DENVER, Oct. 30, 2015 /CNW/ - Resource Capital Fund VI L.P. ("RCF VI") is pleased to announce that it has entered into a loan facility with First Bauxite Corporation (the "Company") in the aggregate principal amount of US$15,000,000, made available in two tranches for US$4,000,000 and US$11,000,000 (the "Private Placement"), pursuant to a note purchase agreement between RCF VI and the Company dated as of October 30, 2015 (the "Note Purchase Agreement"). Under the terms of the Note Purchase Agreement, upon closing of the first tranche the Company will issue to RCF VI a convertible note in the aggregate principal amount of US$4,000,000 (the "$4 Million Note"). Upon closing of the second tranche, the Company will issue to RCF VI a convertible note in the aggregate principal amount of US$11,000,000 (collectively with the $4 Million Note, the "Notes"). As of the date hereof, RCF VI has been issued the $4 Million Note by the Company. RCF VI intends to the close the second tranche of the Private Placement on or before January 19, 2016.
In connection with the Private Placement, Resource Capital Fund V L.P. ("RCF V" and collectively with RCF VI, "RCF") entered into an amending agreement (the "Amending Agreement") with the Company, pursuant to which RCF V agreed, subject to the satisfaction of certain conditions, to exchange, on the maturity date of its US$4,000,000 interest-bearing promissory note and C$8,000,000 promissory note (collectively, the "Existing Notes"), being January 19, 2016 (the "Existing Maturity Date"), its Existing Notes for promissory notes having a principal amount equal to the aggregate principal amount of the Existing Notes plus accrued but unpaid interest, as applicable (the "Replacement Notes").
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 the 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 is being undertaken in connection with a refinancing transaction by the Company, pursuant to which, among other things, Pacific Road Resources Funds ("PRRF") has agreed to extend and replace 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 will be 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 Existing Maturity Date, based on a conversion price of C$0.05698 per Common Share, RCF would acquire approximately 606,428,221 Common Shares, representing approximately 83.76% of the currently issued and outstanding Common Shares (without taking into account any dilution from the PRRF Notes).
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 91.16% (660,252,432 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-US dollar exchange rate of USD$1 = $1.3325, 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 US$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.
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.
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:
SOURCE Resource Capital Fund VI L.P.
For further information: 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