Mandalay Resources Corporation Announces Repurchase Offer and Consent Solicitation in Respect of 5.875% Secured Exchangeable Bonds
(Thomson Reuters ONE) -
TORONTO, April 19, 2017 (GLOBE NEWSWIRE) -- Mandalay Resources Corporation
("Mandalay" or the "Company") (TSX:MND) announced today that Gold Exchange
Limited ("GEL"), an unaffiliated special purpose vehicle incorporated in Jersey,
has launched a repurchase offer (the "Repurchase") and consent solicitation (the
"Consent Solicitation") in respect of its US$60,000,000 principal amount 5.875%
secured exchangeable bonds due in 2019 (the "Bonds").
GEL issued the Bonds in 2014 and loaned the proceeds to a subsidiary of the
Company pursuant to the terms of a loan agreement and related funding agreement
(the "Loan") which together mirror the principal terms of the Bonds.
Pursuant to the Repurchase, GEL is offering to purchase up to US$30,000,000
principal amount of the Bonds from the holders thereof at a price of US$52,500
for each US$50,000 in principal amount of the Bonds.
Pursuant to the Consent Solicitation, GEL is seeking Bondholder approval for a
number of proposed amendments to the terms of the Bonds, including:
* extending the maturity date of the Bonds by three years to May 13, 2022;
* deleting a condition of the Bonds that currently requires that beginning on
May 14, 2017, as additional security for the Bonds, GEL is required to start
depositing into a custody account, the aggregate number of shares of the
SPDR Gold Trust issuable upon exchange of the Bonds;
* adding a new covenant to the Bonds pursuant to which GEL will be required to
offer to repurchase a proportion of the Bonds outstanding at the relevant
time if and to the extent that the contained gold equivalent (in ounces) at
Mandalay's Costerfield mine falls below (initially) 232,000 gold equivalent
ounces;
* increasing the interest rate payable on the Bonds from 5.875% per annum to
6.375% per annum; and
* reducing the exchange price of the Bonds from US$149.99 to US$135.00.
Further details regarding the Repurchase and the Consent Solicitation are set
forth in GEL's announcement regarding the Repurchase and Consent Solicitation, a
copy of which is attached to this press release as Schedule "A".
Mandalay will be required to fund any amounts required by GEL to repurchase the
Bonds pursuant to the Repurchase and all associated fees and expenses (including
early consent fees and consent fees). The outstanding amount of the Loan will be
reduced by an amount equal to the principal amount of the Bonds repurchased
pursuant to the Repurchase. If the proposed amendments to the terms of the Bonds
are approved and implemented, similar amendments will be made to the terms of
the Loan.
Mark Sander, President and Chief Executive Officer of Mandalay, commented, "The
proposed amendments to Bonds (and in turn to the Loan) provide a number of
advantages to Mandalay including eliminating the requirement for Mandalay to
deploy capital in a non-productive manner to purchase gold shares for escrow in
advance of the maturity of the Bonds and extending the maturity of the Bonds by
three years. Any repurchase of the Bonds, which will further de-lever our
already lightly levered balance sheet, will be funded from our existing cash
balances. Our strong balance sheet should allow us to raise additional debt as
and when required to fund our capital investment program and for potential
acquisitions."
For Further Information:
Mark Sander
President and Chief Executive Officer
Greg DiTomaso
Director of Investor Relations
Contact:
647.260.1566
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural resource company with producing
assets in Australia, Sweden and producing and exploration projects in Chile. The
Company is focused on executing a roll-up strategy, creating critical mass by
aggregating advanced or in-production gold, copper, silver and antimony projects
in Australia, the Americas and Europe to generate near-term cash flow and
shareholder value.
Forward-Looking Statements:
This news release contains "forward-looking statements" within the meaning of
applicable securities laws, including statements regarding the Company's
production of gold, silver and antimony for the 2017 fiscal year. Readers are
cautioned not to place undue reliance on forward-looking statements. Actual
results and developments may differ materially from those contemplated by these
statements depending on, among other things, changes in commodity prices and
general market and economic conditions. The factors identified above are not
intended to represent a complete list of the factors that could affect Mandalay.
A description of additional risks that could result in actual results and
developments differing from those contemplated by forward-looking statements in
this news release can be found under the heading "Risk Factors" in Mandalay's
annual information form dated March 31, 2017, a copy of which is available under
Mandalay's profile at www.sedar.com. In addition, there can be no assurance that
any inferred resources that are discovered as a result of additional drilling
will ever be upgraded to proven or probable reserves. Although Mandalay has
attempted to identify important factors that could cause actual actions, events
or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results not
to be as anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements.
