Resource Capital Fund V L.P. closes remainder of US$25 million loan facility with Forbes & Manhattan Coal Corp.

DENVER, CO, July 7, 2014 /CNW/ - Resource Capital Fund V L.P. ("RCF V") reports that on July 3, 2014, RCF V and Forbes & Manhattan Coal Corp. ("Forbes Coal") closed the remainder of the previously announced secured convertible loan facility in the aggregate principal amount of $25 million (U.S.) (the "Facility"). The Facility consists of the US$4 million bridge loan advanced to Forbes Coal on February 5, 2014 (the "Bridge Loan"), a convertible loan in the principal amount of US$15 million to be advanced in a number of tranches (the "Convertible Loan"), and a refinancing of the existing US$6 million convertible loan facility completed between RCF V and Forbes Coal on September 6, 2013 (the "Refinancing"). The Bridge Loan was converted into a loan on the same terms as the Convertible Loan upon closing of the Convertible Loan and the Refinancing.

In connection with the Convertible Loan, RCF V will receive an establishment fee equal to 5% of the value of the Convertible Loan, which amount will be satisfied through the issuance of common shares in the capital of Forbes Coal ("Common Shares"), at a price of C$0.1446 per Common Share.

The Facility will bear interest at a rate of 12% per annum, payable monthly. Interest payment obligations under the Facility will be satisfied through the issuance of Common Shares valued at the 20-day volume-weighted average trading price of the Common Shares on the Toronto Stock Exchange prior to the relevant interest payment date, or may be satisfied in cash in certain circumstances. The Facility will mature on June 30, 2019.

As a condition of entering into the Facility, Forbes Coal also restructured its existing senior debt facilities with Investec Bank Limited ("Investec"). As partial consideration for the restructuring, Forbes Coal issued warrants to purchase 34,817,237 Common Shares to Investec (the "Warrants"), each of which are exercisable at a price of C$0.1446 per Common Share until July 3, 2019. RCF V will have the right to, at its option, purchase the Warrants from Investec.

The issuance of Common Shares to RCF V upon conversion of the Facility (the "Conversion Shares"), in satisfaction of interest obligations under the Convertible Loan and the Refinancing (the "Interest Payment Shares"), and in satisfaction of the establishment fee payable in connection with the Convertible Loan (the "Fee Shares"), as well as the issuance of the Warrants to Investec, were approved by shareholders of Forbes Coal at an annual and special meeting held on June 27, 2014. Pursuant to the policies of the TSX and Multilateral Instrument 61-101 - Protection of Minority Shareholder in Special Transactions, RCF V did not vote on the resolutions approving the issuances of the Common Shares to RCF V under the Facility nor on the issuance of the Warrants to Investec.

Immediately prior to closing the Facility, RCF V owned and controlled 12,568,684 Common Shares representing approximately 31.4% of the issued and outstanding Common Shares. Assuming the issuance of all Fee Shares, Interest Payment Shares and Conversion Shares that RCF V may become entitled to, RCF V would own and control 360,450,588 Common Shares, representing approximately 92.77% of the outstanding Common Shares.1 In addition, assuming the acquisition of the Warrants from Investec and the exercise thereof, RCF V would own and control 395,267,822 Common Shares, representing approximately 93.4% of the outstanding Common Shares.

Due to fluctuations in the market price of the Common Shares, the aggregate number of Common Shares issuable to RCF V under the Facility is subject to change. For further information, see "RCF Holdings After Share Issuances" in Forbes Coal's Amended Management Information Circular dated May 27, 2014.

The securities were acquired for investment purposes. RCF V will evaluate its investment in Forbes Coal from time to time and may, based on such evaluation of market conditions and other circumstances increase or decrease its shareholding in Forbes Coal. 

1These figures assume the following: (i) The Bridge Loan is outstanding from January 30, 2014 to June 30, 2014 at 15% interest and from July 1, 2014 to June 30, 2019 at 12% interest; (ii) The maximum amount under the Convertible Loan (US$15 million) is drawn, outstanding from July 1, 2014 to June 30, 2019; (iii) Conversion of the maximum amount outstanding under the Refinancing into a loan with the same terms as the Convertible Loan, outstanding from July 1, 2014 to June 30, 2019; (iv) An exchange rate of US$1,00 = C$1.0901, being the Bank of Canada noon spot rate of exchange for US$ in terms of C$ on May 20, 2014; and (v) Share issuances in satisfaction of interest payment obligations are calculated at C$0.10, being the 20 day VWAP as of July 3, 2014.

SOURCE: Resource Capital Fund V L.P.

For further information: Resource Capital Fund V L.P, 1400 Sixteenth Street, Suite 200, Denver, CO, 80202, Telephone: (720) 946-1444

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