Mr. Sean Roosen reports
OSISKO AND FINANCIAL PARTNERS EXTEND BRIDGE FINANCING TO STORNOWAY TO SUPPORT STRATEGIC PROCESS
Osisko Gold Royalties Ltd. has entered into a binding bridge financing term sheet whereby it will provide a senior secured bridge credit facility to Stornoway Diamond Corp. together with certain secured lenders and key stakeholders. The bridge facility is being provided to Stornoway by the bridge lenders in order to support Stornoway during its strategic review process.
Sean Roosen, chair and chief executive officer of Osisko, stated, "We are working closely with Stornoway, its financial partners and the governement of Quebec to ensure the long-term viability of the Renard mine for the benefit of all stakeholders during these challenging times in the diamond market."
Osisko owns a senior secured 9.6-per-cent diamond stream on Stornoway's Renard diamond mine and will continue to receive deliveries under its stream agreement. Under the terms of the bridge facility, the buyers under the amended and restated purchase and sale agreement entered into on Oct. 2, 2018, in proportion to their respective commitments, will advance an amount equivalent to the stream net proceeds payable under the stream agreement to Stornoway, up to an estimated amount of $5.9-million ($2.8-million attributable to Osisko). The bridge facility also provides that Diaquem Inc., an affiliate of Investissement Quebec, has agreed to advance to Stornoway an amount of up to $11.7-million by way of access to the funds available in a senior loan reserve account maintained by Stornoway's subsidiary, Stornoway Diamond (Canada) Inc. (SDCI). In addition, amounts equivalent to royalty payments to be made by SDCI to Diaquem under the existing royalty agreement, up to an estimated amount of $1.9-million, and to interest payments accruing under the senior loan agreement between SDCI and Diaquem, up to an estimated amount of $2.5-million, have agreed to be advanced by Diaquem.
The bridge facility will be secured by a first-ranking security interest over all present and after-acquired assets and property of the Stornoway and will accrue interest at a rate equal to 8.25 per cent per annum.
Amounts owing under the bridge facility will become due and repayable in full upon the maturity date, being the earliest to occur of certain stated events, including: (i) the completion of a restructuring or other material transaction pursuant to the strategic process or the sale of all or substantially all of the property, assets and undertakings of Stornoway; and (ii) Sept. 16, 2019 (the maturity date being subject to 30-day extensions by unanimous consent of the bridge lenders).
Concurrently with the entering into of the bridge facility, Stornoway also entered into a binding term sheet with the holders of more than 75 per cent of the outstanding principal amount of the convertible debentures, pursuant to which such holders have consented to postpone interest payments on the convertible debentures from June 30 to Dec. 31, 2019. Stornoway also obtained a waiver from Fonds de Solidarite des Travailleurs du Quebec, Fonds Regional de Solidarite FTQ Nord-du-Quebec SEC and Diaquem of the requirement to make interest payments under the convention de pret dated as of May 3, 2012, from May 1, 2019, until Dec. 31, 2019, inclusively.
About Osisko Gold Royalties Ltd.
Osisko Gold Royalties is an intermediate precious metal royalty company that holds a North America-focused portfolio of over 135 royalties, streams and precious metal offtakes. Osisko's portfolio is anchored by its 5-per-cent net smelter return royalty on the Canadian Malartic mine, which is the largest gold mine in Canada.
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