TSX:JAG
TORONTO,
April 23, 2014 /CNW/ - Jaguar Mining
Inc. ("Jaguar" or the "Company") is pleased to
announce today that it has successfully implemented its amended and
restated plan of compromise and arrangement pursuant to the
Companies' Creditors Arrangement Act (Canada) ("CCAA") dated February 5, 2014 (as amended, the "Plan")
with an implementation date of April 22,
2014. As previously announced, the Plan was approved by 100%
of the Affected Unsecured Creditors (as defined in the Company's
information circular and proxy statement dated December 23, 2013 (the "Circular")) that
voted, in person or by proxy, at the meeting of Affected Unsecured
Creditors held on January 31, 2014.
The Ontario Superior Court of Justice (Commercial List) granted an
order approving the Plan on February 6,
2014.
Implementation of the Plan will result in a
number of benefits to the Company, including, among other things, a
significant reduction of the Company's debt, increased liquidity
for operations and facilitation of the Company's ability to make
certain necessary capital investments and accelerate operational
improvements.
Information about the CCAA proceeding, including
copies of the Circular and all court orders, are available at the
following website http://cfcanada.fticonsulting.com/jaguar.
Effect of the Plan
Common shares of the Company (the "Common
Shares") were issued as follows as a result of the
implementation of the Plan:
- Holders (the "Noteholders") of the Company's 4.5% Senior
Unsecured Convertible Notes due November 1,
2014 ("4.5% Convertible Notes") and 5.5% Senior
Unsecured Convertible Notes due March 31,
2016 (together with the 4.5% Convertible Notes, the
"Convertible Notes") and other affected unsecured creditors
of the Company with proven claims received their pro rata share of
14,000,000 Common Shares in exchange for their Notes and in
satisfaction of their claims, respectively, and Noteholders who
signed a support agreement in respect of the Plan, or a consent
agreement thereto, as of November 26,
2013 received their pro rata share of an additional
5,000,000 Common Shares in exchange for their Notes. Pursuant
to the Plan, the Convertible Notes and the indentures governing
such Convertible Notes were irrevocably and finally cancelled and
all unsecured claims of affected unsecured creditors of the Company
were fully and finally released.
- Noteholders who elected to participate in a backstopped
US$50 million share offering (the
"Share Offering") purchased up to their pro rata share of
70,955,797 Common Shares (the "Offering Shares") and such
Noteholders received their pro rata share of 9,044,203 Common
Shares (the "Accrued Interest Offering Shares") (based on
the percentage that the unpaid interest on their Notes bore to the
aggregate of all unpaid interest owing to all Noteholders who
participated in the Share Offering as at December 31, 2013) in exchange for their
Notes.
- Noteholders who agreed to backstop the Share Offering by
committing to purchase their pro rata share (based on their
backstop commitments) of the Offering Shares not subscribed for
under the Share Offering received their pro rata share of an
additional 11,111,111 Common Shares (the "Backstop Commitment
Shares") in exchange for their Notes.
In connection with and as a step in the Plan,
the Common Shares issued and outstanding immediately prior to the
implementation of the Plan were consolidated at a ratio of one (1)
post-consolidation Common Share for each 86.39636 pre-consolidation
Common Shares (the "Consolidation"). Any fractional Common
Shares resulting from the Consolidation were rounded down to the
next whole share without any additional compensation therefor. As a
result of the implementation of the Plan, such shareholders
represent approximately 0.9% of the equity of Jaguar in the
aggregate. A letter of transmittal with respect to the
Consolidation will be mailed to such shareholders which letter sets
out instructions as to how registered shareholders can receive
certificates representing post-Consolidation Common Shares. The
shareholder rights plan dated May 2,
2013 and all rights issued thereunder were
cancelled pursuant to the terms of the Plan.
As a result of the implementation of the Plan,
there are currently 111,106,262 Common Shares issued and
outstanding.
