DENVER, March 18, 2016 /CNW/ - Resource Capital Fund VI L.P. ("RCF VI") reports that it has closed the second tranche of a previously announced loan facility with First Bauxite Corporation (the "Company") in the aggregate principal amount of USD$15,000,000 (the "Private Placement"), pursuant to a note purchase agreement between RCF VI and the Company dated October 30, 2015, as amended January 19, 2016 and February 29, 2016 (the "Note Purchase Agreement"). Pursuant to the Note Purchase Agreement, the second tranche of the Private Placement closed on March 8, 2016 and the Company issued to RCF VI a convertible note in the aggregate principal amount of USD$11,000,000 (the "$11 Million Note"). The first tranche of the Private Placement closed on October 30, 2015 and at such time the Company issued to RCF VI a convertible note in the aggregate principal amount of US$4 million (together with the $11 Million Note, the "Notes").
In connection with the Private Placement, Resource Capital Fund V L.P. ("RCF V" and together with RCF VI, "RCF") reports that on March 8, 2016 it closed the previously announced replacement of its outstanding USD$4,000,000 interest-bearing promissory note and C$8,000,000 promissory note issued to the Company (together, the "Existing Notes"). The Existing Notes were replaced with promissory notes having a principal amount equal to the Existing Notes plus accrued but unpaid interest, being USD$4,114,655 and C$8,000,000 (together, the "Replacement Notes"). The Replacement Notes were issued pursuant to an amending agreement between the Company and RCF V dated October 30, 2015, as amended January 19, 2016 and February 29, 2016 (the "Amending Agreement").
The Notes and the Replacement Notes will mature on August 1, 2017 (the "Maturity Date") and bear interest at an annual rate of 8% (compounded quarterly and payable on maturity) and be convertible into common shares of the Company ("Common Shares") at a conversion price of C$0.05698 per Common Share for the first year of the term of the Notes and Replacement Notes and C$0.10 per Common Share thereafter, subject to adjustment. Interest on the Replacement Notes and the Notes may, at the election of RCF, be paid in Common Shares at the then-current market price of the Common Shares.
The Private Placement and the issuance of the Replacement Notes were undertaken in connection with a refinancing transaction by the Company, pursuant to which, among other things, Pacific Road Resources Funds ("PRRF") extended and replaced its outstanding convertible notes for convertible notes on substantially the same terms as the Notes and the Replacement Notes (the "PRRF Notes"). The Replacement Notes and the PRRF Notes are subordinated to the Notes issued to RCF VI until the maturity date and thereafter will rank on a pari passu basis. The share prices and values expressed above will be converted into the U.S. dollar equivalent using exchange rates applicable at the time of issuance of any shares.
Assuming full conversion of the Notes and the Replacement Notes on the date hereof and based on a conversion price of C$0.05698, RCF would acquire approximately 589,550,922 Common Shares, representing approximately 83.37% of the currently issued and outstanding Common Shares (without taking into account any dilution from the PRRF Notes and applying a Canadian-U.S. dollar exchange rate of USD$1=1.3389).
As of the date hereof, RCF and its affiliates hold an aggregate of approximately 45.5% (53,524,211 Common Shares) of the 117,563,172 outstanding Common Shares of the Company on an undiluted basis and approximately 84.55% (643,375,133 Common Shares) on a partially diluted basis (assuming conversion of the full principal amount, and accrued interest where applicable, of the Notes and Replacement Notes at a conversion price of C$0.05698, per Common Share and applying a Canadian-U.S. dollar exchange rate of USD$1 = $1.3389, and the exercise of 300,000 options issued to RCF and its affiliates).
RCF V also holds an option to purchase additional notes from the Company in the aggregate principal amount of USD$20,000,000 which will be convertible into Common Shares. As the number of Common Shares issuable to RCF V is contingent, in part, upon future values, share prices, and exchange rates, the number of shares that RCF V could acquire, should it purchase the additional notes and exercise its conversion rights in full and/or trigger payment of interest under the note in shares, cannot be determined as at this time.
The Note Purchase Agreement and the Amending Agreement contain other standard representations, warranties and covenants on the part of RCF and the Company common to such transactions.
Interest on the the Notes and the Replacement Notes is payable (i) at the Maturity Date in cash, or (ii) at the request of the note holder at the Maturity Date in Common Shares at the market price, being the 20 day volume weighted average trading price of the Common Shares on the TSX Venture Exchange (the "Market Price"), at the Maturity Date (subject to TSX Venture Exchange approval), or (iii) before the Maturity Date on the election of the note holder, in Common Shares at the Market Price at the time of conversion (subject to TSX Venture Exchange approval).
The conversion price for the Notes and Replacement Notes will be equal to the greater of (i) C$0.05698 per Common Share for the first year of such Note or Replacement Note and C$0.10 per Common Share thereafter; and (ii) the minimum price required by the TSX Venture Exchange, subject to adjustment in accordance with the terms of the notes (the "Conversion Price"). At the request of the note holder, prior to the Maturity Date, the principal amount and accrued interest may be converted into Common Shares at the Conversion Price and the Market Price, respectively. The Company may prepay the notes with shares issued at the Conversion Price per share if the Market Price of the shares on the TSX Venture Exchange is at least 200% of the Conversion Price for 40 consecutive trading days.
The Notes and Replacement Notes were acquired for investment purposes. RCF will evaluate its investment in the Company from time to time and may, based on such evaluation of market conditions and other circumstances, increase or decrease its shareholdings in the Company as circumstances require.
RCF acquired the Replacement Notes and Notes pursuant to an exemption from the prospectus and registration requirements of applicable law.
SOURCE Resource Capital Fund VI L.P.
For further information: and to obtain a copy of the early warning report filed under applicable Canadian securities laws in connection with the transactions hereunder, please see the Company's profile on the SEDAR website www.sedar.com or contact: Resource Capital Fund V L.P, 1400 Sixteenth Street, Suite 200, Denver, CO, 80202, Telephone: (720) 946-1444, Attn: Molly Campbell; Resource Capital Fund VI L.P., 1400 Sixteenth Street, Suite 200, Denver, CO, 80202, Telephone: (720) 946-1444, Attn: Molly Campbell