CMC Metals Ltd. (OTC:CMCXF) Stock Jumps 12% After Shares for Debt Agreement

Debt settlements are almost always seen as major positives by investors and lead to considerable attention for the stock of a company. Hence, it is likely that CMC Metals Ltd. (OTC:CMCXF) is going to come into focus today among investors owing to the developments from last Friday.

The company came into focus on April 12 after it announced that it had settled and extinguished debts to the tune of $163,457.02. The move was completed through the issuance of common shares in CMC Metals.  In order to settle the debt, the company issued 2,611,111 common shares at a price of $0.045 each to the non-arm’s length creditors of CMC Metals.

Previously, the company had entered into non-arm’s length administrative services agreements for the services that had been provided by the officers in its employ. Hence, the arm’s length creditors had also been issued 1,021,267 common shares for the deemed price of $0.045 each. The decision by CMC Metals to issue shares in order to settle and extinguish the debt was made so as to preserve cash and boost the balance sheet. The debt settlement transaction was, however, subject to approval from the TSX Venture Exchange, as the company noted in its news release.

As per the terms of the agreement, CMC Metals aimed to issue all the shares to both the non-arm’s length creditor and the officers. All the shares that would be issued by the company would be subjected to a hold period of four months, and they would expire after four months and a day. Additionally, the company also revealed that no news insiders would be created and there would not be any change in control in CMC Metals either owing to the issuance of the common shares. It could be a good time to keep an eye on the stock today.