Information Concerning Jaguar Following
Implementation of the Plan
In connection with the Plan, Jaguar negotiated
amendments to certain terms of its US$30.0
million standby credit facility with Global Resource Fund
(the "Lender"), as governed by a credit agreement made as of
December 17, 2012 between Jaguar, as
borrower, its subsidiaries, as guarantors, and the Lender (as
amended from time to time, the "Renvest Facility"). On
January 25, 2013, the Company made an
initial drawdown of US$5.0 million on
the Renvest Facility and on June 26,
2013, the Company drew down the remaining US$25.0 million on the Renvest Facility.
The Renvest Facility amendments provide, among
other things, that:
- the maturity date of the Renvest Facility is extended to
December 31, 2015 from July 25, 2014;
- mandatory repayments of US$1.0
million of principal amount plus accrued and unpaid interest
shall be made each month from and including July 2014 to and including November 2015, with the balance of all
outstanding obligations to be repaid on December 31, 2015;
- the Lender shall have a right to convert up to $5.0 million of the outstanding obligations under
the Renvest Facility into equity at a specified conversion price
(subject to certain anti-dilution protections);
- the Lender shall have a right to participate in certain
offerings of equity securities by the Company if the offering
occurs at a prescribed price;
- the Company shall maintain certain minimum levels of cash on
hand;
- Renvest shall be entitled to appoint an observer to the board
of directors;
- the Company and the Lender shall have entered into a Right of
First Refusal Agreement with respect to assignments of the Renvest
Facility by the Lender; and
- existing breaches, defaults and events of default under the
Renvest Facility were waived by the Lender. Certain events of
default under the Renvest Facility were also amended to reflect the
Company's current financial circumstances.
The Company will pay a fee of US$1.0 million in connection with the amendments
to the Renvest Facility ($0.6 million
payable in cash and $0.4 million
payable as an increase in the principal amount of the Renvest
Facility).
In connection with the above amendments, the
Company agreed to repay immediately to the Lender $10.0 million on account of the outstanding
obligations under the Renvest Facility. The above amendments
are conditional upon, among other things, this repayment.
In connection with the above amendments, the
Lender has waived its rights under the Renvest Facility to receive
any portion of the net proceeds of the Share Offering, with the
exception of the agreed upon US$10.0
million repayment described above.
The following table shows the effect of the Plan
on Jaguar's consolidated capital structure, after accounting for
the amendments to the Renvest Facility as described above:
Pre-Plan & Pro
Forma (As at December 31, 2013) Capital Structure |
(All figures in $USD
millions except number of Common Shares) |
|
|
|
|
|
|
|
As
at December 31, 2013 |
|
Adjustment |
|
Pro
Forma |
Bank Indebtedness |
$15.9 |
|
- |
|
$15.9 |
Renvest Facility (Drawn) |
30.0 |
|
(9.6) |
|
20.4 |
Vale Note |
7.6 |
|
- |
|
7.6 |
4.5% Convertible Notes |
165.0 |
|
(165.0) |
|
- |
5.5% Convertible Notes |
103.5 |
|
(103.5) |
|
- |
Total Debt |
$322.0 |
|
$(278.1) |
|
$43.9 |
Less: Cash and Cash Equivalents |
(9.0) |
|
(29.4) |
|
(38.4) |
Total Net Debt |
$313.0 |
|
$(307.5) |
|
$5.5 |
Number of Common
Shares Outstanding(1) |
86.4 million |
|
24.7 million |
|
111.1 million |
Notes: |
|
(1) |
Pro forma Common Shares outstanding based on the Consolidation,
the extinguishment of the Notes (including accrued interest) in
exchange for Common Shares, as well as the issuance of the Backstop
Commitment Shares and the Accrued Interest Offering Shares. |
In addition to the pro forma financial
information provided above, the Company estimates that its cash
balance as of the implementation date (pro forma for the receipt of
the Share Offering proceeds and payment of fees, expenses and
additional amounts due to the Lender) is approximately US$36.5 million. Enclosed with this press
release is an unaudited pro forma condensed consolidated statement
of financial position of Jaguar as at December 31, 2013 after giving effect to the Plan
and the amendments to the Renvest Facility. The pro forma
information was prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting
Standards Board. The unaudited pro forma financial
information has been prepared based upon currently available
information and assumptions deemed appropriate by management and is
for illustrative purposes only. The pro forma financial
information has not been audited and should not be considered
comprehensive and may differ significantly from the actual
adjustments that may result from the implementation of the Plan and
related transactions in the future.