Schedule "A"
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, ITS
TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF
COLUMBIA (THE "UNITED STATES")
GOLD EXCHANGEABLE LIMITED ANNOUNCES A REPURCHASE OFFER AND CONSENT SOLICITATION
IN RESPECT OF ITS U.S.$60,000,000 5.875 PER CENT. SECURED EXCHANGEABLE BONDS DUE
2019, EXCHANGEABLE INTO SHARES IN THE SPDR GOLD TRUST
Gold Exchangeable Limited (the "Issuer") today announces a repurchase offer (the
"Repurchase") and consent solicitation (the "Consent Solicitation") in respect
of its U.S.$60,000,000 5.875 per cent. Secured Exchangeable Bonds due 2019 (the
"Bonds") (ISIN: XS1061459381), exchangeable into shares in the SPDR Gold Trust
(the "Gold Shares").
The Repurchase and Consent Solicitation are being made on the terms, and subject
to the conditions, contained in the repurchase and consent solicitation
memorandum dated 19 April 2017 (the "Repurchase and Consent Solicitation
Memorandum"). Capitalised terms used in this announcement have the same meaning
ascribed to them in the Repurchase and Consent Solicitation Memorandum.
Background to the Repurchase and Consent Solicitation
Starting on 14 May 2017, the Issuer is required to start acquiring Gold Shares
and depositing them in a Custody Account for the benefit of Bondholders.
Mandalay Resources Corporation ("MRC") would effectively be required to fund
these purchases. This would result in MRC indirectly paying interest on the
Bonds while holding increasing amounts of non-yielding Gold Shares, rather than
being able to productively invest the funds in its business.
MRC has concluded that this is a sub-optimal use of the Group's assets and, in
consultation with certain of the Bondholders, has decided to make the Proposal
to all Bondholders to better align anticipated growth opportunities with an
efficient balance sheet.
The Repurchase
Subject to the terms and conditions set out in the Repurchase and Consent
Solicitation Memorandum, the Issuer is offering to repurchase for cash up to
U.S.$30,000,000 principal amount of Bonds. The Purchase Price payable for Bonds
accepted in the Repurchase shall be U.S.$52,500 for each U.S.$50,000 in
principal amount of the Bonds, payable in cash in U.S. dollars. If more than
U.S.$30,000,000 in principal amount of Bonds are offered for repurchase in the
Repurchase, the Issuer shall scale back all acceptances received on a pro rata
basis.
By accepting the Repurchase and submitting an Electronic Instruction, each
Bondholder will irrevocably instruct the Principal Paying, Transfer and Exchange
Agent to appoint a proxy on behalf of the Bondholder and, subject to the terms
and conditions set out in the Repurchase and Consent Solicitation Memorandum, to
attend and vote in favour of the Extraordinary Resolution at the Meeting (and
any adjournment thereof).
The Proposal
The Proposal that the Issuer is inviting the Bondholders to approve will, if
approved and implemented, modify the Conditions and the Trust Deed (with
consequential changes to the Amended and Restated Transaction Documents) as
follows and as further described in the Supplemental Trust Deed and the Amended
and Restated Transaction Documents (items (i) to (vi) together, the "Proposal"):
(i) extension of the maturity date of the Bonds by three years to 13 May 2022;
(ii) deletion of Condition 3.2 in the Conditions, which currently requires
that, with effect from 14 May 2017, the Issuer must register Gold Shares in the
Custody Accounts on an ongoing basis, and the consequent release by the Trustee
(acting on the instructions of the Secured Creditors) of (A) the first ranking
fixed charge over the Custody Accounts and the Issuer Bank Account) and (B) the
assignment by way of security of all the Issuer's rights, title and interest in
and to the Custody Agreement, the Custody Accounts and all Gold Shares and other
securities (if any) and any cash distributions related to the Gold Shares (if
any) standing to the credit of the Custody Accounts and the Issuer Bank Account
Agreement, the Issuer Bank Account and all amounts (if any) standing to the
credit of the Issuer Bank Account (the "Relevant Security"), and the removal of
the Relevant Security from the Secured Property pursuant to a deed of release to
be entered into between 2the Issuer, the Trustee, the Australian Trustee, The
Bank of New York Mellon, London Branch (as Paying, Transfer and Exchange Agent,
Registrar, Custodian and Account Bank), Crestbridge Corporate Services Limited
(as Corporate Services Provider) and Conv-Ex Advisors Limited (as Calculation
Agent);
(iii) introduction of a new covenant by the Issuer pursuant to which the Issuer
will offer to purchase a proportion of the Bonds outstanding at the relevant
time if and to the extent that the contained gold equivalent (in ounces) at
MRC's gold-antimony mine in Costerfield, Australia falls below (initially)
232,000 gold equivalent ounces;
(iv) increase in the interest rate payable on the Bonds from 5.875 per cent.
