Kadestone closes $3.3M convertible note private placement
What's the deal? Kadestone Capital Corp., a Vancouver-based property and building materials company listed on the TSX Venture Exchange, has closed a $3.3M non-brokered private placement of secured convertible notes and warrants. The company issued one convertible note for the full amount plus 8.25 million common share purchase warrants.
The convertible note matures in 36 months, carries 10% annual interest compounded monthly, and is convertible into common shares at $0.40 per share. Each warrant lets the holder buy one common share at $0.50 for 36 months.
Kadestone said it will use the proceeds to pay down debt and for general corporate purposes.
Why now? Kadestone operates five business lines spanning building materials procurement, property development, construction finance, asset ownership, and property management across Canadian urban centres. The debt reduction focus suggests the company is looking to clean up its balance sheet as it pursues its goal of becoming a vertically integrated property company.
What could go wrong? The placement comes with several strings attached. The notes will automatically convert into shares if Kadestone closes an equity financing of $25M or more, or if it sells substantially all of its assets — either scenario could dilute existing shareholders significantly. The 10% interest rate signals investors demanded a premium for their risk.
The securities are subject to a four-month-and-one-day hold period expiring October 12, 2026, and the placement still needs final approval from the TSXV.
The signal: Kadestone's reliance on a convertible note structure — with a 10% coupon and warrants sweetener — to raise just $3.3M underscores how difficult it remains for micro-cap Canadian property companies to access capital on favourable terms. The deal is essentially a bridge to buy time for balance sheet repair, but the automatic conversion triggers tied to a $25M equity raise or asset sale hint that both the company and its investors are positioning for a more transformative transaction down the line.
Read more: streetinsider.com