The equity-based compensation arrangements of
the Company existing immediately prior to implementation of the
Plan were cancelled pursuant to the terms the Plan. The board of
directors of the Company has approved a new 10% rolling stock
option plan (the "New Stock Option Plan"). The New Stock
Option Plan has received conditional approval from the TSX Venture
Exchange (the "TSXV") and is subject to the approval of
disinterested shareholders of the Company. It will be presented for
approval at the Company's next annual general meeting of
shareholders ("AGM"), which is expected to be held late in
the second quarter of 2014. The board of directors of the
Company has also approved a new deferred share unit plan (the
"DSU Plan"). The DSU Plan has received conditional
approval from the TSXV and will be presented for approval by
shareholders at the Company's AGM.
Directors and Senior Management of
Jaguar
The board of directors of Jaguar was
reconstituted in connection with the implementation of the Plan so
as to be comprised of seven individuals, four of whom are incumbent
directors of the Company. In addition, in connection with the
Plan, Mr. David Petroff and Mr.
Douglas Willock resigned from their
positions as Chief Executive Officer and Chief Financial Officer of
the Company, respectively, and Mr. George
Bee and Mr. Derrick Weyrauch
have been appointed as CEO and CFO. "This restructuring process has
made Jaguar a financially stronger company positioned for the
future," stated Richard Falconer,
Chairman of the Board. "We want to thank departing management for
their leadership role in achieving significant improvements to
operations. The finalization of the restructuring process
gives Jaguar a strong balance sheet allowing the new management
team to continue with the operational improvements and embrace
future opportunities associated with existing assets."
Set out below are biographies of the directors
and executive officers of the Company:
- Richard D. Falconer
(Director): Mr. Falconer was elected to the Board on
May 22, 2012 and was appointed
Chairman of the Board on June 29,
2012. Mr. Falconer retired from CIBC after 40 years with the
bank. At the time of retirement, Mr. Falconer was Vice Chairman and
Managing Director, CIBC World Markets Inc. Current directorships
include Chorus Aviation Inc., Resolute Forest Products Inc.,
Bridgepoint Health Foundation; LOFT Community Services; and Member,
Shaw Festival Theatre Endowment Foundation Board of Governors. He
is a Chartered Financial Analyst and holds a Master of Business
Administration degree, York University,
and Honours B.A., University of
Toronto.
- George Bee (Director
and Chief Executive Officer): Mr. Bee was elected to the
Board on June 10, 2013 and was
appointed Chief Executive Officer of the Company on April 22, 2014. Mr. Bee is a mining
engineer and has over 30 years' experience in the mining industry,
developing world-class gold mining projects. Recently, he was the
President and Chief Executive Officer and a director of Andina
Minerals Inc. Prior to that, Mr. Bee was Chief Operating Officer of
Aurelian Resources and spent over 16 years at Barrick Gold
Corporation where he was responsible for a number of operating and
development projects. Mr. Bee is a graduate of the Camborne School
of Mines in Cornwall, United
Kingdom. Mr. Bee currently serves on the boards of
Stillwater Mining Company and Sandspring Resources Inc. and holds
ICD.D designation from the Institute of Corporate Directors.
- Edward V. Reeser
(Director): Mr. Reeser was appointed to the Board on
June 10, 2013. Mr. Reeser is
the owner and President of Celco Inc. (Food Service Equipment), one
of Canada's major commercial food
service equipment importers and distributors. Mr. Reeser has been a
director and member of the Finance and Audit Committee of
Bridgepoint Health since September
2011. Mr. Reeser has over 15 years' experience as a senior
financial officer of TSX-listed companies in the metallurgical,
aviation and energy utility industries. Mr. Reeser has also served
as a director and officer of a number of private companies and
non-profit organizations. Mr. Reeser holds a Master of Business
Administration degree (finance concentration) from York University, a Bachelor of Arts from
York University and an ICD.D
designation from the Institute of Corporate Directors.