per annum to 6.375 per cent. per annum;
(v) reduction in the Exchange Price of the Bonds from U.S.$149.99 to
U.S.$135.00; and
(vi) making of certain other technical amendments to the Trust Deed, the
Conditions and the Amended and Restated Transaction Documents to give effect to
(i) to (v) above.
Early Consent Fee / Consent Fee
Subject to the terms and conditions specified in the Repurchase and Consent
Solicitation Memorandum, including the Payment Conditions, being satisfied,
Bondholders who have voted in favour of the Extraordinary Resolution by
delivering or procuring the delivery of an Electronic Instruction (which is not
validly revoked) (a) prior to the Early Consent Deadline will be eligible to
receive the Early Consent Fee, and (b) after the Early Consent Deadline but
prior to the Expiration Deadline will be eligible to receive the Consent Fee,
save that the Early Consent Fee and Consent Fee shall not be payable in respect
of any Bonds that are tendered for purchase in the Repurchase.
Bondholders will not receive the Early Consent Fee or the Consent Fee in respect
of any Bonds tendered for purchase in the Repurchase.
The Early Consent Fee is an amount in cash in U.S. dollars equal to 1.00 per
cent. of the aggregate principal amount of Bonds which are the subject of a
relevant Electronic Instruction, and is only payable in respect of Bonds which
are the subject of an Electronic Instruction delivered prior to the Early
Consent Deadline, and which are not tendered for purchase in the Repurchase.
The Consent Fee is an amount in cash in U.S. dollars equal to 0.50 per cent. of
the aggregate principal amount of Bonds which are the subject of a relevant
Electronic Instruction, and is only payable in respect of Bonds which are the
subject of an Electronic Instruction delivered after the Early Consent Deadline
but prior to the Expiration Deadline, and which are not tendered for purchase in
the Repurchase.
As at the date of this Repurchase and Consent Solicitation Memorandum, the
Issuer has received indications of support for the Proposal from Bondholders
holding in aggregate U.S.$35,000,000 in principal amount of the Bonds (equal to
58.3 per cent. of the outstanding Bonds).
THE ISSUER WILL NOT ACCEPT REPURCHASES OF BONDS IF IT DOES NOT RECEIVE
ELECTRONIC INSTRUCTIONS VOTING IN FAVOUR OF THE PROPOSAL FROM BONDHOLDERS
HOLDING IN AGGREGATE AT LEAST 75 PER CENT. IN PRINCIPAL AMOUNT OF THE BONDS
OUTSTANDING BY THE EXPIRATION DEADLINE.
Expected Timetable
This timetable assumes that (i) the Meeting is quorate and (ii) new meetings are
not convened in respect of the Bonds. This timetable is subject to change and
dates and times may be extended or changed by the Issuer in accordance with the
terms of the Repurchase and Consent Solicitation, as described in the Repurchase
and Consent Solicitation Memorandum. Accordingly, the actual timetable may
differ significantly from the timetable below.
