Comet Industries Secures $8 Million Loan for Iron Mask Project

Comet Industries Ltd., a real estate development company based in Kamloops, BC, has secured a non-dilutive debt financing package to fund the ongoing development of the Iron Mask Project. The company entered into a commitment letter with Harbour Mortgage Corp., a lender, to borrow up to $8,000,000 for construction and development activities related to the Iron Mask project.

The loan has a one-year term and bears interest at the greater of the Royal Bank of Canada prime rate plus 4.55% or 9.00% per annum, calculated and payable monthly. A commitment fee of $200,000 is due, with $100,000 paid upon acceptance of the commitment letter. The remaining $100,000 will be deducted from the initial advance. The loan will be advanced through multiple draws based on work completed, with no more than one draw per month and a minimum of $500,000 per draw, accompanied by a $750 administration fee.

The loan cannot be prepaid during its initial six-month term. If the loan is not repaid by the maturity date, an overholding fee equal to 0.25% of the outstanding principal will be payable monthly in advance, in addition to interest and all other amounts owing. Payment of the overholding fee does not extend the loan’s term or cure the resulting default. The effective annual interest rate over the one-year term is estimated at approximately 13.3%, assuming eight monthly draws. It is expected to range from approximately 12.3% to 14.5%. If the loan remains outstanding for three months after maturity, the effective annual rate over the extended period would be approximately 12.2%. In no event can the effective annual rate exceed 24% per annum.

The proceeds of the loan will be used to repay the company’s existing loan from an arm’s-length third party in the amount of approximately $1.6 million and to pay trade creditors, contractors, subcontractors, and material suppliers in connection with the servicing and related construction activities at the project. The loan will be secured by a first-ranking mortgage over the lands comprising the company’s Kamloops subdivision project, together with an assignment of rents, an assignment of receivables, and a first-ranking general security agreement over all personal property related to the project.

The company anticipates that it will service the loan by using a portion of the proceeds received from the sale of lots comprising the project. Completion of the loan is subject to various conditions customary for transactions of this nature, including the execution of a formal loan agreement between the parties and receipt of all requisite approvals, including the approval of the TSX Venture Exchange. The loan will not be convertible into any securities of the company without the prior approval of the exchange. In connection with the loan, the company will pay a cash commission of up to $65,000 to Fit Broker Services Ltd.

Established in 1972 and incorporated in the Province of British Columbia, Comet Industries Ltd. is listed on the TSX Venture Exchange. The company is focused on holding and developing real estate properties in British Columbia, with a major initiative being the Iron Mask Industrial Park project.