- Luis Miraglia (Director):
Mr. Miraglia was appointed as a director of the Company on
September 27, 2012. Mr. Miraglia is a
native of Minas Gerais, Brazil and
is a Partner at the law firm of Azevedo Sette Advogados with 19
years of experience in legal practice specializing in corporate
law, mergers and acquisitions, project finance, infrastructure
projects and mining. He holds a degree (Juris Doctorate equivalent)
from the Universidade Federal de Minas Gerais in Belo Horizonte, Brazil and a Master of Laws
degree from the University of Chicago
Law School.
- Stephen Hope (Director):
Mr. Hope has worked in fixed-income investment management for over
fifteen years. Prior to forming Outrider Management
("Outrider") in January 2004,
he was a portfolio manager with Dalton Investments LLC where he
managed a fund with a substantially similar investment strategy to
that of Outrider. Prior to joining Dalton, he managed an emerging
markets debt fund focused on distressed debt for two years at San
Francisco Sentry Investment Group. Prior to San Francisco Sentry,
he worked at Bracebridge Capital as an analyst and trader for their
Asian operations. From 1995 to 1997, Stephen was a currency and
bond trader for the Asian and Dollar Bloc markets for Eaton Vance
Management. Stephen began his career at the First National Bank of
Maryland as a corporate credit
analyst and trader. Stephen Hope
holds an Bachelor of Arts in Economics from Princeton University.
- R. David Russell
(Director): Mr. Russell has over three decades of executive
experience in the mineral exploration and development industry.
From 2002 to June 2010 Mr. Russell
was President, CEO and a director of the former Apollo Gold
Corporation, (now Brigus Gold Corp. after its merger in 2010 with
Linear Gold). Mr. Russell's previous positions included
Vice-President and CEO of Getchell Gold Company/Placer Dome Gold,
General Manager, US Operations, LAC Minerals Ltd. (now Barrick Gold
Corporation), Manager, Underground Mining, Independence Mining
Company, Project Manager, Hecla
Mining Company, Manager, Lincoln Project FMC/Meridian Gold. Mr.
Russell currently serves as Chairman of the Board of Directors of
Pure Nickel Inc., a mineral exploration and development company
listed on the TSXV. Mr. Russell graduated from the Montana School
of Mineral, Science and Technology with a Bachelor of Science
Degree in Mining Engineering.
- Robert J. Chadwick
(Director): Mr. Chadwick is a partner and a member of the
Executive Committee at Goodmans. He practices corporate and
commercial law and in the areas of corporate restructuring and
insolvency, financial services and private equity law. Mr.
Chadwick focuses his practice on corporate, banking, private
equity, insolvency and reorganization law and mergers and
acquisitions. He also has expertise in national, cross-border and
international transactions. Mr. Chadwick has participated in
significant financings and acquisitions and other transactional
matters in various industries on behalf of a diverse group of
clients. He has been an advisor in many of the major Canadian
and cross-border commercial matters and restructurings. He is a
director of TSX-listed Ainsworth Lumber Co. Ltd.
- Derrick Weyrauch (Chief
Financial Officer): Mr. Weyrauch served as an independent
director of the Company from June 10,
2013 until April 22, 2014, and
was appointed Chief Financial Officer of the Company on
April 22, 2014. Mr. Weyrauch is
a Chartered Professional Accountant ("CPA") and a Chartered
Accountant ("CA") and has over 15 years' experience as a senior
financial officer of TSX/TSXV-listed companies in the mining,
contract manufacturing and medical device industries. Mr.
