Gran Colombia Gold Announces the Restructuring Proposal for the Gold-Linked and Silver-Linked Notes
Sep 29, 2015
6:03pm
TORONTO, Sept. 29, 2015 /CNW/ - Gran Colombia Gold Corp. (the "Company") (TSX: GCM, OTC: TPRFF) announced today the details for a comprehensive debt restructuring proposal that is to be implemented pursuant to a Plan of Arrangement (the "Arrangement") under the Business Corporations Act (British Columbia) (the "BCA").
The comprehensive debt restructuring will include:
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the exchange of the US$100 million face value of 10.0% Secured Gold-Linked Notes due 2017 (the "Gold Notes") for Senior Secured Convertible PIK-Toggle Debentures due 2020 (the "Secured Debentures") (the "Gold Notes Exchange"); and |
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the exchange of the US$78.6 million face value of 5.0% Senior Unsecured Silver-Linked Notes due 2018 (the "Silver Notes") for Senior Unsecured Convertible PIK-Toggle Debentures due 2022 (the "Unsecured Debentures") (the "Silver Notes Exchange"). |
The Company expects to hold meetings of holders of the Gold Notes, the Silver Notes and the Company's common shares on or about November 27, 2015 to approve the Arrangement. If an Arrangement becomes impractical under the BCA, the Company may instead complete a Plan of Arrangement or Compromise under the Canadian Companies' Creditors Arrangement Act.
The Company also intends to add three new independent members to its Board of Directors. The Company's Compensation, Corporate Governance and Nominating Committee is reviewing candidates and will provide further information on nominees with the meeting materials.
Upon the Arrangement becoming effective, all arrears of interest on the Gold Notes and Silver Notes will be capitalized and included in the face value of the Secured Debentures and Unsecured Debentures, respectively, and will ultimately be paid on maturity of the Secured Debentures and Unsecured Debentures, respectively. Where such capitalization of arrears of interest would otherwise result in a Secured Debenture or an Unsecured Debenture, as the case may be, with a face value that is not an integral multiple of $1,000, the face value of such Secured Debenture or Unsecured Debenture will be rounded down to the nearest $1,000.
Key terms of the Secured Debentures include:
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Holders will exchange US$1,000 Gold Notes for US$1,000 Secured Debentures (prior to the addition of interest in arrears on the Gold Notes). |
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The Secured Debentures, at the option of the Company, will bear either (a) cash interest at a rate of 3.00% per annum or (b) pay-in-kind interest (or "PIK") at a rate of 4.00% per annum, in either case payable monthly in arrears on the last business day of each month, commencing in the first full calendar month following the date of the exchange. For further certainty, the Company will be able to elect between either a cash interest payment or a PIK interest payment on a monthly basis. PIK interest will be added to the principal amount of the Secured Debentures outstanding. |
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The Secured Debentures will be convertible, at the option of the holder at any time prior to the close of business on the earlier of the maturity date and the last business day immediately preceding the date fixed for redemption (the "Conversion Date"), at a conversion price of US$0.30 per common share (the "Conversion Price") (before giving effect to any PIK interest or payment of interest in shares, this represents a conversion rate of approximately 3,333.33 common shares per US$1,000 principal amount of Secured Debenture). The Conversion Price shall be subject to standard provisions providing for adjustments upon the occurrence of certain corporate events. |
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The Secured Debentures may be redeemed for cash in whole or in part from time to time at the option of the Company on not more than 60 days and not less than 30 days prior notice, at a price equal to their principal amount (including any PIK principal increases) plus accrued and unpaid interest. |
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On maturity, provided that no event of default shall have occurred and be continuing, the Company may, at its option, on not more than 60 and not less than 30 days prior notice and subject to regulatory approval, elect to satisfy its obligation to repay principal (including any PIK principal increases) plus accrued and unpaid interest amounts of the Secured Debentures by issuing and delivering that number of freely tradeable common shares obtained by dividing the principal plus accrued and unpaid interest amounts of the outstanding Secured Debentures which have matured by 95% of the volume weighted average trading price of the common shares on the TSX for the 20 consecutive trading days ending five trading days preceding the Maturity Date. |
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The Secured Debentures will be senior secured indebtedness of the Company. The ranking of, and security for, the Secured Debentures are as set out in the Gold Notes trust indenture. The covenants and events of default are also as set out in the Gold Notes trust indenture. |
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In addition to the right of the Company to redeem the Secured Debentures, as set out above, the Company will also have the right at any time to purchase the Secured Debentures in the market, by tender, or by private contract, at any price, which, for greater certainty, may be below par. |
In addition to the above, the Company covenants that a minimum of 75% of its Excess Cash Flow, as defined below, will be paid into a sinking fund, which will be applied towards repayment, repurchase (in the market, by tender, or by private contract, at any price, which, for greater certainty, may be below par) or other redemption, as the Company elects, of the Secured Debentures and the Unsecured Debentures, with 2/3 and 1/3 of such sinking fund to be used in respect thereof, respectively. "Excess Cash Flow" means with respect to any fiscal quarter of the Company, consolidated EBITDA for such fiscal quarter less capital, development and exploration expenditures, cash payments of principal and interest on debt, changes in non-cash working capital items and payment of taxes and certain other existing financial obligations of the Company.
