RYU Apparel Inc., an urban athletic apparel and accessories brand, announced its intention to settle debt in the amount of $710,000 owed by the company to Marcello Leone — RYU’s CEO, president and chairman of the board — in exchange for 5.68 million units of the company.
Each unit will be issued at a deemed price of 12.5 cents and will consist of one common share and one share purchase warrant. Each warrant shall entitle Leone to purchase one additional common share at a price of 20 cents per share for a period of two years from closing, subject to an acceleration provision. The proposed debt settlement is subject to final approval of the TSX Venture Exchange.
As the units will be issued to a director and officer of RYU, the debt settlement will constitute a “related party transaction” within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”).
The board of directors determined that neither the value of the units to be issued nor the aggregate debt to be settled in connection with the debt settlement will exceed 25 percent of the company’s market capitalization.