Weyrauch is an independent director of Banro Corporation and is
currently the Chief Financial Officer of Temex Resources
Corp. Prior to its sale in 2013, Mr. Weyrauch served as the
Chief Financial Officer of Andina Minerals Inc. Mr. Weyrauch earned
his CA designation in 1990 while employed at KPMG LLP. He is a
member of the Institute of Chartered Accountants of Ontario, the Institute of Corporate Directors
and holds a Bachelor of Arts degree in Economics from York University.
Implementation of the Plan resulted in two
unrelated investment managers each owning or exercising control or
direction over in excess of 10% of the outstanding Common Shares:
(i) Outrider Management, LLC has beneficial ownership, or exercises
control or direction, directly or indirectly, over approximately
32.4% of the Common Shares; and (ii) an unrelated investment
manager exercises control over approximately 10.8% of the Common
Shares. Mr. Stephen Hope, one
of the directors of the Company, is the principal of Outrider
Management, LLC.
Listing of the Common Shares
In connection with the Plan, Jaguar has received
conditional approval to list the Common Shares on the TSXV.
The Common Shares are currently listed (but suspended from trading)
on the Toronto Stock Exchange (the "TSX") and are expected
to be delisted no later than April 30,
2014. The Company expects to satisfy the listing
conditions and have the Common Shares listed on the TSXV as soon as
possible but in any event by the end of April. The transition
from the TSX to the TSXV will be coordinated so that there is no
gap in listing. Trading in the Common Shares has been
suspended since December 23, 2013 and
will remain suspended until the delisting from the TSX or until the
transition of the Company's listing to the TSXV.
Forward-Looking Statements
Certain statements in this press release
constitute "Forward-Looking Statements" within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities legislation. These Forward-Looking
Statements include, but are not limited to, statements concerning
the Company's ability to transition its listing to the TSXV.
Forward-Looking Statements can be identified by the use of words
such as "are expected", "is forecast", "is targeted",
"approximately" or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might", or "will" be taken, occur or be achieved.
Forward-Looking Statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results
or performance to be materially different from any future results
or performance expressed or implied by the Forward-Looking
Statements.
These risks, uncertainties and other factors
relating to Jaguar include, but are not limited to, the impact of
the implementation of the Plan; our ability to generate sufficient
cash flow from operations or obtain adequate financing to fund our
capital expenditures and working capital needs and meet our other
obligations; the volatility of our stock price, and the ability of
our common stock to be transitioned to the TSXV and remain listed
and traded on an exchange in Canada; our ability to maintain relationships
with suppliers, customers, employees, stockholders and other third
parties; the volatility of gold prices; a continuation of depressed
gold prices; regulatory and environmental risks associated with
exploration, drilling and production activities; the adverse
effects of changes in applicable tax, mining and environmental and
other regulatory legislation; the risks of conducting operations in
Brazil and the impact of pricing
differentials, fluctuations in foreign currency exchange rates and
political developments on the financial results of our operations.
The results, estimates, events or other forward-looking information
predicted in any Forward-Looking Statements may differ materially
from actual results or events if known or unknown risks, trends or
uncertainties affect Jaguar's business, or if Jaguar's estimates or
assumptions turn out to be inaccurate.
These Forward-Looking Statements represent the
Company's views as of the date of this press release. The Company
anticipates that subsequent events and developments may cause the
Company's views to change. The Company does not undertake to update
any forward-looking statements, either written or oral, that may be
made from time to time by or on behalf of the Company subsequent to
the date of this discussion except as required by law. For a
discussion of important factors affecting the Company, including
fluctuations in the price of gold and exchange rates, uncertainty
in the calculation of mineral resources, competition, uncertainty
concerning geological conditions and governmental regulations and
assumptions underlying the Company's forward-looking statements,
see the "CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS" and
"RISK FACTORS" in the Company's Annual Information Form for the
year ended December 31, 2013 filed on
SEDAR and available at http://www.sedar.com and the Company's
Annual Report on Form 40-F for the year ended December 31, 2012 filed with the United States
Securities and Exchange Commission and available at
www.sec.gov.
