TORONTO, May 12, 2015 /CNW/ - Marret Resource Corp. (MAR.TO) ("the "Company") announced that a proposal (the "Proposal") will be made to shareholders at the annual and special meeting to be held on June 29, 2015 (the "Meeting"). The Proposal is in response to the review initiated by the Company in late 2014 concerning the significant trading price discount to net asset value of the common shares and the objective of providing liquidity to shareholders. Details of the Proposal will be contained in the management information circular (the "Circular") to be mailed to shareholders later in May. A summary of the Proposal is as follows:
- At the Meeting holders of common shares will be asked to consider an amendment to the articles of the Company (the "Amendment") that will permit the Company to redeem the common shares in July 2015 (the "First Redemption") with a valuation date of June 30, 2015 and in October 2015 (the "Second Redemption") with a valuation date of September 30, 2015 based on a formula to be specified in the Circular;
- The First Redemption would occur no later than July 31, 2015 and the Second Redemption would occur no later than October 31, 2015;
- If the Amendment is approved the Company will redeem sufficient common shares to return substantially all of its capital to shareholders on a pro rata basis, except for (i) an amount representing its investment in Cline Mining Corporation ("Cline"), unless the investment in Cline is liquidated prior to the Second Redemption, and (ii) a reserve amount of $8,000,000 (the "Reserve Amount"); and
- The actual redemption payments will be based on the net asset value of the Company on June 30, 2015 and September 30, 2015.
The net asset value of the Company at May 7, 2015 was approximately $84.9 million, of which the Cline investment represented approximately $8.8 million.
The Reserve Amount is being maintained to enable the Company to continue its business in order to manage the liquidation of the Cline investment and to maximize the value of the Company's structure. The Reserve Amount will be invested in accordance with the investment policy approved by the board of directors. No further investments in private or illiquid securities will be made.
If the Amendment is approved, the management agreement with Marret Asset Management Inc. (the "Manager") would be amended to provide that:
- The Manager's fees related to the Cline investment would be deferred and payable only when the investment is sold; and
- The Company will have an option to terminate the management agreement at any time after September 30, 2015 by providing 90 days' written notice to the Manager, subject to payment of any fees owing under the agreement up to the termination date.
To be effective the Amendment must be approved by at least two-thirds of the votes cast at the Meeting by holders of common shares. Holders of common shares will be entitled to exercise dissent rights under applicable corporate law with respect to the Amendment.
Various employees and insiders of the Company, the Manager and other significant shareholders, including Frigate Ventures LP and M5V Advisors Inc. (collectively, "Anson Funds"), representing a total of 4,102,570 common shares or 23.17 % of the outstanding common shares, have agreed to vote in favour of the Amendment. Anson Funds has also agreed to withdraw its shareholder proposal, the receipt of which was announced by the Company on April 20, 2015.
About Marret Resource Corp.
Marret Resource Corp. is focused on natural resource lending. The Company's business is primarily directed to investing in public and private debt securities of and making term loans (including bridge and mezzanine debt) to issuers in a broad range of natural resource sectors, including energy, base and precious metals and other commodities, and issuers involved in exploration and development, and may also include financing other resource-related businesses and investing in public and private equity and quasi-equity securities. The Company seeks to generate income mainly from its lending activities, while taking advantage of additional upside through equity participation in the companies which it finances. Marret Asset Management Inc. is the Company's investment manager and is responsible for implementing Marret Resource Corp.'s investment strategy and managing its investment portfolio.
About Marret Asset Management Inc.
Marret Asset Management Inc. is the manager of the Company. Marret Asset Management and its experienced team of investment professionals led by Barry Allan specialize exclusively in fixed income and, particularly, in high yield debt strategies. Barry Allan, the President and Chief Investment Officer, founded Marret Asset Management in 2000, following a career at Altamira, Nesbitt Thomson and a Canadian chartered bank. Mr. Allan has over 30 years of experience in credit and fixed income markets.
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This press release contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can be identified by the expressions "seeks", "expects", "believes", "estimates", "will", "target" and similar expressions. The forward-looking statements are not historical facts but reflect the current expectations of Marret Resource Corp. (the "Company") regarding future results or events and are based on information currently available to them. Certain material factors and assumptions were applied in providing these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. The Company believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions; however, the Company can give no assurance that the actual results or developments will be realized. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risks Factors" in the prospectus or annual information form for the Company. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. The Company undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances except as required by securities laws. These forward-looking statements are made as of the date of this press release.