Melior Announces Proposed Amendment to Loan Facility
06 June 2019 - 11:02PM
Melior Resources Inc. (TSXV: “MLR”) (“Melior”, the “Company” or the
“Borrower”) has agreed with Pala Investments Limited (“Pala” or the
“Lender”) to amend (the “Amended Agreement”) the loan facility
currently in place with Pala pursuant to a loan agreement entered
into between the parties on August 9, 2018 as amended on November
16, 2018 and February 4, 2019 (the “Current Agreement”) to increase
the principal amount of the loan by US$2,500,000 for a total of
approximately US$21 million.
The Current Agreement has a total outstanding
principal and accrued interest as of May 31, 2019 of US$18,368,562
and is accruing interest at 14% per annum on a quarterly basis in
arrears. Under the Current Agreement, principal and accrued
interest are payable in full on August 13, 2020, with Melior having
a right to elect for a one-year extension to August 13, 2021, on
payment of a 2% extension fee. The Borrower is permitted to
make prepayments after February 1, 2020 and a cash sweep provision
is included with up to 70% of excess cash, at the election of the
Lender on a quarterly basis, going towards loan repayment.
The proposed Amended Agreement has the following
key points:
- Principal amount:
The principal loan amount will be total principal and accrued
interest under the Current Agreement at the time of execution of
the Amended Agreement plus an additional principal amount of US$2.5
million (the “Additional Proceeds”) (i.e. total new principal
amount outstanding under the Amended Agreement is expected to be
approximately US$21 million).
- Interest: Interest
rate remains at 14% per annum. However, interest is to be accrued
on a quarterly basis in arrears until December 31, 2019, following
which interest shall, at the election of the Lender, be payable in
either common shares of Melior (“Common Shares”) or cash on a
quarterly basis in arrears commencing on the first interest payment
date of March 31, 2020 until maturity on December 31, 2021 (i.e. a
total of eight instalments of cash interest payments and/or Common
Share issuances).
- Maturity:
Repayment in full, including principal and any accrued but unpaid
interest and fees, on December 31, 2021 (this is a 1.25 year
extension to the maturity date under the Current Agreement).
- Drawdown:
Immediately upon execution subject to (i) confirmation that all
first ranking security remains effective; and (ii) any customary
conditions precedent such as TSX Venture Exchange (“TSX-V”)
approvals.
- Cash sweep: Up to
70% of excess cash, at the election of the Lender, going towards
loan repayment (including interest) on a quarterly basis, with the
first cash sweep date on June 30, 2019.
- Use of proceeds:
The Additional Proceeds will be used by Melior for general working
capital purposes.
- Arrangement fee:
US$50,000, payable in cash or in Common Shares (being 2% of the
Additional Proceeds). The Company intends to pay the arrangement
fee by the issuance of 171,807 Common Shares to the Lender on
closing. These arrangement fee shares will be subject to resale
restrictions of four months and a day under applicable Canadian
securities laws.
- Voluntary
prepayment: No voluntary prepayment prior to the Maturity
Date.
- Convertible loan:
Lender may exercise a right to convert the outstanding amount,
including principal and accrued and unpaid interest, in part or in
full, at any time prior to the maturity date in US$5 million
tranches. The conversion price at which the principal amount may be
convertible into Common Shares is $0.39, the last trading price of
the Common Shares prior to the issuance of this news release, and
any remaining amount of the loan may be convertible into Common
Shares at the greater of the five day volume-weighted average
trading price of the Common Shares (on days that trading of Common
Shares occurred on the TSX-V) and the maximum allowable Discounted
Market Price (as defined under the polices of the TSX-V) on the
date of such election to convert.
- Other terms:
Similar to terms in Current Agreement.
- Fees and expenses:
To be reimbursed by the Borrower.
The terms of the Amended Agreement, including
the issuance of the conversion option to Pala, are subject to the
approval of the TSX-V and the finalization of the Amended
Agreement.
The Amended Agreement and the terms thereof
constitute a “related party transaction” within the meaning of
Multilateral Instrument 61-101 ("MI 61- 101"). The
board of directors of Melior (the “Board”), acting in good faith,
and the independent members of the Board, acting in good faith,
have determined that the Company is in serious financial
difficulty, that the entering into of the Amended Agreement is
designed to improve the Company’s financial position and that the
terms of the Amended Agreement are reasonable in the Company’s
circumstances. As such, Melior intends to rely on the exemption
from the formal valuation and minority shareholder approval
requirements of MI 61-101 contained in Sections 5.5(g) and
5.7(1)(e), respectively, of MI 61-101 on the basis of financial
hardship.
About Melior
Melior is the owner and operator of the
Goondicum ilmenite and apatite mine located in Queensland,
Australia. Further details on Melior and the Goondicum mine can be
found at www.meliorresources.com and regulatory filings are
available on SEDAR.
Melior is incorporated under the provisions of
the Business Corporations Act (British Columbia) and has a
registered office in Vancouver, British Columbia. Melior is
classified as a Tier 1 Mining Issuer under the policies of the
TSX-V.
Forward Looking Statements Disclaimer
This press release contains forward-looking
information within the meaning of applicable securities laws that
reflects the current expectations of management of Melior. The
words “may”, “would”, “could”, “should”, “will”, “anticipate”,
“believe”, “plan”, “expect”, “intend”, “estimate”, “aim”,
“endeavour”, “project”, “continue”, “predict”, “potential”, or the
negative of these terms or other similar expressions have been used
to identify these forward-looking statements and include, without
limitation, the execution of the Amended Agreement and closing as
contemplated therein. Forward-looking statements are based upon a
number of assumptions and are subject to a number of known and
unknown risks and uncertainties, many of which are beyond
management’s control, and that could cause actual results to differ
materially from those that are disclosed in or implied by such
forward-looking statements. There can be no assurance that
forward-looking information will prove to be accurate, as actual
results and future events could differ materially from those
expected or estimated in such statements. Accordingly, readers
should not place undue reliance on forward-looking information.
Additional risks and uncertainties regarding
Melior are described in its publicly available disclosure
documents, as filed by Melior on SEDAR (www.sedar.com) except as
updated herein.
This forward-looking information represents
management’s views as of the date of this press release. While
subsequent events and developments may cause such views to change,
Melior does not intend to update this forward-looking information,
except as required by applicable securities laws.
For further information please contact:
MELIOR RESOURCES INC.Mark
McCauleyChief Executive
Officer+61 7 3233
6300mark.mccauley@meliorresources.com
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
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