The securities offered in connection with the
CCAA proceeding and under the Plan have not been registered under
the United States Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws of
the United States and, unless so
registered, may not be offered or sold in the United States, except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable
state securities laws of the United
States. It is contemplated that the securities will be
issued pursuant to one or more exemptions from the Securities
Act. This announcement shall not constitute an offer to sell
or the solicitation of an offer to buy the securities nor shall
there be any sale of the securities in any state of the United States in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
About Jaguar Mining Inc.
Jaguar is a junior gold producer in Brazil with operations in a prolific
greenstone belt in the state of Minas Gerais and owns the Gurupi
Project in Northeastern Brazil in
the state of Maranhão. The Company also owns additional mineral
resources at its approximate 210,000-hectare land base in
Brazil. Additional information is
available on the Company's website at www.jaguarmining.com.
Jaguar Mining
Inc. |
Unaudited Pro Forma
Consolidated Statement of Financial Position |
As at December 31,
2013 |
|
Jaguar
Mining |
Pro Forma
Adjustments |
Reference |
Jaguar Mining
(Pro Forma) |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
9,015 |
$ |
29,400 |
(3) |
$ |
38,415 |
|
Inventory |
23,080 |
- |
|
23,080 |
|
Other accounts receivable |
5,866 |
- |
|
5,866 |
|
Recoverable taxes |
3,985 |
- |
|
3,985 |
|
Prepaid expenses and sundry assets |
2,181 |
- |
|
2,181 |
|
Derivatives |
508 |
|
|
508 |
|
|
44,635 |
29,400 |
|
74,035 |
|
Prepaid expenses and sundry assets |
951 |
- |
|
951 |
|
Restricted cash |
109 |
- |
|
109 |
|
Assets held for sale |
36 |
- |
|
36 |
|
Recoverable taxes |
25,220 |
- |
|
25,220 |
|
Property, plant and equipment |
155,952 |
- |
|
155,952 |
|
Mineral exploration projects |
67,885 |
- |
|
67,885 |
|
|
$ |
294,788 |
$ |
29,400 |
|
$ |
324,188 |
|
|
|
|
|
- |
Liabilities and Shareholders' Equity |
|
|
|
- |
Current liabilities: |
|
|
|
- |
|
Accounts payable and accrued liabilities |
$ |
24,651 |
$ |
(6,373) |
(1) |
$ |
18,278 |
|
Notes payable |
316,076 |
(292,500) |
(1) (2) |
23,576 |
|
Income taxes payable |
11,642 |
- |
|
11,642 |
|
Reclamation provisions |
826 |
- |
|
826 |
|
Other provisions |
7,981 |
- |
|
7,981 |
|
Deferred compensation liabilities |
3 |
- |
|
3 |
|
Other liabilities |
1 |
- |
|
1 |
|
|
361,180 |
(298,873) |
|
62,307 |
|
Notes payable |
5,911 |
14,400 |
(2) |
20,311 |
|
Deferred income taxes |
6,350 |
- |
|
6,350 |
|
Reclamation provisions |
14,844 |
- |
|
14,844 |
|
Deferred compensation liabilities |
8 |
- |
|
8 |
|
Other liabilities |
54 |
- |
|
54 |
|
|
388,347 |
(284,473) |
|
103,874 |
Shareholders' equity: |
|
|
|
- |
|
Share capital |
371,077 |
78,296 |
(3) (4) |
449,373 |
|
Stock options |
917 |
(917) |
(5) |
- |
|
Hedging reserve |
508 |
- |
|
508 |
|
Contributed surplus |
17,638 |
917 |
(4) |
18,555 |
|
Deficit |
(483,699) |
235,577 |
(1) (2) (3) (4) (6) |
(248,122) |
|
|
(93,559) |
313,873 |
|
220,314 |
|
|
$ |
294,788 |
$ |
29,400 |
|
$ |
324,188 |
Jaguar Mining Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Statement
of Financial Position
Pro Forma Statement of Financial Position
This unaudited pro forma condensed consolidated statement of
financial position of Jaguar Mining Inc. (the "Company")
includes pro forma adjustments illustrating the impact that the
specific terms contemplated in the proposed plan of compromise and
arrangement pursuant to the Companies' Creditors Arrangement
Act (the "Plan of Arrangement") will have on the
Company's financial position. These adjustments are for
illustrative purposes only, have not been audited, should not be
considered comprehensive and may differ significantly from the
actual adjustments that may result from the approved Plan of
Arrangement in the future.
