Northern Financial Corp. announced a proposed private placement of common shares on Monday.

The company, which wholly owns the full-service investment dealer Northern Securities Inc., intends to complete a private placement of common shares at $1.42 per share for gross proceeds of approximately $1 million.

At the company’s option, the private placement may be increased to gross proceeds of up to $1.5 million. Employees of the company may participate in the private placement. The primary use of proceeds will be an investment of working capital in Northern Securities.

Completion of the private placement is subject to the Toronto Stock Exchange’s final approval. The private placement is expected to close in one or more closings in July.

Northern also announced that it has arranged an increase of $1 million in its secured term loan to a total of $3.5 million. The total term loan is for a period of 18 months and bears interest at a rate of 13%.

The lender also has the ability to earn participation of a maximum of $150,000 during the 18-month term if the Northern share price exceeds $2.08. The proceeds will be used to fund Northern’s merchant banking activities as well as being used as additional working capital in Northern and Northern Securities. Closing of the transaction is expected within two weeks.