Arianne Phosphate Reaches Agreement to Significantly Reduce its Debt and Extends its Credit Facility on Much Improved Terms -Company also enters into agreement with subordinated debt holders DAN: TSX-V ( Canada ) JE9N: FSE (
Arianne Phosphate Reaches Agreement to
Significantly Reduce its Debt and Extends its
Credit Facility on Much Improved Terms
-Company also enters into agreement with subordinated debt holders
DAN: TSX-V (
Canada
)
JE9N: FSE (
Germany
)
DRRSF: OTC (
USA
)
SAGUENAY, QC,
March 18, 2021
/CNW Telbec/ -
Arianne Phosphate (the "Company" or
"Arianne")
(TSXV: DAN) (OTC: DRRSF) (FRANKFURT: JE9N), a development-stage phosphate
mining company, advancing the Lac à Paul project in
Quebec's
Saguenay-Lac-Saint-Jean region, is
pleased to announce that it has entered into an Agreement with its senior secured lender Mercury
Financing Corp. ("Mercury" or the "Lender") by which the Lender has agreed to exercise its
26,780,000 warrants that it currently holds, thereby reducing the amount owed under the credit
facility by roughly
$6.6M
to
$24.9M
(the "Loan"). Further, the Lender has also agreed to extend the
Loan under the credit facility for a period of 5 years and reduce the annual interest rate to 8% from
the previous 15% (the "Loan Extension"). In conjunction with the amended credit facility, the Lender
will receive 32 million non-transferable share purchase warrants, exercisable at a price of
$0.33
per
share for a period of 5 years (the "2021 Warrants"). As well, these warrants will be subject to a
"warrant blocker" provision.
Additionally, Arianne is also please to announce that it has also entered into Agreements with its
subordinate unsecured debt holders amounting to a total of
$5,970,155
whereby these debt holders
have agreed to a conversion of their existing debt into common shares of the Company at a price of
$0.275
per share (the "Debt Conversion"), representing the volume weighted average price of
Arianne's common shares on the TSX-V for the previous 30 trading days.
"This is very significant news for Arianne and its shareholders," said
Brian Ostroff
, CEO of the
Company. "By addressing this, Arianne has removed a significant concern of its shareholders and
put the Company on a more solid foundation. This agreement allows Arianne to cut its overall debt
by roughly a third, extend the maturity of its outstanding loan by a full five years and cut the interest
rate almost in half which, will save the Company close to
$3 million
a year in interest payments. This
agreement also fully aligns the Company and its lender, as Mercury through its decision to exercise
its warrants, will now become a major shareholder of Arianne with over a 17% equity holding."
"This deal comes at an ideal time," added Mr. Ostroff. "Over the last few years, Arianne has been
able to weather a very difficult macro while many others have not. The Company has advanced its
Lac a Paul project to, what is today, arguably a best of breed asset. Now, we are seeing a drastic
improvement in the agricultural sector with many grains trading at multi-year highs and, improved
conditions for farmers along with tightness in markets, has led to a significant increase in the price of
phosphate fertilizers with DAP prices having doubled in the last year. Arianne should now be very
well-placed to take advantage of its position and advance its project, thus unlocking substantial
returns for its investors and stakeholders."
Highlights of the Agreement with Mercury
The Lender will exercise 26,780,000 warrants into the Company's common shares, thereby
reducing the credit facility from
$31,496,897
to
$24,892,949
, a reduction of
$6,603,948
;
The credit facility will be extended for a period of 5 years at an annual interest rate of 8%
(down from the previous 15%);
The 8% annual interest can be paid by the Company, at its sole option, either in cash or in
common shares of the Company (the "Share Interest Payment") at a price per share equal to
the 1-year volume weighted average price and subject to the rules of the TSX Venture
Exchange (the "TSX-V"), but the Company shall not issue commons shares resulting in the
Lender holding more than more than 19.9% of the issued and outstanding common shares of
the Company as a result of such Share Interest Payment. In such case, the balance of the
interest which may not be paid in common shares shall be paid in cash;
The Company will issue the Lender the 2021 Warrants. The Lender shall not be entitled to
exercise 2021 Warrants which would result in the Lender holding, following such exercise, on a
partially diluted basis, more than 19.9% of the issued and outstanding common shares of the
Company. The Lender shall nevertheless be entitled to exercise such 2021 Warrants in the
event of a transaction involving the Company, by way of Take-Over Bid (as defined under
applicable Canadian securities legislation) or otherwise, resulting in the Company ceasing to be
a publicly listed issuer on the TSX-V. In the event of a transaction of the Company resulting in
the creation of a new Control Person (as defined in the policies of the TSX-V) and requiring the
Company to obtain disinterested shareholder approval in connection with such transaction, the
Company shall also request the approval of its disinterested shareholders in order to remove
the warrant exercise restrictions from said 2021 Warrants, thereby entitling the Lender to
become a Control Person of the Company;
The Company will increase the buyback purchase price of the existing production fee granted in
favour of the Lender to
$11.25M
;
For as long as the Loan remains outstanding, the Lender shall have the right to designate a
nominee for appointment to the board of directors of the Company;
The Company has undertaken to raise additional funds in the amount of
$3M
within the 1-year
anniversary of the closing of the transaction and, every anniversary thereafter for the three
subsequent years, for total cumulative gross proceeds of
$12M
. Should the Company not raise
additional funds on a yearly and cumulative basis, the Company shall issue the Lender an
additional
5M
non-transferable share purchase warrants (the "Additional Warrants") per year
where a funding milestone has not been met (maximum of
20M
non-transferable warrants).