This unaudited pro forma condensed consolidated statement of
financial position should be read in conjunction with the Company's
audited 2013 consolidated financial statements, accompanying notes,
and related management discussion and analysis.
The Company's financial statements on a future date giving
effect to the Plan of Arrangement may differ significantly from the
Company's audited condensed consolidated financial statements of
December 31, 2013 and this unaudited
pro forma condensed consolidated statement of financial
position.
The following are the events and transactions
reflected in this unaudited pro forma condensed consolidated
statement of financial position: |
|
|
(a) |
|
the implementation of the Plan of Arrangement, including the
exchange of the entire outstanding principal amount of the
Company's 4.5% Senior Unsecured Convertible Notes due November 1,
2014 (the "4.5% Convertible Notes") and 5.5% Senior
Unsecured Convertible Notes due March 31, 2016 (together with the
4.5% Convertible Notes, the "Notes"), being approximately
$268.5 million, and certain potential other unsecured claims, for
equity; and |
|
|
|
|
|
|
|
(b) |
|
the issuance of additional common shares (the "New Common
Shares") under the Plan of Arrangement, as discussed below
under "Plan of Arrangement". |
Other than those transactions described above, the unaudited pro
forma condensed consolidated statement of financial position as at
December 31, 2013 does not give
effect to transactions occurring after December 31, 2013. The Plan of Arrangement
is subject to possible amendments and the receipt of the necessary
approvals. If the Plan of Arrangement is implemented, the events
and transactions will be accounted for on the basis of events and
circumstances at the implementation date of the Plan of Arrangement
(the "Effective Date").
In conjunction with the implementation of the Plan of
Arrangement, certain liabilities and equity classified as "Accounts
payable and accrued liabilities", "Notes payable", "Option
component of convertible notes", "Share capital" and "Deficit" on
the Company's unaudited interim condensed consolidated statement of
financial position as at December 31,
2013 are subject to recapitalization. Liabilities subject to
recapitalization recorded as at December 31,
2013 amount to $298.9
million.
Plan of Arrangement
The Plan of Arrangement has the following key elements:
- Exchange of approximately $268.5
million of Notes for New Common Shares;
- Reduction of total pro forma debt from approximately
$323 million as at December 31, 2013 to approximately $43.9 million upon completion of the Plan of
Arrangement;
- Reduction of projected annual cash interest payments by
approximately $13.1 million;
- Investment of approximately $50
million of new equity raised by way of a backstopped share
offering (the "Share Offering") by current holders of Notes
(the "Noteholders") and possibly other affected unsecured
creditors of the Company (the "General Unsecured
Creditors"), the net proceeds of which will be available for
use in the Company's operations;
- In full settlement of the Notes, the issuance to Noteholders of
their pro rata share of:
- New Common Shares representing approximately 12.6% of the
equity of the Company outstanding following implementation of the
Plan of Arrangement (the "Unsecured Creditor Common
Shares"), in exchange for all outstanding obligations owed to
Noteholders under the Notes (including, without limitation,
outstanding principal and all accrued and unpaid interested
thereon);
- New Common Shares representing approximately 4.5% of the equity
of the Company outstanding following implementation of the Plan of
Arrangement, if such Noteholder signed the Support Agreement on or
prior to November 26, 2013;
- New Common Shares representing approximately 8.0% of the equity
of the Company outstanding following implementation of the Plan of
Arrangement, if such Noteholder participates in the Share Offering
or is a funding backstop Noteholder to the Share Offering (the
"Accrued Interest Offering Shares"); and
- New Common Shares representing approximately 10.0% of the
equity of the Company outstanding following implementation of the
Plan of Arrangement, if such Noteholder is a funding backstop
Noteholder to the Share Offering (the "Backstop Consideration
Shares");
- The issuance to General Unsecured Creditors of their pro rata
share of the Unsecured Creditor Common Shares;
- The issuance of New Common Shares representing approximately
63.9% of the equity of the Company outstanding following
implementation of the Plan of Arrangement pursuant to the Share
Offering; and
- Existing shareholders of the Company will hold approximately
0.9% of the equity of the Company outstanding following
implementation of the Plan of Arrangement.
