GDNP Good Natured Products Inc

good natured Products Inc. (the “Company” or “good natured®”) (TSX-V: GDNP), a North American leader in earth-friendly plant-based products, today announces it has filed a preliminary short form prospectus with the securities regulatory authorities in all provinces of Canada except Quebec, in connection with an anticipated offering (the "Offering") of $15 million aggregate principal amount of convertible unsecured subordinated debentures maturing October 31, 2026 (the “Debentures”). The Offering is being conducted on an overnight marketed basis by a syndicate of underwriters (the “Underwriters”) led by National Bank Financial Inc. (“NBF”) and Beacon Securities Limited (“Beacon”).

The Company also announces that it has received a committed term sheet from National Bank of Canada (“National Bank”) and is negotiating a credit agreement that contemplates up to $35.8 million in financing, including a revolving working capital facility, capital expenditure financing, mortgage and a $10 million accordion facility, which is available at the discretion of National Bank (collectively, the “Senior Credit Facility” and together with the Offering, the "Financing").

The completion of the Financing would reduce the Company’s annual combined interest rate across all its debt facilities by 2.37%, reduce principal payments by over $8 million through the end of 2024, and increase the Company’s net working capital to between $25 million and $30 million. The resulting asset to liability ratio would become approximately 1.4x post completion of the Financing compared to 1.0x at December 31, 2020. The completion of the Financing would also consolidate four existing lenders into one senior secured debt financing partner.

"We’re extremely pleased to announce these new funding agreements designed to strengthen our working capital position while providing the Company with additional fire power to execute our acquisition strategy,” stated Paul Antoniadis, CEO of good natured®. “This Financing, once completed, will decrease the blended average interest rate on our debt and materially reduce our principal payments over the next three years, providing the Company with access to additional cash assets to fund organic initiatives, including the commercial relationship we are announcing concurrently."

The completion of the financing under the Senior Credit Facility is contingent on the successful closing of the Offering, and the completion of the Offering remains subject to various terms and conditions, including agreement on favorable pricing terms between the Company and the Underwriters. There is no guarantee the Company will complete the Financing or any individual aspect thereof.

Commercial Agreement with Large US Food ProducerThe Company has commenced shipping commercial quantities of product to a large US food producer that is replacing petroleum-based packaging with multiple Bio-PET packaging products. The Company expects to sign a commercial agreement, which would outline a multi-year relationship that, based on a framework of open purchase orders, would produce approximately USD$13 million in revenue in the first year.

The OfferingThe Company has filed a preliminary short form prospectus with the securities regulatory authorities in all provinces of Canada except Quebec in connection with an anticipated offering of the Debentures. The Company will grant to the Underwriters an option (the “Over-Allotment Option”), exercisable in whole or in part at the sole discretion of the Underwriters at any time up to 30 days following the closing of the Offering, to sell up to an additional principal amount of the Debentures representing up to 15% of the Offering for market stabilization purposes and to cover over-allotments.

The Offering will be priced in the context of the market with final terms of the Offering to be determined at the time of pricing. The Company anticipates issuing $15 million aggregate principal amount of Debentures in denominations of $1,000 with a maturity date of October 31, 2026 (the “Maturity Date”) at a price of $1,000 per Debenture. The Debentures will bear interest at a rate of 7.00% per annum payable semi-annually in arrears on April 30 and October 31 of each year, commencing April 30, 2022. The Debentures will be convertible at the holder’s option into fully-paid common shares of the Company (“Shares”) at any time prior to the earlier of 5:00pm Eastern Time on the Maturity Date and the business day immediately preceding the date fixed for any redemption. The conversion price will be determined at the time of pricing and will be subject to adjustment in certain circumstances.

The Debentures will not be redeemable by the Company at any time on or before October 31, 2024, except upon the occurrence of a change of control of the Company in accordance with the terms of the debenture indenture to be entered into with respect to the Offering. After October 31, 2024 and prior to October 31, 2025, the Debentures will be redeemable by the Company on not more than 60 days and not less than 30 days prior notice at a price payable equal to $1,000 per Debenture plus accrued and unpaid interest, provided that the volume weighted average trading price of the Shares on the TSX-V for the 20 consecutive trading days ending five trading days prior to the applicable date on which the notice of redemption is given exceeds 125% of the conversion price. On or after October 31, 2025 and prior to the Maturity Date, the Debentures will be redeemable by the Company on not more than 60 days and not less than 30 days prior notice at a price payable equal to $1,000 per Debenture plus accrued and unpaid interest.

The Debentures will be direct, unsecured obligations of the Company, subordinate to all other liabilities of the Company.

Subject to specified conditions, the Company will have the right to repay the outstanding principal amount of the Debentures, on maturity or redemption, through the issuance of Shares.

