CALGARY, Jan. 20 /CNW/ - TVI Pacific Inc. (TSX: "TVI" or the "Company")
announced today that the Company and its Philippine affiliate, TVI Resource
Development (Phils.) Inc. ("TVIRD"), have signed an Omnibus Loan and Security
Agreement ("OLSA") with LIM Asia Multi-Strategy Fund Inc. (formerly LIM Asia
Arbitrage Fund Inc.) and LIM Asia Special Situations Master Fund Limited
(collectively, the "Lenders") providing for a US$29,926,801 principal amount
Term Loan Facility (the "Facility").
The purpose of the Facility is to convert to a term loan the bridge loans
previously made to TVIRD by the Lenders (in the aggregate amount of
approximately US$25.2 million) and accrued interest and fees (in the aggregate
amount of approximately US$1,731,801); and to provide TVIRD with additional
working capital funding to further advance commissioning and construction
activities and to support mining and processing activities at the Canatuan
mine site, located on the Zamboanga Peninsula in the southern Philippines.
"We are pleased to conclude these financing discussions with the LIM
Group", stated Clifford M. James, President and CEO of TVI. "By converting the
previous bridge loan funds into a longer term facility, together with the new
funds provided by the facility, management of the Company believes that it now
has sufficient funds to establish commercial production from the Sulphide
Project at Canatuan."
The OLSA provides that immediately on fulfilment of a number of
conditions precedent, including the receipt of satisfactory due diligence
reports of TVIRD and related companies, all outstanding amounts payable to the
Lenders under the previous bridge financing facility will be converted to an
initial advance under the Facility. Subsequent advances will be available for
a period of three months. Background information regarding the previous bridge
financing facility is set out in news releases disseminated by the Company on
March 13, October 14, November 10, and December 12, 2008, copies of which are
available at www.tvipacific.com.
The Term of the Facility is five years ending January 20, 2014. After an
initial 180 day period from the date of the initial advance, the Company is
required to begin repaying principal and interest amounts outstanding. The
Facility is subject to a fixed arrangement fee in the amount of US$195,000 and
funds borrowed under the Facility bear interest at the rate of 10% per year
calculated on the original principal balance, irrespective of the actual
outstanding balance of the loans payable, until the outstanding principal
balance of the Facility is paid in full. In connection with the execution and
delivery of the OLSA, the Company has agreed to issue to the Lenders share
purchase warrants entitling them to purchase up to 71,689,734 common shares in
the capital of TVI at any time and from time to time until January 20, 2014,
at a purchase price of CDN$0.016 per share.
The Facility is secured by a charge on all of the present and after
acquired assets of TVIRD. The Company has guaranteed the obligations of TVIRD
under the OSLA, has granted a security interest in its intercompany
receivables, and caused its indirectly wholly owned subsidiary, TVI
International Marketing Limited, to grant a security interest to the Lenders
in all of the outstanding shares of TVIRD. As contemplated by the OLSA, all of
the intercompany loans made by the Company or its subsidiary, TVI Minerals
Processing Inc., to TVIRD are subordinated and postponed to the Facility.
Under the OLSA the Lenders, collectively, have the right to nominate a
person for election as a director of each of TVIRD and TVI Pacific and TVIRD
and TVI Pacific have each agreed to use reasonable efforts to cause the
election of the director nominees designated by the Lenders.
The Company has also entered into an Advisory Agreement with a third
party (the "Advisor"). The Advisor will be entitled to a fee equal to 10% per
year of the Facility as defined in the OLSA, payable on the last business day
of each quarter. In addition, commencing December 31, 2010, the Advisor will
be entitled to profit participation of 40% of any cash surplus in TVIRD.
In connection with the execution and delivery of the OLSA, TVI has
entered into a debt conversion agreement (the "Debt Conversion Agreement")
with Clifford M. James and each of Seajay Management Enterprises Ltd.
("Seajay") and Regent Parkway Management Ltd. ("Regent") (both corporations
controlled by Clifford M. James), pursuant to which Seajay and Regent have
agreed to convert indebtedness owing to them by TVI into common shares of TVI,
subject to the receipt of all necessary regulatory and other approvals,
including the approval of the Toronto Stock Exchange. As at the date hereof,
an aggregate of approximately $2 million is owing by TVI to Seajay and Regent.
Those amounts have been advanced to TVI from time to time to support ongoing
operations and for working capital purposes. Additional information relating
to such indebtedness is set out in the notes to the unaudited interim
consolidated financial statements of TVI as at and for the three and nine
month periods ended September 30, 2008 (copies of which have been filed with
various securities regulatory authorities in Canada and which are available
through the SEDAR website at www.SEDAR.com). Under the Debt Conversion
Agreement, the price at which the indebtedness of TVI to Seajay and Regent is
to be converted will be equal to the market price of the Company's common
shares at the time of conversion, being the weighted average trading price of
such shares on the Toronto Stock Exchange for the 10 trading day period
immediately preceding the date of conversion. The Debt Conversion Agreement
contemplates that the indebtedness of TVI to Seajay and Regent will be
converted over time, in a manner intended to ensure that the ownership of TVI
common shares by Clifford M. James and his associates and affiliates does not
exceed certain thresholds. The execution and delivery of the Debt Conversion
Agreement was a condition to the signing of the OLSA by the Lenders.
Discussion of this condition arose late in negotiations relating to the OLSA
and the terms of the Debt Conversion Agreement were only finalized on Monday,
January 19, 2009. Accordingly, public disclosure of the terms of the Debt
Conversion Agreement at an earlier time was not feasible.
About TVI Pacific Inc. (TSX: TVI)
TVI Pacific Inc. is a publicly traded Canadian mining company focused on
exploring for and producing precious and base metals within district scale
systems in the Philippines. The Company's interest in the Canatuan Mine and
its other Philippine assets are held through its affiliate, TVI Resource
Development (Phils.) Inc.
The Toronto Stock Exchange has neither approved nor disapproved of the
information contained herein.
For further information:
For further information: Investor Relations - (403) 265-4356 or