Key terms of the Unsecured Debentures include:
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Holders will exchange US$1,000 Silver Notes for US$1,000 Unsecured Debentures (prior to the addition of interest in arrears on the Silver Notes). |
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The Unsecured Debentures, at the option of the Company, will bear either (a) cash interest at a rate of 1.5% per annum or (b) pay-in-kind interest (or "PIK") at a rate of 2.5% per annum, in either case payable monthly in arrears on the last business day of each month, commencing in the first full calendar month following the date of the exchange. For further certainty, the Company will be able to elect between either a cash interest payment or a PIK interest payment on a monthly basis. PIK interest will be added to the principal amount of the Unsecured Debentures outstanding. |
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The Unsecured Debentures will be convertible, at the option of the holder at any time prior to the close of business on the earlier of the maturity date and the last business day immediately preceding the date fixed for redemption (the "Conversion Date"), at a conversion price of US$0.25 per common share (the "Conversion Price") (before giving effect to any PIK interest or payment of interest in shares, this represents a conversion rate of approximately 4,000 common shares per US$1,000 principal amount of Unsecured Debenture). The Conversion Price shall be subject to standard provisions providing for adjustments upon the occurrence of certain corporate events. |
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The Unsecured Debentures may be redeemed for cash in whole or in part from time to time at the option of the Company on not more than 60 days and not less than 30 days prior notice, at a price equal to their principal amount (including any PIK principal increases) plus accrued and unpaid interest. |
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On maturity, provided that no event of default shall have occurred and be continuing, the Company may, at its option, on not more than 60 and not less than 30 days prior notice and subject to regulatory approval, elect to satisfy its obligation to repay principal (including any PIK principal increases) plus accrued and unpaid interest amounts of the Unsecured Debentures by issuing and delivering that number of freely tradeable common shares obtained by dividing the principal plus accrued and unpaid interest amounts of the outstanding Unsecured Debentures which have matured by 95% of the volume weighted average trading price of the common shares on the TSX for the 20 consecutive trading days ending five trading days preceding the Maturity Date. |
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The Unsecured Debentures will be unsecured indebtedness of the Company. The covenants and events of default are also as set out in the Silver Notes trust indenture. |
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In addition to the right of the Company to redeem the Unsecured Debentures, as set out above, the Company will also have the right at any time to purchase the Unsecured Debentures in the market, by tender, or by private contract, at any price, which, for greater certainty, may be below par. |
The Excess Cash Flow covenant outlined above will also apply to the Unsecured Debentures as described.
The Company will be providing additional information regarding the forthcoming meetings to holders of the Gold Notes, Silver Notes and common shares in due course. The Arrangement is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals including the receipt of approval by the Toronto Stock Exchange. Terms outlined herein may be amended as required to receive such approvals.
About Gran Colombia Gold Corp.
Gran Colombia is a Canadian-based gold and silver exploration, development and production company with its primary focus in Colombia. Gran Colombia is currently the largest underground gold and silver producer in Colombia with several underground mines in operation at its Segovia and Marmato Operations. Gran Colombia is currently advancing a project to develop a modern, large-scale, gold and silver mine at its Segovia operations.
Additional information on Gran Colombia can be found on its website at www.grancolombiagold.com and by reviewing its profile on SEDAR at www.sedar.com.
Cautionary Statement on Forward-Looking Information:
This news release contains "forward-looking information", which may include, but is not limited to, the proposed terms of the debt restructuring proposal and the expected timing for the meetings of the Gold Notes, the Silver Notes and the Company's common shares. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Gran Colombia to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption "Risk Factors" in the Company's Annual Information Form dated as of March 31, 2015, which is available for view on SEDAR at www.sedar.com. Forward-looking statements contained herein are made as of the date of this press release and Gran Colombia disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. 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, the reader is cautioned not to place undue reliance on forward-looking statements.
SOURCE Gran Colombia Gold Corp.
For further information: Peter Volk, General Counsel & Secretary, (416) 360-4653, investorrelations@grancolombiagold.com