08:23:48 EDT Thu 28 Mar 2024
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or Name
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CA



Gran Colombia Gold Corp (3)
Symbol GCM
Shares Issued 23,703,281
Close 2015-11-30 C$ 0.15
Market Cap C$ 3,555,492
Recent Sedar Documents

Gran Colombia holder Miller supports debt restructuring

2015-11-30 22:04 ET - News Release

Mr. Mike Davies reports

GRAN COLOMBIA GOLD ANNOUNCES FURTHER CHANGES TO RESTRUCTURING PROPOSAL FOR THE GOLD-LINKED AND SILVER-LINKED NOTES AND RELEASE OF SUPPLEMENTAL MATERIALS

Further to the press release dated Nov. 25, 2015, Gran Colombia Gold Corp. has made some additional changes to its comprehensive debt restructuring proposal after further discussion with holders of its significant gold and silver notes, including Lloyd I. Miller. The debt restructuring proposal that is to be implemented pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) now has the support of the company's significant holders of gold and silver notes, including Mr. Miller, a significant holder of gold notes, who had previously indicated he was opposed to the company's initial proposal. The company believes that this revised arrangement represents the best available solution to restructuring the company's senior debt on consensual and advantageous terms, with the objective of addressing the company's capital structure and liquidity requirements. The revised arrangement will include:

  • All accrued and unpaid interest on the 10-per-cent secured gold-linked notes due 2017 and 5.0-per-cent senior unsecured silver-linked notes due 2018 will be added to the principal amount of each gold note and silver note.
  • The aggregate principal amount of the gold notes will also include a restructuring fee in the amount of $2-million (U.S.).
  • There will be an exchange of the principal amount of gold notes (including all accrued and unpaid interest plus the restructuring fee) for the same amount of PIK-toggle senior secured convertible debentures due 2020.
  • There will be an exchange of the principal amount of the silver notes for the same amount of PIK-toggle senior unsecured convertible debentures due 2018.
  • There will be an option for holders of each of the gold and silver notes to convert up to 100 per cent of their respective notes (including all accrued and unpaid interest and the restructuring fee for gold notes only) on the effective date of the revised arrangement into common shares of the company at a conversion price of 13 U.S. cents per common share, approximately equal to 17 Canadian cents, the volume-weighted average price of the company's common shares for the 20 consecutive trading days ended Nov. 27, 2015, based on the closing Bank of Canada exchange rate on Nov. 27, 2015, in lieu of debentures.

The 2020 debentures and 2018 debentures have the option to convert at any time during their term at the higher conversion prices of 20 U.S. cents per common share and 25 U.S. cents per common, respectively, as further described herein.

If the revised arrangement becomes impractical under the BCA, the company may instead complete a plan of arrangement or compromise under the Canadian Companies' Creditors Arrangement Act.

Revised materials, including a supplemental management information circular, revised proxies, and new letter of transmittal and election forms, with respect to the elected common shares, will be mailed to holders of the gold notes, silver notes and common shares. The supplemental circular and other materials will be available today on the company's website and its profile on SEDAR.

The special meetings of the holders of the gold notes, silver notes and common shareholders will be held on Dec. 22, 2015, at the times indicated in the supplemental circular. The record date of Oct. 26, 2015, for the meetings remains unchanged. Key terms of the gold note exchange and 2020 debentures under the revised arrangement include:

The maximum aggregate principal amount of the 2020 debentures shall be the sum of $100-million (U.S.) plus the accrued and unpaid interest on the gold notes that is added to the principal amount of gold notes under the revised arrangement, plus the restructuring fee, all as rounded down to the nearest whole $1 (U.S.). The ultimate aggregate principal of the 2020 debentures will depend on the number of elected common shares issued in exchange for gold notes pursuant to the revised arrangement.

Holders will have the option to convert some or all of their gold notes to elected common shares on the effective date of the revised arrangement at a conversion price of 13 U.S. cents per elected common share, representing approximately 7,692 common shares for each $1,000 (U.S.) gold note.

The 2020 debentures will be issuable only in denominations of $1 (U.S.) and integral multiples thereof.

The 2020 debentures, at the option of the company, will bear either: (a) cash interest at a rate of 6.00 per cent per annum, or (b) pay-in-kind (PIK) interest at a rate of 9.00 per cent 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 exchange date. The first payment will include interest payable from the exchange date. For further certainty, the company will make a cash interest payment unless it elects to make a PIK interest payment in respect of any monthly payment.

The maturity date of the 2020 debentures will be Jan. 2, 2020.

The 2020 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, at a conversion price of 20 U.S. cents per common share (before giving effect to any PIK interest or payment of interest in shares, this represents a conversion rate of 5,000 common shares per $1,000 (U.S.) principal amount of 2020 debentures). The 2020 conversion price shall be subject to standard provisions providing for adjustments upon the occurrence of certain corporate events.

