![]() ![]() Issuance by the issuer, at its sole discretion, of a draw down notice indicating the aggregate price of the draw down and the minimum (or floor) price per security, if any, and filing of a press release announcing its issuance.Filing of prospectus (usually a base shelf prospectus which qualifies securities to be issued in accordance with ELOC but can also serve to qualify other distributions over a 25-month period).Obtaining certain essential regulatory exemptions (see Certain Material Regulatory Considerations below).The process involves the following principal steps: This process may be repeated during the term of the ELOC as often as the company deems appropriate until the amount under the facility is exhausted. At the end of the pricing period, the company issues the shares to the purchaser and the purchaser pays the issue price to the company. The price of the shares to be purchased pursuant to the ELOC is determined by taking the market price of the shares during the draw down period, less the applicable discount agreed upon between the purchaser and the company, and it is usually subject to a minimum price below which price no shares may be sold. ![]() The purchaser then has a fixed period of time (usually 5-10 days) to sell the shares in the market. If and when the company elects to draw down under the facility, it sends a notice to the purchaser. The purchaser is committed for a fixed period (usually 2-3 years) to buy the securities, whereas the company has the ability, but not the obligation, to sell the shares during this period. #DRAWDOWN LINE OF CREDIT SERIES#The ELOC is entered into between the public company and an institutional purchaser (often, a US investor via an offshore entity in order to avoid being subject to certain US securities laws), whereby the purchaser commits to purchase up to a pre-established dollar amount of the company's shares in a series of "draw downs", at the option of the issuer. The ELOC is a financing vehicle that is easy to implement, can be set up in advance, and provides the company with a degree of certainty regarding future cash flow. The equity line of credit facility, or ELOC, (also known as a standby equity distribution agreement, or SEDA or as an equity line facility agreement, or ELF) has been used in US financial markets in the past, but it is relatively new in Canada. More and more public biotech and mining companies in Canada have recently been turning to equity line of credit facilities as a means of securing their position through these difficult times. A public company's survival is often linked to its ability to obtain additional equity financing – an option which has been limited for many due to the financial crisis. Financial markets are still feeling the impact of the recent financial crisis. ![]()
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