A newer news release.
NEWS RELEASE
AUGUST 25, 1998
KAFUS CLOSES ON US$12.5 MILLION CREDIT FACILITY FROM ENRON
.... WILL FUND BUY BACK OF KAFUS CONVERTIBLE PREFERENCE SHARES
Kafus Environmental Industries, Ltd. (American Stock Exchange, symbol: KS,
Frankfurt and Berlin Stock Exchanges, symbol: KAF) Kafus Environmental
Industries is pleased to announce the closing of a US$12.5 million loan
facility from Enron Capital & Trade Resources Corp. (ECT), a subsidiary of
Enron Corp. "The ECT loan is significant to our shareholders because of
its non-dilutive nature," quoted Mike McCabe, President of Kafus. "Apart
from certain warrants granted to ECT, Kafus is not required to issue any
further common or convertible preference shares at this time," added Mr.
McCabe.
A portion of the proceeds of the loan facility were used immediately to
redeem the balance of the Series II Convertible Preference Shares from
Olympus Securities, LTD and NP Partners for approximately $4.6 million and
the Series VI and Series VII Convertible Preference Shares from KA
Investments LLC for approximately $1.3 million. The remainder will be used
to provide general working capital required by Kafus in its current
development program.
ECT intends to provide additional capital upon the finalization of terms
and conditions for a stock repurchase program subject to regulatory and
Kafus board approval.
The investment was made by means of a promissory note bearing interest at
the rate of 14% per annum until the maturity date of February 18, 2000. In
the event the Note is not repaid at maturity, the Note is convertible at
ECT's option into shares of Common Stock of Kafus at a conversion price of
US$4.00 per share, subject to certain anti-dilution adjustments. ECT also
acquired warrants to purchase 750,000 shares of Kafus Common Stock at an
exercise price of US$4.00 per share. ECT received an additional 795,000
warrants which can be terminated by Kafus once the company meets certain
performance milestones including loan repayment.
"Kafus' securing of the ECT loan was made possible by the pledging of
collateral by The Samarac Corporation, Kafus' controlling shareholder,
owned and managed by Mr. Ken Swaisland, Kafus' Chairman," stated Mr.
McCabe. "The loan facility will give Kafus the funds necessary to complete
the first phase of its global development program and realize its true
market value. This marks the beginning of Kafus' transformation from a
development company to an operating company," added Mr. McCabe.
Kafus believes the ECT loan facility will help insulate the company from
any short-term adverse market conditions by removing the correlation
between Kafus' trading price and the company's ability to fund corporate
development.
Kafus is rapidly moving towards its corporate objective of becoming a
global low-cost producer of commodity type products from alternative
materials including post consumer and agricultural waste.
Direct all enquiries to:
KAFUS ENVIRONMENTAL INDUSTRIES
Todd Hilditch, Manager Investor Relations
Toll Free (888) 333-5377 Tel (604) 602-1981 Fax (604) 685-2426
E-mail: kafus@direct.ca Website: www.kafus.com
or:
Tony Francel, PBS
Tel: 941-698-8920
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