Sankar Das Gupta Acquires Common Shares and Warrants of Electrovaya Inc. and Provides Update on Previously-Disclosed Securities Loan Agreements

Sankar Das Gupta Acquires Common Shares and Warrants of Electrovaya Inc. and Provides Update on Previously-Disclosed Securities Loan Agreements

TORONTO, ONTARIO / ACCESSWIRE / April 13, 2020 / This release is being made by Dr. Sankar Das Gupta (the "Acquiror") to report the following:

1. his acquisition of 4,000,000 common shares (each, a "Common Share") of Electrovaya Inc. ("Electrovaya" or the "Corporation") and 7,100,000 Common Share purchase warrants (each, a "Warrant"), as consideration for personally guaranteeing certain of the Corporation's financial obligations and for making certain share pledges as collateral for the benefit of the Corporation; and
2. material changes to two securities loan agreements involving Common Shares.

Acquisition of Common Shares and Warrants

Effective as of April 7, 2020, the Corporation issued: (i) 4,000,000 Common Shares at a price of CDN$0.18 per Common Share; and (ii) 7,100,000 Warrants to purchase Common Shares, with each Warrant exercisable for one Common Share at an exercise price of CDN$0.18 per Common Share until April 2, 2030, as consideration for the significant personal risk involved in granting personal guarantees to certain of the Corporation's lenders and for making personal share pledges in order to effect the following:

1. certain amendments (the "Amendments") to the Corporation's outstanding CDN$15 million principal amount unsecured 9% convertible debentures due March 27, 2020 (the "March 2017 Debenture"); and
2. an increase to the amount available under the Amended and Restated Promissory Note (as hereinafter defined).

Pursuant to the Amendments, the Corporation and its lender under the March 2017 Debenture (the "Debenture Lender") agreed that the Corporation could satisfy the entire $15 million principal amount and any accrued but unpaid interest owing under the March 2017 Debenture by: (i) issuing the Debenture Lender 11,111,111 Common Shares at a deemed price of CDN$0.18 per Common Share on or before April 3, 2020; (ii) paying the Debenture Lender CDN$2 million in cash on or before April 10, 2020; and (iii) paying the Debenture Lender an additional CDN$2 million in cash on or before September 29, 2020, an equivalent of about CDN$6 million dollars. The Acquiror personally guaranteed the Corporation's CDN$2 million deferred payment obligation under the Amendments, as described in item (iii) above.

The Corporation satisfied the initial CDN$2 million cash payment pursuant to the Amendments effective as of April 7, 2020, by amending and restating an existing promissory note from a third-party lender, a Canadian financial institution (the "Facility Lender"), to increase the principal amount available thereunder (such note, the "Amended and Restated Promissory Note").

The Debenture Lender and the Facility Lender agreed to these amendments due, in part, to the Acquiror's willingness to provide the personal guarantees and to pledge his Common Shares as collateral.

Securities Loan Agreements

The Acquiror previously entered into the following securities loan agreements:

1. a securities loan agreement dated March 27, 2017 (the "March 2017 SLA"), pursuant to which the Acquiror loaned 6,976,744 Common Shares to an arm's length party for a period of up to 36 months; and
2. a securities loan agreement dated December 27, 2017 (the "December 2017 SLA" and collectively with the March 2017 SLA, the "SLAs"), pursuant to which the Acquiror loaned 2,000,000 Common Shares to an arm's length party for a period of up to 16 months.

As a result of certain amendments made to the March 2017 SLA (the "Amendments to the March 2017 SLA") and the expiration of the December 2017 SLA, certain loaned securities and pledged securities of the Corporation were transferred back to the Acquiror and the arm's length borrower, respectively. This is the case with respect to the December 2017 SLA, which expired on April 27, 2019. On March 27, 2020, the March 2017 SLA was amended to reflect the following:

1. the initial collateral (i.e. the March 2017 Debenture) was replaced by new collateral (being an unsecured convertible debenture in the aggregate principal amount of CDN$11,345,000 due on September 30, 2020) (the "New Collateral"); and
2. the maturity date of the loan was extended to the earlier of (i) the date that the outstanding aggregate principal amount of the New Collateral together with all accrued and unpaid interest is repaid by or on behalf of the Corporation, or (ii) September 30, 2020.

In connection with the Amendments to the March 2017 SLA, 1,700,000 of the 6,976,744 Common Shares that were initially loaned pursuant to the March 2017 SLA were transferred back to the Acquiror.

Security holdings Immediately Before and After the Acquisition of Common Shares and Warrants

Immediately prior to the transaction (being the issuance of 4,000,000 Common Shares and 7,100,000 Warrants to the Acquiror, as described above), including the 6,976,744 Common Shares that were initially loaned pursuant to the March 2017 SLA, the Acquiror owned 47,313,754 Common Shares on a non-diluted basis, representing approximately 42.47% of the outstanding Common Shares, and 840,000 Warrants and 1,100,000 options entitling the Acquiror to purchase, in the aggregate, an additional 1,940,000 Common Shares. If the Acquiror were to have exercised all his Warrants and options at such time, and assuming no other new issuances of Common Shares at or prior to such exercise, the Acquiror would have owned an aggregate of 49,253,754 Common Shares, representing approximately 43.45% of the then outstanding Common Shares.

Following the transaction, including the 5,276,744 Common Shares that continue to be loaned pursuant to the March 2017 SLA following the Amendments to the March 2017 SLA, the Acquiror owns 51,313,754 Common Shares on a non-diluted basis, representing approximately 44.46% of the outstanding Common Shares, and 7,940,000 Warrants and 1,100,000 options entitling the Acquiror to purchase, in the aggregate, an additional 9,040,000 Common Shares. If the Acquiror were to exercise all his Warrants and options, and assuming no other new issuances of Common Shares at or prior to such exercise, the Acquiror would own an aggregate of 60,353,754 Common Shares, representing approximately 48.50% of the then outstanding Common Shares.

The Acquiror agreed to grant the personal guarantees and make the share pledges to certain of the Corporation's lenders in order to assist Electrovaya with the restructuring of its debt and assist with its ability to continue satisfying certain debt obligations. The Acquiror may, from time to time in the future, increase or decrease direct or indirect ownership, control or direction over the Common Shares, warrants or other securities of Electrovaya through market transactions, private agreements, subscriptions from treasury or otherwise, subject to applicable securities laws. The Acquiror has no present plans or intentions which relate to or would result in any of the transactions or circumstances identified in Item 5 of Form 62-103F1 - Required Disclosure under the Early Warning Requirements.

The Corporation and the Acquiror are both located at 6688 Kitimat Road, Mississauga, Ontario, L5N 1P8. A copy of the report filed under applicable Canadian securities laws by the Acquiror in connection with the transactions referred to in this press release may be obtained from the Acquiror via email (sdasgupta@electrovaya.com) or telephone (905-399-7450), or on the SEDAR profile of the Corporation at www.sedar.com.

SOURCE: Sankar Das Gupta