Hampton Financial's Strategic Financial Move
Hampton Financial Corporation recently announced the successful completion of a non-brokered private placement involving unsecured convertible debentures totaling $500,000. This move is designed to enhance the company's investment capabilities and support the growth of its subsidiary, Oxygen Working Capital Corp. (OWC).
Understanding Convertible Debentures
A convertible debenture is a type of long-term debt issued by a company that can be converted into equity, usually shares of the company or a subsidiary, at a later date. In this case, the debentures can be converted into common shares of OWC at a conversion price of CAD$0.50 per share. This offers investors the flexibility to switch from a fixed income investment to an equity stake, potentially benefiting from any appreciation in OWC’s value.
Key Features of the Debentures
- Maturity and Interest: The debentures will mature five years and one day from the issue date. They bear an annual interest rate of 11.0%, paid quarterly.
- Interest Payments: The first interest payment is due at the end of the first calendar quarter following the closing date. It includes interest accrued from the closing date.
- Conversion Option: Investors can convert the debentures into OWC common shares at any time before the maturity date, which allows for potential capital gains if OWC's value increases.
Purpose of the Funds
The funds raised through this offering will primarily be directed toward expanding OWC’s loan book, enabling the subsidiary to offer more extensive financing solutions. OWC is known for providing short-term financing through factoring, which helps businesses manage their immediate cash flow needs by advancing cash against invoices and receivables.
About Oxygen Working Capital Corp.
Founded in 2017, OWC is a specialized lender in the commercial factoring sector, serving clients across Canada with ambitions to expand throughout North America. Factoring involves purchasing a business's accounts receivable at a discount, providing businesses with immediate cash flow. This approach helps entrepreneurs manage their working capital more effectively.
Hampton Financial's Broader Vision
Hampton Financial, through its subsidiaries like Hampton Securities Limited (HSL), continues to pursue growth and value creation for its shareholders. HSL provides a wide range of services, including wealth management, capital markets activities, and investment banking services. By completing this debenture placement, Hampton Financial demonstrates its commitment to supporting its subsidiaries’ growth while exploring new strategic investment opportunities.
