Hertz Energy Inc. (CSE: HZ) has announced that Coloured Ties Capital Inc. (TSXV: TIE), a related party, will subscribe for up to 2,777,777 HD Units at $0.18 per unit in the company's previously announced non-brokered private placement, contributing up to $500,000 of the total offering of up to $1,607,400. The participation constitutes a related party transaction under Multilateral Instrument 61-101, with Hertz relying on applicable exemptions from formal valuation and minority shareholder approval requirements. Investors may be watching how this insider subscription affects the company's share structure ahead of closing.

Key Points

  • Hertz Energy Inc. (CSE: HZ, OTCQB: HZLIF, FSE: A340) disclosed insider participation in its private placement on October 15, 2026.
  • Coloured Ties Capital Inc. has agreed to subscribe for up to 2,777,777 HD Units at $0.18 per unit for gross proceeds of up to $500,000.
  • If completed, Coloured Ties' stake would rise from approximately 6.21% to approximately 14.96% on a non-diluted basis, or approximately 23.05% on a partially diluted basis.
  • Closing remains subject to regulatory approvals, including final approval of the Canadian Securities Exchange.

Coloured Ties Capital's Subscription and Resulting Ownership Shift

Coloured Ties Capital currently holds 1,176,300 common shares of Hertz Energy, representing approximately 6.21% of issued and outstanding shares. By subscribing for up to 2,777,777 HD Units under the offering, the release states that Coloured Ties' expected total holding would reach 3,954,077 common shares, representing approximately 14.96% on a non-diluted basis. On a partially diluted basis — assuming exercise of the warrants comprising the subscribed HD Units and no other issuances — that figure would rise to approximately 23.05%. The company confirmed the offering will not result in a change of control.

Related Party Transaction Status and MI 61-101 Exemptions

Hertz Energy's Chief Executive Officer and director, Kal Malhi, also serves as Chief Executive Officer and director of Coloured Ties Capital and beneficially owns approximately 25.6% of its outstanding shares. Combined with his spouse's holdings, the pair controls more than 50% of Coloured Ties, making this a related party transaction under MI 61-101. Hertz is relying on exemptions from the formal valuation and minority shareholder approval requirements because the fair market value of securities to be issued, and consideration to be paid, each fall below 25% of the company's market capitalisation. Mr. Malhi declared his interest and abstained from voting on the approval.

Offering Terms, Hold Period, and Regulatory Conditions

The broader offering terms and HD Unit structure remain as originally announced on October 9, 2026, with the total offering size capped at up to $1,607,400. All securities issued under the offering, including any warrant shares, will be subject to a statutory hold period expiring four months and one day from the date of issuance. Completion remains conditional on receipt of all necessary regulatory approvals, including final approval from the Canadian Securities Exchange. The company noted the material change report will not be filed at least 21 days before the anticipated closing date due to the expeditious nature of the transaction.