The 2020 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 fewer than 30 days prior notice, at a price equal to their principal amount (including any PIK 2020 debentures issued) plus accrued and unpaid interest.

On maturity, the repayment obligations will be settled in cash as set out in the amended and restated gold note indenture.

The 2020 debentures will be senior secured indebtedness of the company. The ranking of, and security for, the 2020 debentures is as set out in the gold note indenture. The covenants and events of default are also as set out in the gold note indenture.

In addition to the right of the company to redeem the 2020 debentures, as set out above, the company will also have the right at any time to purchase the 2020 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 per cent of its excess cash flow, as defined below, will be paid into a sinking fund, which will be applied toward 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 2020 debentures. Excess cash flow means, with respect to any fiscal quarter of the company, consolidated earnings before interest, taxes, depreciation and amortization 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 silver note exchange and 2018 debentures under the revised arrangement include:

The maximum aggregate principal amount of the 2018 debentures shall be the sum of $78,632,000 (U.S.) plus the accrued and unpaid interest on the silver notes that is added to the principal amount of silver notes under the revised arrangement, rounded down to the nearest whole $1 (U.S.). The ultimate aggregate principal of the 2018 debentures will depend on the number of elected common shares issued in exchange for silver notes pursuant to the revised arrangement.

Holders will have the option to convert some or all of their silver notes to elected common shares on the effective date of the revised arrangement at a conversion price of 13 U.S. cents per elected common share, representing approximately 7,692 common shares for each $1,000 (U.S.) silver note.

The 2018 debentures will be issuable only in denominations of $1 (U.S.) and integral multiples thereof.

The 2018 debentures, at the option of the company, will bear either: (a) cash interest at a rate of 1.00 per cent per annum, or (b) PIK interest at a rate of 2.00 per cent 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 exchange date. The first payment will include interest payable from the exchange date. For further certainty, the company will make a cash interest payment unless it elects to make a PIK interest payment in respect of any monthly payment.

The maturity date of the 2018 debentures will be Aug. 11, 2018.

The 2018 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 conversion date, at a conversion price of 25 U.S. cents per common share (before giving effect to any PIK interest or payment of interest in shares, this represents a conversion rate of 4,000 common shares per $1,000 (U.S.) principal amount of 2018 debentures). The 2018 conversion price shall be subject to standard provisions providing for adjustments upon the occurrence of certain corporate events.

The 2018 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 fewer than 30 days prior notice, at a price equal to their principal amount (including any PIK 2018 debentures issued) plus accrued and unpaid interest.

On maturity, provided that no event of default shall have occurred and be continuing, the company may, at its option, on not fewer than 30 days prior notice and subject to regulatory approval, elect to satisfy its obligation to repay principal (including any PIK 2018 debentures issued) plus accrued and unpaid interest amounts of the 2018 debentures by issuing and delivering that number of common shares obtained by dividing the principal plus accrued and unpaid interest amounts of the outstanding 2018 debentures by 95 per cent 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.

The 2018 debentures will be unsecured indebtedness of the company. The covenants and events of default are also as set out in the silver note indenture.

In addition to the right of the company to redeem the 2018 debentures, as set out above, the company will also have the right at any time to purchase the 2018 debentures in the market, by tender or by private contract, at any price, which, for greater certainty, may be below par.

Voting information for securityholders

The company is in the process of mailing its supplemental circular and other materials regarding the postponed meetings to holders of the gold notes, silver notes and common shares. The forms of proxies or voting instruction forms that were previously provided with the original circular for use at the postponed meetings remain valid. Securityholders who have voted on the company's original debt restructuring proposal as set out in its Oct. 27, 2015, management information circular will not need to take any further action to have their votes counted in the same manner indicated by such securityholder in respect of the revised arrangement. If securityholders have already voted and wish to change their vote, please refer to the proxy revocation procedures set forth in the form of proxy and supplemental circular or simply submit a later-dated form of proxy or voting instruction form.

Holders of the gold notes, silver notes or common shares who have not yet voted or who voted against the company's original debt restructuring proposal should refer to the supplemental materials once received, and are encouraged to vote as soon as practicable and, in any event, no later than the proxy cut-off on Dec. 18, 2015. In connection with the revised arrangement, a new letter of transmittal and election form are being mailed, together with this supplemental circular, to each person who was a registered noteholder on the record date. To receive any elected common shares, registered noteholders must provide a properly completed letter of transmittal and election form to Equity Financial Trust Company (the depositary) prior to 5 p.m. (Toronto time) on Jan. 13, 2016. For further information or assistance on completing, submitting or revoking your proxy, please contact the company's proxy advisory and solicitation agent, Kingsdale Shareholder Services, at 1-866-581-0508, or by e-mail at contactus@kingsdaleshareholder.com.

The revised 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.

We seek Safe Harbor.

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