Regulation D of the U.S. Securities Act, in a manner that does not require any of the securities sold pursuant to the Offering to be registered under the U.S. Securities Act or any applicable securities laws of any state of the United States. The Subscription Receipts issued pursuant to the Offering may also be sold in such other international jurisdictions in accordance with applicable law as the Company and the Underwriters may agree.

The terms of the Offering shall be subject to the provisions of a definitive underwriting agreement in respective of the Offering (the "Underwriting Agreement") to be entered into between the Company and the Underwriters, which Underwriting Agreement shall include, without limitation, the provisions set forth in the Engagement Letter as well as such representations, warranties, covenants, conditions, indemnities and termination provisions including standard disaster, material adverse change, material adverse legislation and material breach termination provisions that are usual for transactions such as the Offering.

The Subscription Receipts issued pursuant to the Offering and the additional Subscription Receipts, if any, issued pursuant to the exercise of the Underwriters' Option have not been and will not be registered under the U.S. Securities Act or any applicable securities laws of any state of the United States and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. Persons absent such registration or applicable exemption from such registration requirements. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein.

About Exro Technologies

Exro Technologies Inc. is a leading clean technology company that has developed new generation power control electronics that change how the world optimizes energy by expanding the capabilities of electric motors and batteries. The company's innovative technologies serve to bridge the performance-cost gap in e-mobility (Coil Driver™) and stationary energy storage (Cell Driver™), and act to accelerate adoption towards a circular electrified economy by delivering more with less – minimum energy for maximum results.

About SEA Electric

SEA is a leading automotive and e-mobility technology company that provides 100% electric drivetrain system technology. SEA has a worldwide presence, deploying products in the USA, Canada, Australia, New Zealand, Thailand, Indonesia, India, and South Africa, collectively achieving more than three million miles of service via independent OEM-testing and real-world operation.

Cautionary Statement Regarding Forward Looking Statements

This news release contains forward-looking statements within the meaning of Canadian securities laws. These statements relate to future events or future performance and reflect management's expectations regarding the Company's growth, results of operations, performance and business prospects and opportunities. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", "target" or the negative of these terms or other comparable terminology.

Forward-looking statements are necessarily based on estimates and assumptions made by management in light of management's experience and perception of historical trends, current conditions and expected future developments, as well as factors management believe are appropriate. Forward-looking statements may include but are not limited to statements respecting: the completion of the Transaction or the realization of the benefits thereof by the Combined Company; the terms and conditions of the Offering and the closing of the Offering; the receipt of all required regulatory and shareholder approvals of the Transaction and the Offering, including but not limited to the approval of the Transaction by the shareholders of Exro at the Special Meeting and the approval of the TSX; the timing and occurrence of the Closing Date; the ability of Exro and the Underwriters to enter into the Underwriting Agreement, on satisfactory terms or at all; all information regarding the Debt Financing, and the Company's (and following the Transaction, the Combined Company's) ability to commercialize its technology.

These forward-looking statements are based on the beliefs of the management of Exro and on assumptions which such management believes to be reasonable, based on information available at the time such statements were made. However, there can be no assurance that forward-looking statements will prove to be accurate. Such assumptions and factors include, among other things: demand for the technology of the Company (and following the Transaction, the Combined Company); the Company's (and following the Transaction, the Combined Company's) ability to maintain existing partners and attract new partners; the impact of competition; the Company's (and following the Transaction, the Combined Company's) ability to obtain and maintain existing financing on acceptable terms; the Company's (and following the Transaction, the Combined Company's) ability to retain skilled management and staff; currency, exchange and interest rates; the availability of financing opportunities, risks associated with economic conditions, dependence on management; volatility of stock price and market conditions; technology risks and risks associated with the commercialization of Company's (and following the Transaction, the Combined Company's) technology; regulatory risks; the Company's reliance on key personnel; the Company's limited operating history; market uncertainties; the protection of patents and intellectual property; conflicts of interest; market competition; and operating in an environment subject to regulation.

The preceding list is not exhaustive of all possible factors. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and the Company cannot assure that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties and assumptions, any investors or users of this document should not place undue reliance on these forward-looking statements. Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors.

Please refer to the Company's annual information form and other public continuous disclosure documents filed with the Canadian securities regulators under its profile on SEDAR+ at www.sedarplus.com for additional disclosure respecting the risks affecting the Company and its business.

Readers should not place undue reliance on the Company's forward-looking statements, as the Company's actual results, performance or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company's business, or if the Company's estimates or assumptions prove inaccurate. The Company does not undertake to update any forward-looking information, except as, and to the extent required by applicable securities laws.

Neither the TSX nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this press release.

SOURCE Exro Technologies Inc.