The net proceeds of the Offering will be used to fund the redemption of the Company’s indebtedness under its existing credit facilities, in conjunction with the new Senior Credit Facility. In addition to this, proceeds will be available for the Company to pursue growth initiatives and working capital requirements.

Closing of the Offering is expected to occur on or about October 28, 2021 (the "Closing Date") or such other date as the Company and the Underwriters may agree, and is subject to a number of conditions, including without limitation, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX-V and the applicable securities regulatory authorities.

The Debentures may also be offered by way of private placement in the United States to Qualified Institutional Buyers pursuant to Rule 144A of the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"). This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any offer, solicitation or sale of the securities in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful. The Debentures (and the Company common shares issuable upon conversion of such Debentures) have not been and will not be registered under the U.S. Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and other applicable securities laws.

$35.8 million Senior Credit Facility with National BankThe Company has received a committed term sheet from National Bank and is negotiating a credit agreement pursuant to which National Bank will provide up to $35.8 million in additional funding subject to the successful close of the Offering, and other customary conditions precedent. The secured Senior Credit Facility would be comprised of:

• $15 million revolving working capital facility with a 2-year term and an uncommitted $10 million accordion available at the discretion of National Bank;
• $4 million revolving term credit facility to finance capital expenditures, amortized over 84 months; and
• $6.755 million non-revolving term credit facility secured by a first mortgage on the Company's Brampton, ON manufacturing facility to replace the existing mortgage on such facility, with a 25-year amortization.

The Senior Credit Facility would bear interest of the Canadian Bankers’ Acceptance Rate plus 2.75% and be secured by all existing and future subsidiaries of the Company.

The good natured® corporate profile can be found at: investor.goodnaturedproducts.com and at on SEDAR (sedar.com) under the Company's issuer profile.

About good natured Products Inc.good natured® is passionately pursuing its goal of becoming North America's leading earth-friendly product company by offering the broadest assortment of eco-friendly options made from plants instead of petroleum. We're all about making it easy and affordable for business owners and consumers to switch to better everyday products® made from renewable materials and free from chemicals of concern.

Part of the sustainable consumer goods market, good natured® offers over 400 products and services through wholesale and retail channels, including our own e-commerce stores. From plant-based home organization products to compostable food containers, bioplastic industrial supplies and medical packaging, we're focused on delivering a great customer experience and to make more plant-based products readily accessible to more people as the path to deliver meaningful environmental and social impact.

For more information: goodnaturedproducts.com

On behalf of the Company:Paul Antoniadis – Executive Chair & CEO Contact: 1-604-566-8466

Investor Contact:        Spencer ChurchillInvestor Relations1-877-286-0617 ext. 113invest@goodnaturedproducts.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.

Cautionary Statement Regarding Forward-Looking Information

Information regarding the Offering, the Senior Credit Facility financing in negotiations, and the commercial agreement with a large US food producer (the "Commercial Agreement") contained in this news release constitutes forward-looking information within the meaning of securities laws.

The forward-looking statements contained in this news release are based on certain key expectations and assumptions ‎made by the Company, including expectations and assumptions regarding the terms, timing and potential completion ‎of the Offering, satisfaction of regulatory requirements in various jurisdictions and the use of the net proceeds of the ‎Offering, and expectations around concluding negotiations regarding the Senior Credit Facility and Commercial Agreement. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that the closing of the Offering and Senior Credit Facility, and the entry into the Commercial Agreement is subject to a number of risks and uncertainties, including risks that a definitive credit agreement and/or the contemplated Commercial Agreement may not be executed, risks relating to satisfaction of regulatory requirements in various jurisdictions and general economic, market and business conditions and could differ materially from what is currently expected as set out above.

Other than as required under securities laws, we do not undertake to update this information at any particular time.

Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date.  All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.

Future-Oriented Financial Information

The future-oriented financial information set forth above with respect to the Company's financial situation following completion of the Financing are based on a review of the Company's historical financial situation for certain metrics, taking into account the expected outcomes of the Financing. The purpose of including this information is to demonstrate certain positive aspects of the potential completion of the Financing. Actual results could differ from these preliminary results following the completion the Financing and of ordinary quarter or year-end accounting procedures, final adjustments and other developments arising between now and the time that the Company's financial results are finalized, and such changes could be material. The Company's independent auditor, Deloitte LLP, has not audited, reviewed, or performed any procedures with respect to the accompanying future-oriented financial information and other data, and accordingly does not express an opinion or any other form of assurance with respect thereto. The future-oriented financial information has been prepared by, and are the responsibility of, the Company's management, and were approved by management on October 11, 2021. They should not be viewed as a substitute for audited financial statements prepared in accordance with International Financial Reporting Standards and are not necessarily indicative of the Company's results for any future period.