Plan of Arrangement Pro Forma Adjustments
In conjunction with the implementation of the Plan of
Arrangement, adjustments to the unaudited pro forma condensed
consolidated statement of financial position are as follows:
(1) Exchange of the $268.5
million of Notes for Equity and Other Adjustments
As of the Effective Date, the Notes carried on the statement of
financial position as at December 31,
2013 in the amount of $268.5
million and the unpaid accrued interest in the amount of
$6.4 million (recorded as accounts
payable and accrued liabilities) will be extinguished and
derecognized. As a result, the derecognized debt shall be recorded
in net earnings (loss) as part of the gain on settlement of
debt.
(2) Renvest Credit Facility maturing in December 2015
As of the Effective Date, the Renvest Credit Agreement
carried on the statement of financial position as at December 31, 2013 in the amount of $30.0 million will be amended to provide, among
other things, that: (i) the maturity date is extended to
December 31, 2015 from July 25, 2014; and (ii) there will be mandatory
repayments of $1.0 million of
principal amount plus accrued and unpaid interest made on a monthly
basis from and including July 2014
until and including November 2015,
with the balance of all outstanding obligations to be repaid on
December 31, 2015. The Company
will pay a fee of $1.0 million in
connection with the amendments to the Renvest Credit Agreement
($0.6 million payable in cash and
$0.4 million payable as an increase
in the principal amount of the Renvest facility). In
addition, the Company agreed to repay immediately to the lender
$10.0 million on account of the
outstanding obligations under the Renvest Credit Agreement.
(3) Issuance of New Common Shares
Holders of the Notes and General Unsecured Creditors will
receive 14,000,000 Unsecured Creditor Common Shares in exchange for
all outstanding obligations owed to the Noteholders, including,
without limitation, outstanding principal of the Notes and all
accrued and unpaid interest thereon and outstanding claims. The
fair value of this transaction is estimated to be approximately
$9.9 million and will be recorded in
Share Capital.
Consenting Noteholders who signed the Support Agreement on or
prior to November 26, 2013 received
an additional 5,000,000 New Common Shares at an estimated fair
value amount of $3.5 million which
will be recorded in Share Capital.
Existing shareholders will hold approximately 0.9%
of the equity of the Company following implementation of the Plan
of Arrangement. The fair value of this transaction is estimated to
be approximately $705,000 and will
also be recorded in Share Capital.
The fair value of the transaction is based on a pro forma value
for the New Common Shares of $0.704,
which amount may change pending the Corporation's review of the
financial statements for the three months ended June 30, 2014.
(4) Backstopped Share Offering
Based on the Plan of Arrangement, $50.0
million will be received upon issuance of 91,111,111 New
Common Shares, as stated below, which will be accounted for at an
estimated fair value amount of $64.2
million at initial recognition in the Company's published
consolidated financial statements for the period in which the Plan
of Arrangement will take effect:
Description |
# of
Shares |
Offering shares |
70,955,797 |
Accrued interest offering
shares |
9,044,203 |
Backstop consideration
shares |
11,111,111 |
Total |
91,111,111 |
(5) Cancelling of Stock Option Plan
The stock options outstanding as of the Effective Date will be
cancelled. As a result, the stock options reserve classified in
equity in the amount of $917,000 as
at December 31, 2013 will be reversed
into contributed surplus.
(6) Restructuring Costs
In addition, the transaction costs relating to the
implementation of the Plan of Arrangement in the estimated amount
of $10.0 million will be paid on or
about the Effective Date.
SOURCE Jaguar Mining Inc.