TIDMWLFE
RNS Number : 0826W
Wolf Minerals Limited
30 July 2018
30 July 2018
Wolf Minerals Limited
("Wolf" or the "Company")
Senior Debt Deferral and Additional GBP4 Million Funding
Specialty metals producer, Wolf Minerals Limited (ASX: WLF, AIM:
WLFE) (Wolf or the Company) provides the following update on the
Company's financing arrangements to support its short term working
capital requirements during the ongoing operational ramp up at its
Drakelands open pit mine (Drakelands) at the Company's Hemerdon
tungsten and tin project in Devon, southwest England, whilst a
strategic review of its funding arrangements is completed.
Highlights
ü GBP2m to be available immediately under the Existing Bridge
Facility.
ü Subject to documentation:
o Existing Bridge Facility increased from GBP65 million to GBP69
million.
o Standstill agreed with Senior Lenders regarding outstanding
fees and matters of default, and deferral of Senior Debt principal
and interest repayments totalling approximately GBP2.1 million,
until 28 October 2018.
o Access to up to GBP1.7 million from the Rectification
Account.
ü Financing arrangements expected to be sufficient to support
Wolf's short-term working capital requirements until 28 October
2018, during which time the Company will undertake a strategic
review of its funding arrangements.
Following the further improvements in the operating performance
at Drakelands over the June 2018 quarter, Wolf has worked with its
key stakeholders to develop financing arrangements that can support
the Company's short-term working capital requirements whilst a
detailed strategic review of its funding arrangements is completed
prior to 28 October 2018. As a result, Wolf has executed a
commitment letter to enter into binding agreements with:
-- its existing senior lenders (Senior Lenders) for:
o a deferral of principal, interest and other amounts totalling
approximately GBP2.1 million due at the end of July 2018, up to 28
October 2018 (Senior Debt Deferral); and
o access to up to GBP1.7 million of the GBP9.5 million cash
balance currently restricted for use on the noise and vibration
management plan (Rectification Account); and
-- Resource Capital Fund VI L.P. (RCF VI) to provide an
additional GBP4 million, secured priority loan (Priority Bridge
Loan) under an amended bridge loan facility (Bridge Facility), with
the potential for the Priority Bridge Loan to be increased to GBP5
million at the discretion of RCF VI and subject to the consent of
the Senior Lenders. An initial GBP2 million to be available
immediately under the Existing Bridge Facility which will be
superseded by the Priority Bridge Loan.
The Senior Debt Deferral, withdrawals from the Rectification
Account and the Priority Bridge Loan when established (together,
the New Money) are to be repaid pari passu with existing Senior
Debt liabilities from operational cash flows or in priority to
existing Senior Debt liabilities in limited circumstances.
Implementation of the above requires changes to the existing
Bridge Facility and documents relating to the Company's debt
facilities with the Senior Lenders (Senior Debt). The Company
currently anticipates that the relevant full form documentation
will be finalised and entered into during August 2018.
Commenting on the financing arrangements, Wolf's Managing
Director, Richard Lucas said:
"As we drive further operating improvements towards
self-sustaining cash flows and convert value-adding opportunities,
such as ore pre-processing, these financing arrangements provide
additional flexibility to prepare for our future as a significant
contributor in the tungsten market.
The support we receive from each of our key project stakeholders
is fundamental to the long-term success of Wolf and we recognise
their shared vision of a secure, long term source of tungsten in
the UK."
Bridge Facility
The Company currently has GBP65 million in outstanding
subordinated loans under the Bridge Facility, comprising the
original subordinated loan in the aggregate amount of GBP45 million
from 21 October 2017 (First Subordinated Loan) and the second
subordinated loan in the aggregate amount of GBP20 million
announced on 27 October 2017 and 28 February 2018 (Second
Subordinated Loan) (together, Subordinated Loans).
Terms of the Priority Bridge Loan
The Priority Bridge Loan is being provided in two tranches as
follows:
-- an initial tranche of GBP2 million (Initial Tranche)
available immediately. The Initial Tranche is being advanced until
the Priority Bridge Loan is established pursuant to an existing
uncommitted tranche that remains available subject to RCF VI's
discretion under the existing Bridge Facility. The Initial Tranche
will temporarily increase the Second Subordinated Loan to a total
of GBP22 million, but on the understanding that in the subsequent
amendments to the Senior Debt and Bridge Facility documents, the
Initial Tranche will be superseded by the Priority Bridge Loan and
treated as New Money and not a Subordinated Loan. The interest rate
of the Initial Tranche will reduce at this point to equal the
interest rate payable on the Senior Debt (LIBOR + 4.25%); and
-- a subsequent tranche of GBP2 million to be made available in
two utilisations of GBP1 million, in each case as New Money
pursuant to the subsequent amendments to the Bridge Facility,
including that it will be fully secured with an interest rate equal
to the interest rate payable on the Senior Debt (LIBOR + 4.25%) as
a result of the increased seniority of this tranche.
