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Completes $42.5 Million Convertible Debenture Financing Involving Debt Restructuring and Rights to D
Publié le 11 février 2009
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Re: News - Tuesday, February 10, 2009
Infinito Completes $42.5 Million Convertible Debenture Financing
Involving Debt Restructuring and Rights to Drawdown up to $8
Million in Further Convertible Debt
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Infinito Gold Ltd. (the "Company") announces that it has closed the
non-brokered private placement announced on February 1, 2009 under
which it sold an aggregate of up to CDN$50.5 million secured
convertible notes (the "Notes") to Exploram Enterprises Ltd.
("Exploram") and Auro Investments Ltd. ("Auro") (collectively, the
"Holders"). The Holders subscribed for an initial aggregate principal
amount of CDN$42.5 million in Notes and Exploram has agreed to give the
Company the right to make subsequent drawdowns under the Note held by
Exploram of up to CDN$8 million, subject to certain conditions. Under
their subscriptions for Notes, the Holders were issued, concurrently
with the issue of the Notes, 208,333,334 common share purchase warrants
(the "Warrants"). The proceeds of $42.5 million has been used to
retire all outstanding Notes and Debentures of the Company totaling
$37,500,000 and to pay interest on such outstanding debt of
$1,006,068.50 and the balance will be used for working capital and
corporate general and administrative expenses.
The Notes mature on February 10, 2014 and are convertible at any time
up to maturity into shares of the Company. The conversion price for
the initial $42.5 million subscription of Notes is $0.204 per share,
being the 20-day volume weighted average price of the shares of the
Company for the 20 trading days (the "20-Day VWAP") preceding the
announcement of the transaction and the conversion price for subsequent
drawdowns will be the 20-Day VWAP at the date of drawdown. If, after
the Notes are issued however, the Company issues shares for cash at a
price below the conversion price of the Notes (a "Subsequent
Issuance"), the Holders shall be entitled to concurrently convert into
shares at that lower issue price an aggregate principal amount of the
Notes as is equal to the amount of the Subsequent Issuance. Shares
issued for cash upon the exercise of stock options, interest payments
on the Notes or on conversion of principal of a Note with a lower
conversion price do not trigger this right.
The Notes bear interest at 15% per year, payable quarterly, except that
after March 31, 2010 the Holders have the discretion to require
interest to be paid monthly. The first interest payment is due on the
earlier of the first drawdown of a project development debt financing
for the Company's Crucitas Project and September 30, 2009. (The
Company announced in August of 2008 that it had signed an engagement
letter giving BNP Paribas an exclusive mandate to act as lead arranger
on the project development financing for the Crucitas Project (the
"Project Development Financing"), but financing work has been suspended
pending resolution of the Costa Rican legal challenge in respect of the
grant of a change of land use permit for the mine announced on October
21, 2008.) Interest is payable in cash or shares of the Company, at
each Holders' election, such shares to be issued at the 20-Day VWAP at
the time the interest payment is due.
The Warrants issued at closing are exercisable until February 10, 2014
and each Warrant entitles the holder to acquire one share of the
Company at $0.204 per share. Upon future drawdowns by the Company, if
any, the Company will issue warrants concurrently with the completion
of the drawdown, each warrant to be exercisable for a period of five
years and entitle the Holder to acquire one share of the Company at a
price equal to the conversion price of the concurrent drawdown.
The Company's obligations under the Notes are secured by: (i) a general
security agreement over all of the Company's assets and a pledge of the
shares of certain of the Company's direct subsidiaries; (ii) a
guarantee of the Company's obligations under the Notes by each of the
Company's subsidiaries; and (iii) a pledge of the shares of certain
indirect subsidiaries of the Company, including the shares of
Industrias Infinito S.A., the owner of the Company's Crucitas Project.
The Company has the right to prepay the principal amount of the Notes,
in full or in part, at any time after three years from the issue date
of the Notes, subject to each Holders' right to convert before
prepayment. Prepayment is subject to other conditions, including that
the 20-Day VWAP prior to prepayment must be 15% greater than the
conversion price of the principal amount of the Note to be prepaid.
