AURELIA METALS LIMITED Aurelia Metals ('Aurelia', 'AMI' or 'the Company') wishes to advise that it has entered into a legally binding Term Sheet with Glencore for the provision of funding to the Company and settlement of the litigation between the parties ('the Agreement'). As a consequence of the Agreement, Glencore and AMI have jointly applied to the Supreme Court of NSW to have the current court proceedings adjourned.
The Agreement highlights are:
All legal disputes with Glencore are settled
All existing debt repayments are deferred for at least two years
All interest is suspended on the current and new senior finance facilities for two years**
Glencore to provide additional funding of a net $21.5 million to support the business through additional loans and credit support
Additional funding includes an advance payment of $5 million which has been received
Aurelia maintains conversion rights to convert up to $77 million of the facilities at the end of the two year deferral period
The Agreement constitutes binding and enforceable legal obligations but is subject to being restated in a more complete and precise manner in a formal agreement or agreements by 18 December 2015. In addition to the execution of the formal agreements, the Agreement is subject to a number of conditions precedent which must be satisfied or waived on or before 2 March 2016, including:
Aurelia obtaining any necessary shareholder approvals;
Glencore obtaining any necessary regulatory approvals;
Aurelia committing not to draw down on the Pacific Road Facilities (ASX announcement 9 September 2015);
Aurelia and Glencore jointly agreeing a 12 month business plan; and
Aurelia cancelling any dilutive settlement arrangements with creditors.
**Except the A$15m Pre-Export Finance Loan, where repayments commence 12 months after drawdown (refer Appendix)
Chief Executive Officer Rimas Kairaitis commented;
'Aurelia welcomes the Agreement, as its sets aside the considerable legal and financial uncertainty around the Company whilst providing a net A$21.5m funding together with a substantial deferral of existing debt repayments and interest. Aurelia can now proceed with the rectification and optimisation of the Hera project and position the business for growth'
Background and Settlement
ASX: AMI 27 November 2015As previously detailed, the Company has drawn funding facilities provided by Glencore totalling approximately $120 million (including capitalised interest as detailed in the table below).
Since 26 June 2015, Aurelia has been in dispute with Glencore, with the dispute being heard by the NSW Supreme Court on the 4th and 5th November 2015. Following the court hearing of the 4 and 5 November the court reserved judgment.
During and since the court proceedings, Aurelia and Glencore have maintained discussions with a view to reaching a negotiated outcome to the dispute.
On 25 November, Aurelia and Glencore reached a settlement and funding agreement on the terms summarised in the Appendix. On reaching that agreement, the parties have jointly approached the court for an adjournment of judgment until the earlier of the completion of the Agreement or 2 March 2016. On Completion the parties will jointly apply to have the court proceedings formally dismissed.
Agreement
In the view of the Aurelia Directors, the Agreement reached represents the best outcome for Aurelia in the context of the current and foreseeable commercial environment as well as the legal and financial circumstances of the Company.
With the suspension of the existing funding facility obligations and the provision of $21.5m net new funding, the Agreement provides the opportunity to stabilise and rectify the issues associated with the Hera processing plant and work collectively through the business plan to deliver a sustainable Hera operation.
The Company's obligation to issue the options to Pacific Road and Pybar remain in place (as announced to ASX on 28 September 2015).
Treadstone Resource Partners acted as exclusive strategic and financial advisors to Aurelia.
