CRAiLAR to raise $5mn via private placement offering

"This funding is an important step in the growth strategy for the Company as we apply to move to a senior U.S. exchange platform," said Ken Barker, CEO of CRAiLAR.  "The assurance that this private investor confidence provides to the public market, while we simultaneously prepare to deliver finished fiber at increased capacities from our Pamplico, S.C. manufacturing facility, puts CRAiLAR in an ideal position for introduction on a more visible and globally accessible platform."

The Offering is intended to be completed on essentially the same terms as the offering previously announced by the Company on August 23, 2012 (the "Previous Private Placement"). Under the Previous Private Placement, the Company sought to raise an aggregate of $18.0 million and closed on approximately $12.5 million of debentures and equity units. The Offering at minimum $3 million will substantially complete the funding goal of the Previous Private Placement. The Offering is expected to close on or about February 19, 2013.

Terms of Financing

The Debentures will mature on September 30, 2017 (the "Maturity Date") and will accrue interest at a rate of 10.0% per annum payable semi-annually in arrears on March 31st and September 30th in each year commencing September 30th, 2013. The September 30th, 2013 interest payment will represent accrued interest for the period from the Closing Date.

At the holder's option, the Debentures may be converted into common shares in the capital of the Company (each a "Share") at any time up to the earlier of the Maturity Date and the business day immediately preceding the date specified by the Company for redemption of the Debentures. The conversion price, subject to adjustment in certain circumstances, will be $2.90 per Share (the "Conversion Price"), being a conversion rate of approximately 344.828 Shares for each $1,000 principal amount of Debentures.

The Debentures will be direct obligations of the Company.  Crailar Inc., a wholly-owned U.S. subsidiary of the Company ("Crailar US"), will provide a limited guarantee of the obligations of the Company under the Debentures and a security interest over certain assets of Crailar US having an initial acquisition cost of approximately $5.5 million (the "Secured Assets"). 

The security granted in respect of the Debentures will be subordinated to the security granted in respect of the Company's secured convertible debentures issued on September 20, 2012 and will be limited to the Secured Assets.  The Debentures will otherwise rank subordinate in right of payment of principal and interest to all present and future senior obligations of the Company and rank equally to all present and future unsecured indebtedness of the Company.