The Notes include negative covenants, positive covenants and conversion
right adjustments that are standard for transactions of this nature.
The Notes also contain events of default to be expected in financings
under these circumstances, including a breach of the terms of the
Notes, bankruptcy, insolvency or receivership proceedings, a change of
control of the Company, a change of business of the Company's Costa
Rican subsidiary, a failure to obtain and maintain regulatory approvals
in respect to the Crucitas Project, a failure to make the initial
drawdown under the Project Development Financing before September 30,
2009 and a court decision that impairs or prevents the ability to
construct the Crucitas Project.
The Company has paid a cash structuring fee of $150,000 to the Holders
in respect of funds advanced at closing not utilized to retire existing
debt, has agreed to pay the Holders a further $375,000 in respect of
the funds used to retire existing debt on or before the earlier of June
30, 2009 and the date of the first drawdown under the Project
Development Financing and to pay the Holders a cash structuring fee of
3% of all future drawdowns.
Subsequent drawdowns on the Note held by Exploram to a maximum of
$8,000,000 may be made at the Issuer' request in increments of between
$500,000 and $2,000,000 subject to specified conditions precedent to
subsequent drawdowns, including the rendering of a favorable ruling in
the Costa Rican legal challenge referred to above.
The financing is a related party transaction under MI 61-101 as each of
Exploram and Auro are related parties. As such, the Company formed a
Special Committee of independent directors to consider and negotiate
the terms of the transaction. The Company is exempt from the formal
valuation requirements of MI 61-101 as its shares are only listed on
the TSX Venture Exchange and the Company is exempt from the minority
shareholder approval requirement under MI 61-101 as both the Board of
Directors and the independent directors each determined, in good faith,
that (i) the Company is in serious financial difficulty, (ii) the
transaction is designed to improve the financial position of the
Company, and (iii) the terms of the transaction are reasonable in the
circumstances of the Company. These determinations were based in part
upon the advice of its financial advisors. Due to the potential
dilution to minority shareholders under this transaction, the Special
Committee also recommended that the Company make available to minority
shareholders an opportunity to mitigate the dilutive impact through
participation in an offering of units priced at a comparable level.
Accordingly, the Company plans to approach certain of its minority
shareholders to see if there is interest in such an offering on a
private placement basis.
On closing Exploram was issued a Note in the aggregate amount of $34
million and 166,666,667 Warrants and Auro was issued a Note in the
aggregate amount of $8.5 million and 41,666,667 Warrants. Exploram
presently holds 61,154,490 shares of the Company and, upon conversion
in full of its Note at $0.204 per share and exercise of all of its
Warrants, could acquire a further 333,333,334 shares of the Company.
Auro presently holds 5,714,285 shares of the Company and, upon
conversion in full of its Note at $0.204 per share and exercise of all
of its Warrants, could acquire a further 83,333,334 shares of the
Company. The Company presently has 121,429,289 shares outstanding.
The Notes and the Warrants and any shares issuable thereunder are
subject to a hold period expiring on June 11, 2009.
Caution Regarding Forward-Looking Information and Statements
Certain statements in this press release address future events and
conditions and, as such, involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the statements.
These factors include, among others, the inherent risks involved in the
exploration and development of mineral properties, the uncertainties
involved in interpreting drilling results and other geological data,
fluctuating metal prices, the possibility of project cost overruns or
unanticipated costs and expenses, uncertainties relating to the
availability and costs of financing needed in the future, the
possibility that all necessary governmental and regulatory approvals
will not be received, and the availability of a qualified workforce and
third party contractors necessary for the development and operation of
a mine. The Company undertakes no obligation to update these
forward-looking information or statements if circumstances or
management's estimates or opinions should change. The reader is
cautioned not to place undue reliance on forward-looking information or
statements.
INFINITO GOLD LTD.
John Morgan
President
"The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release."
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Copyright (c) 2009 INFINITO GOLD LTD. (IG) All rights reserved. For
more information visit our website at http://www.infinitogold.com/ or
send mailto:info@infinitogold.com
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