Revised Funding Profile
On Completion of the Agreement, the key changes in Aurelia's debt facilities will be as follows:
Facility A: Converting Note
Facility B: Converting Note
Facility C: Debt
Facility D: Debt
Facility E: Debt
Total
20,000,000
50,000,000
30,000,000
50,000,000
5,000,000
-
-
155,000,000
23,579,871
57,061,144
33,441,105
Undrawn (7)
5,967,687
120,049,807
15-Sep-15
15-Sep-15
15-Sep-15
15-Sep-15
15-Oct-15
15-Oct-15
15-Oct-15
15-Oct-15
15-Mar-18
15-Mar-18
15-Mar-18
15-Oct-16
2.5
2.5
2.5
1.1
2.3
2.3
2.3
0.9
Original Loan Terms
Facility Size A$
Current Balance at 23 Nov 2015 A$ First Repayment Due
Qtly Repayments from Maturity
Loan term from first repayment Yrs Remaining term from 23 Nov 15 Yrs
Facility A: Converting Note
Facility B: Converting Note
Facility C: Debt
Facility D: Debt
Facility E: Debt
ASCL(6)
Pre-Export Finance Loan
Total
See Note (1)
50,000,000
30,000,000
50,000,000
5,000,000
20,000,000
15,000,000
170,000,000
57,061,144
33,441,105
Undrawn( 7)
5,967,687
20,000,000
15,000,000
131,469,936
2-Mar-18
2-Mar-18
2-Mar-18
2-Mar-18
2-Mar-17
2-Sep-20
2-Sep-20
2-Apr-19
2-Sep-20
2-Sep-18
2.5
2.5
1.1
2.5
1.6
4.8
4.8
3.4
4.8
2.8
Revised Loan Terms
Facility Size (1) A$
New Loan Balances (2) A$ First Qtly Repayment Due (3)(4)
Maturity
Loan term from first repayment (5) Yrs Remaining term from 23 Nov 15 Yrs
The Revised Loan Terms assumes the full repayment/conversion of Facility A upon drawdown of the ASCL
The $11.420m increase in loan balances reflects the additional $35.000m of new facilities less the $23.579m of FacA repaid/converted
First repayment date is 24 months from Completion Date. Completion Date can be no later than 2 March 2016
First repayment of Pre-Export Finance Loan is 12 mths from first drawdown. First drawdown assumed to be 2 March 2016
Loan term for Pre-Export Finance Loan is based min repayment of US$7.2m per annum using an USD exchange rate of 0.71
Additional Secured Convertible Loan
Facility D is only available once a bankable feasibility study has been completed for the Nymagee copper project
The diagram below shows the current debt repayment profile compared to the new debt repayment profile. The debt repayment of 'Convertible Senior Debt' in FY16 is funded by the drawdown of the Additional Secured Convertible Loan (ASCL). In the Chart, scheduled debt repayments for Facilities A, B and ASCL are classified as 'Convertible Senior Debt, with scheduled debt repayments for Facilities C and E being classified as 'Senior Debt' and repayments under the Pre-Export Finance Loan classified as 'PEFL'.
Aurelia Metals Limited
Revised Debt Repayment Profile A$M 80 70Revised debt
profile
Convertible Senior Debt
Senior Debt PEFL
Original debt profile
70Media Contact: Michael Vaughan Fivemark Partners
michael.vaughan@fivemark.com.au
+61 422 602 720
APPENDIX - Summary of Key Terms The Summary of key Agreement terms is set out in the table below:
Term | Description |
Conditions Precedent | The Agreement is conditional upon the following conditions:
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Existing Facilities | Existing Facilities A, B, C and E will each have their repayment profile and interest accrual suspended and deferred for 24 months from the completion date of the agreement. All or part of Facility B and the ASCL (defined below) are convertible into ordinary shares of Aurelia at Aurelia's election on a 60 day VWAP within 5 days of the expiry of the 24 month suspension. Amortisation and interest on any amount not converted is suspended for a further 12 months and Aurelia's conversion rights are annulled. If, following 6 months after signing of the formal agreement, up until the debt deferral date, Hera (and Nymagee as appropriate) generates greater than A$10m of CFADS (Cash Flow Available for Debt Service) in any 3 month look back period, Hera will make repayments against the Facilities to the amount of CFADS less A$10m. There will be no restriction on new equity investment into Aurelia, however, in certain circumstances Glencore can use debt to pays for shares if it exercises its existing anti-dilution rights, or subscription moneys received from Glencore will be applied as a repayment of debt. |
Pre Export Finance Loan (PEFL) | Glencore will provide a PEFL to the amount of A$15m, to be repaid by deducting US$175/DMT from bulk concentrate payments. The repayments will be subject to a minimum US$1.8m repayments per quarter with repayments commencing 12 months after drawdown. The PEFL will be subject to an interest rate of 3m BBSW + 6%. The PEFL will be subject to a testing regime of Key Performance Indicators (KPI's) under which the Hera project performance will be tested. The KPI testing regime includes the requirement to meet operational KPI's, with the failure to do so in 3 consecutive months triggering an event of default, which if not cured, will trigger a cross default of the new and existing Facilities. The failure to meet KPI's will be subject to good faith negotiations, a force majeure and a cure period of 45 days (under which the outstanding balance of the PEFL may be repaid in full). The key operational KPI's are summarised below:
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