+----------------------------------------+-------------------------------------+
|Event Day |Date and Time |
+----------------------------------------+-------------------------------------+
|Commencement of Repurchase and Consent | |
|Solicitation | |
+----------------------------------------+-------------------------------------+
|Repurchase and Consent Solicitation | |
|announced. Repurchase and Consent | |
|Solicitation Memorandum available from | |
|the Repurchase Agent and the Principal | |
|Paying, Transfer and Exchange Agent |19 April 2017. |
+----------------------------------------+-------------------------------------+
|Deadline for Early Consent Fee | |
| | |
|Latest time for receipt of votes in | |
|favour of the Proposal to qualify for |4:00 p.m. (London time) on 28 April |
|the Early Consent Fee. |2017. |
+----------------------------------------+-------------------------------------+
|Deadline for appointing a proxy or | |
|representative | |
+----------------------------------------+-------------------------------------+
|In relation to the Meeting of the Bonds,| |
|the latest time for appointing a proxy | |
|or representative to attend and vote at |4:00 p.m. (London time) on 10 May |
|the Meeting in person. |2017. |
+----------------------------------------+-------------------------------------+
|Expiration Deadline | |
+----------------------------------------+-------------------------------------+
|Final deadline for receipt of valid | |
|Electronic Instructions by the | |
|Repurchase Agent in order for | |
|Bondholders to be able to participate in| |
|the Repurchase. | |
| | |
|Final deadline for receipt of valid | |
|Electronic Instructions in favour of the| |
|Extraordinary Resolution by the | |
|Principal Paying, Transfer and Exchange |4:00 p.m. (London time) on 10 May |
|Agent of an Electronic Instruction. |2017. |
+----------------------------------------+-------------------------------------+
|Meeting | |
+----------------------------------------+-------------------------------------+
| |10:00 a.m. (London time) on 12 May |
|Time and date of the Meeting. |2017. |
+----------------------------------------+-------------------------------------+
|Announcement and publication of results | |
|of the Meeting | |
+----------------------------------------+-------------------------------------+
|Announcement of the results of the |As soon as reasonably practicable |
|Meeting. |after the Meeting has concluded. |
+----------------------------------------+-------------------------------------+
|Settlement Date | |
| | |
|Date on which payment of the Purchase | |
|Price for the Bonds accepted for | |
|purchase and settlement of such | |
|purchases is expected to be made. | |
| | |
|Date on which the Consent Fee and the | |
|Early Consent Fee (if applicable) is | |
|expected to be paid. |15 May 2017 |
+----------------------------------------+-------------------------------------+
Further Information
A complete description of the terms and conditions of the Repurchase and the
Proposal is set out in the Repurchase and Consent Solicitation Memorandum. A
copy of the Repurchase and Consent Solicitation Memorandum is available to
eligible persons upon request from the Principal Paying, Transfer and Exchange
Agent.
Before making a decision with respect to the Proposals, Bondholders should
carefully consider all of the information in the Repurchase and Consent
Solicitation Memorandum and, in particular, the risk factors described in the
section entitled "Risk Factors and Other Considerations".
None of the Issuer, MRFL, MRC, the Dealer Manager and Solicitation Agent, the
Repurchase Agent, the Principal Paying, Transfer and Exchange Agent, the Trustee
or the Australian Trustee, or any of their respective directors or employees,
makes any recommendation as to whether Bondholders should participate in the
Repurchase and approve the Proposal described in the Repurchase and Consent
Solicitation Memorandum. This announcement must be read in conjunction with the
Repurchase and Consent Solicitation Memorandum. This announcement and the
Repurchase and Consent Solicitation Memorandum contain important information,
which should be read carefully before any decision is made with respect to the
Proposal. If any holder of Bond is in any doubt as to the action it should take,
it is recommended to seek its own advice, including as to any tax consequences,
from its stockbroker, bank manager, solicitor, accountant or other independent
adviser.
Offer and Distribution Restrictions
This announcement and the Repurchase and Consent Solicitation Memorandum do not
constitute an invitation to participate in the Repurchase in any jurisdiction in
which, or to any person to or from whom, it is unlawful to make such invitation
or for there to be such participation under applicable securities laws. The
distribution of the Repurchase and Consent Solicitation Memorandum in certain
jurisdictions may be restricted by law. Persons into whose possession the
Repurchase and Consent Solicitation Memorandum comes are required by each of the
Issuer, MRFL, MRC, the Dealer Manager and Solicitation Agent, the Repurchase
Agent and the Principal Paying, Transfer and Exchange Agent to inform themselves
about, and to observe, any such restrictions.
No action has been or will be taken in any jurisdiction in relation to the
Repurchase and Consent Solicitation that would permit a public offering of
securities.
Requests for information in relation to the Repurchase and Consent Solicitation
should be directed to:
DEALER MANAGER AND SOLICITATION AGENT
KNG Securities LLP
6 Broad Street Place
London EC2M 7JH
United Kingdom
Email: nnugent(at)kngsecurities.com
Telephone: +44 20 7426 2602
Attention: Nick Nugent
Requests for copies of the Repurchase and Consent Solicitation Memorandum and
information in relation to the procedures for submission of an Electronic
Instruction should be directed to:
REPURCHASE AGENT AND PRINCIPAL PAYING, TRANSFER AND EXCHANGE AGENT
The Bank of New York Mellon, London Branch
One Canada Square
London E14 5AL
United Kingdom
Email: debtrestructuring(at)bnymellon.com
Telephone: +44 (0)1202 689644
Attention: Debt Restructuring Services Team
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Mandalay Resources Corporation via GlobeNewswire
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