Once established, the Priority Bridge Loan does not include any
conversion terms and any future convertibility would need to be
agreed between the Company and RCF VI.
The Company anticipates receiving the Initial Tranche before the
end of July 2018, with the subsequent GBP2 million to be received
in August 2018 following the satisfaction of certain conditions
precedent and execution of the relevant amendment documents to the
Bridge Facility. As noted above, the potential further GBP1 million
will be advanced at the discretion of RCF VI and subject to the
consent of the Senior Lenders.
All terms of the existing Bridge Facility, the Subordinated
Loans and any Convertible Notes remain as described in the
Company's announcements of 24 October 2016, 28 June 2017, 27
October 2017 and 28 February 2018.
Debt Restructure
The Company currently has GBP63 million of Senior Debt
outstanding.
In addition to the funding and offtake standstill arrangements
from the debt restructure in October 2016 that have been extended
to 31 January 2019 (as announced on 28 February 2018), the Senior
Lenders and RCF (together the Lenders) have agreed to enter into a
further standstill arrangement with the Company as part of the
amendments to the Bridge Facility and the Senior Debt
documents.
The Company has not paid an outstanding arrangement fee that is
due and owing to the Senior Lenders. Under the further standstill
arrangement, the Lenders will agree to a further standstill of this
and any other existing defaults and any further defaults that may
arise. The standstill period will commence on execution of formal
documentation and terminate on the earlier of 28 October 2018 or
the occurrence of specific limited events of default.
The terms of the Senior Debt Deferral provide that the Senior
Debt quarterly principal and interest repayments due on 31 July
2018 and any other amounts payable to the Senior Lenders will be
deferred until 28 October 2018. The subsequent amendments to the
Senior Debt will also include certain waivers of, and amendments
to, the Senior Debt conditions for any non-compliance as part of
the Senior Debt Deferral.
In addition, the Senior Lenders will provide access to up to
GBP1.7 million of the GBP9.5 million cash balance currently held in
the Rectification Account to support short-term working capital
requirements, which is not expected to impact the implementation of
the noise and vibration management plan agreed with the Environment
Agency. Further sums may be drawn from the Rectification Account in
due course with the consent of the Senior Lenders and subject to
certain conditions.
A portion of the Company's Senior Debt is supported by
guarantees provided by the German government's Untied Loan
Guarantee Scheme (Ungebundene Finanzkreditdeckung - UFK), and
Wolf's tungsten concentrate customers Global Tungsten & Powders
Corp and Wolfram Bergbau und Hütten AG (together Guarantors). UFK
consent is required for the entry into of the full form
documentation to give effect to the amendments to the Senior Debt
documents and the Bridge Facility, and the standstill referred to
above. The Company currently anticipates receiving such consent in
the near future, however, if such consent was not received, the
Company would be in default and would need to re-enter discussions
with the Senior Lenders and UFK to remedy this.
The Company has agreed with the Senior Lenders and RCF VI to
undertake a strategic review of its funding arrangements as the
operational ramp up at Drakelands is completed. As a condition to
the arrangements described above, the Company will appoint a
financial advisor to assist with the strategic review. The
strategic review is scheduled for completion prior to 28 October
2018.
Cash position
As reported in the Company's recent quarterly activities report,
the Company had A$19.8 million (GBP11 million) total cash at 30
June 2018, of which A$17.0 million (GBP9.5 million) was restricted
for use on the noise and vibration management plan. As a result of
the funding arrangements described above, the Company expects to
have sufficient working capital for the period to 28 October
2018.
Related Party Transaction
RCF VI is deemed to be a Related Party as defined in the AIM
Rules as it is considered to be an associate of Resource Capital
Fund V L.P. (RCF V) and RCF V Annex Fund (Annex Fund). RCF V, Annex
Fund and RCF VI currently hold in aggregate 609,704,057 shares,
which equates to a relevant interest of approximately 55.9%[1]. As
a result, entering into the amended Bridge Facility is deemed to be
a related party transaction under the AIM Rules.
The Company's Board of Directors (excluding Mr Chris Corbett,
who is an employee of an entity which is an associate of RCF VI and
RCF V) consider, having consulted with the Company's nominated
adviser, that the terms of the transaction are fair and reasonable
insofar as its shareholders are concerned.
ENDS
Wolf Minerals Limited
Richard Lucas + 44 (0) 17 5239 3235
Numis Securities
John Prior / James Black / Paul
Gillam +44(0)20 7260 1000
Newgate
Adam Lloyd +44 (0) 20 7653 9850
About Wolf Minerals
Wolf Minerals is a dual listed (ASX: WLF, AIM: WLFE) specialty
metals producer. In late 2015, Wolf Minerals completed the
development of a large tungsten resource at its Drakelands Mine,
located at Hemerdon, in southwest England.
[1] Total fully paid outstanding ordinary shares 1,090,880,251
as per Appendix 3B dated 3 July 2018.
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END
MSCRLMATMBMTBFP
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July 30, 2018 02:01 ET (06:01 GMT)
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