Imperial Metals Announces New Debt Facility and C$40 Million Rights Offering
VANCOUVER, British Columbia, Oct. 27, 2017 (GLOBE NEWSWIRE) -- Imperial Metals Corporation (the “Company”) (TSX:III) reports that it has concluded its discussions with its Senior Credit Facility and Second Lien Credit Facility lenders and provides the following update on its Financing Plan which is subject to receipt of certain required regulatory approvals and definitive documentation.
The elements of the Financing Plan are as follows:
Senior Credit Facility and Second Lien Credit Facility
The Company’s Senior Credit Facility (“SCF”) and Second Lien Credit Facility (“SLCF”) lenders have agreed to permanently waive the breach of EBITDA covenant related to the quarter ended June 30, 2017. In addition, the SCF and SLCF will be extended to October 1, 2018 and December 1, 2018 respectively. A fee of $500,000 will be payable in respect of the amendments. Two of the four financial covenants will be removed leaving only a Senior Debt to EBITDA covenant of 3.75:1 and a minimum liquidity covenant of $5 million.
The Company reports that it has closed a non-brokered private placement (“Private Placement”) consisting of units of the Company raising gross proceeds of $5 million. The proceeds of the Private Placement will be used for general corporate purposes.
Under the Private Placement the Company has issued 1,818,182 units (the “Units”) at a price of $2.75 per Unit. Each Unit consists of one common share and one-half of one transferable common share purchase warrant. Each whole warrant will entitle the holder to purchase, for a period of 24 months from the date of issue, one additional common share of the Company at a price of $3.25 per share.
The common shares issued pursuant to the Private Placement represent approximately 1.94% of the issued and outstanding common shares of the Company. N. Murray Edwards (“Edwards”), a significant shareholder of the Company, has purchased approximately $4.6 million (1,686,082 Units) and directors and officers of the Company have purchased approximately $0.4 million (132,100 Units) of the Private Placement. The Private Placement is a “related party transaction” under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions. (“MI 61-101”). The Company did not file a material change report 21 days prior to the closing of the Private Placement because details were not settled until shortly prior to closing and the Company wished to complete the Private Placement as soon as possible. The Private Placement will be exempt from the formal valuation and minority approval requirements of MI 61-101 as it represents less than 25% of the Company’s market capitalization.
$10 Million Unsecured Debt Facility
The board of directors has also approved the establishment of a new $10 million unsecured debt facility (“2017 LOC”) that is to be provided by an affiliate of Edwards. The 2017 LOC will be available on November 1, 2017, will bear interest at 12% per annum and mature on January 5, 2019. An arrangement fee of $50,000 will be payable on closing.
The 2017 LOC will be used for general working capital purposes, including capital expenditures. The 2017 LOC will constitute a related party transaction within the meaning of MI 61-101. Management considers the 2017 LOC to be advantageous as it provides additional liquidity and financial flexibility to the Company and the terms to be reasonable in the context of the market.
The 2017 LOC was reviewed and approved by the disinterested members of the Company’s board of directors. The material change report in relation to the 2017 LOC will be filed less than 21 days before the expected closing date of the Loan as the Company wishes to complete the Loan as soon as commercially feasible after all required approvals are obtained. The 2017 LOC will be exempt from the formal valuation and minority approval requirements of MI 61-101 as it represents less than 25% of the Company’s market capitalization.
Interest Payments on Certain Debt Facilities
The Company would also like to confirm that from the respective next interest payment dates until January 1, 2019 the interest on the $75 million Junior Credit facility, all of the $115 million 2014 Convertible Debenture and $26.7 million of the $30 million 2015 Convertible Debenture will be paid in shares of the Company. This will reduce the Company’s overall cash interest payments by approximately $16 million per annum.
As announced on October 13, 2017 the Company has extended the maturity date of the $20 million Bridge Loan provided by Edco Capital Corporation, an affiliate of Edwards, and The Fairholme Partnership, LP (“Fairholme”) to January 5, 2019. As part of the Financing Plan the Bridge Loan will be increased by $6 million to $26 million effective October 31, 2017 with half the increase to be provided by an affiliate of Fairholme. A fee of $65,000 will be payable in respect of the extension/increase. The interest rate remains at 8% per annum.
The board of directors has approved the Company undertaking a rights offering (“Rights Offering”) to be made only to holders of common shares by the issue of the rights (“Rights”) entitling them to subscribe for approximately $40 million of shares at a price to be determined in the context of the market at the time of filing the Rights Offering Circular (“Circular”). Overallotment subscription privileges will be extended to all shareholders. Edwards has advised that he intends to exercise all of his Rights and cause all of his affiliates to do so. Fairholme Capital Management, LLC, an affiliate of Fairholme, has advised that, subject to relevant restrictions, it intends to exercise all of the Rights to be received by certain funds or accounts over which it exercises discretionary management authority.
At the time of filing the Circular, the Company expects Edwards to commit to purchase all the common shares which remain unsubscribed for by the holders of the Rights. In exchange for backstopping the Rights Offering, the Company expects to pay Edwards a fee of 3% of the gross proceeds of the Rights Offering, excluding proceeds from the exercise of Rights issued in respect of common shares owned or over which the Edwards and Fairholme or their affiliates have control.
Further information regarding the proposed Rights Offering will follow in due course through subsequent announcements, as well as a disclosure document, which will be filed and sent to shareholders of record on a date to be determined.
This news release does not constitute an offer for sale or the solicitation of an offer to buy any securities in the United States. The securities referenced herein have not been registered under the United States Act of 1933, as amended, and such securities may not be offered or sold within the United States absent such registration or an applicable exemption from such registration requirements.
Imperial is a Vancouver based exploration, mine development and operating company. The Company, through its subsidiaries, owns the Red Chris, Mount Polley and Huckleberry copper mines in British Columbia. Imperial also holds a 50% interest in the Ruddock Creek lead|zinc property in British Columbia.