Each warrant will be exercisable at a price per share equal to the market price on the date such
warrants must be issued by the Company and will expire on the date the amended credit facility
expires- for the first 4 years of the amended credit facility, in the event the Company has not
repaid the Loan in full and the Lender remains the creditor of the Company in relation to such
Loan, the Company shall grant the Lender an additional annual production fee of
$0.25
/tonne ,
which may be bought back by the Company for
$2.25M
, for a maximum annual additional
production fee of
$1
/tonne (which may be bought back by the Company for a total amount of
$9M
).
Conversion of Existing Unsecured Debt
The holders of
$5,970,155
have decided to convert the debt into the common shares of the
Company at a price of
$0.275
per share (the "Debt Conversion"), representing the volume
weighted average price of Arianne's common shares on the TSX-V for the previous 30 trading
days.
As a result of the Debt Conversion, the Company will issue a total of 21,709,655 common
shares to such debt holders.
The Company will cancel 11,028,584 warrants that were originally issued with the unsecured
debt
The Loan Extension and Debt Conversion are expected to close on or about
March 31, 2021
. The
completion of these transactions are subject to, notably, the approval of the TSX-V and the
execution of definitive agreements in relation to each of the Loan Extension and the Debt
Conversion. The 2021 Warrants, the Additional Warrants and the common shares of the Company
issued under the Debt Conversion shall be subject to a four month hold period from their date of
issuance.
Qualified
Person
Jean-Sébastien David, P.Geo., Qualified Person by NI 43-101, has approved this release. Mr. David
is also the Company's Chief Operating Officer.
About Arianne Phosphate
Arianne Phosphate ("Arianne Phosphate Inc.") (
www.arianne-inc.com
) is developing the Lac à Paul
phosphate deposits located approximately 200 km north of the Saguenay/Lac St. Jean area
of Quebec,
Canada
. These deposits will produce a high-quality igneous apatite concentrate grading
39% P
2
O
5
with little or no contaminants (Feasibility Study released in 2013). The Company has
171,688,003 shares outstanding.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this
release.
Follow Arianne on:
Facebook:
https://www.facebook.com/ariannephosphate
Twitter:
http://twitter.com/arianne_dan
YouTube:
http://www.youtube.com/user/ArianneResources
Flickr:
http://www.flickr.com/photos/arianneresources
Resource Investing News:
http://resourceinvestingnews.com/?s=Arianne
Cautionary Statements Regarding Forward Looking Information
This news release contains "forward-looking statements" and "forward-looking information"
within the meaning of applicable securities regulations in
Canada
and
the United States
(collectively, "forward-looking information"). Forward-looking information includes, but is
not limited to, anticipated quality and production of the apatite concentrate at the Lac à Paul
project. Often, but not always, forward-looking information can be identified by the use of
words such as "plans", "expects, "is expected", "budget", "scheduled", "estimates",
forecasts", "intends", "anticipates", or "believes", or the negatives thereof 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 information is
subject to known and unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such forward-looking information,
including but not limited to: volatile stock price; risks related to changes in commodity
prices; sources and cost of power facilities; the estimation of initial and sustaining capital
requirements; the estimation of labour and operating costs; the general global markets and
economic conditions; the risk associated with exploration, development and operations of
mineral deposits; the estimation of mineral reserves and resources; the risks associated with
uninsurable risks arising during the course of exploration, development and production;
risks associated with currency fluctuations; environmental risks; competition faced in
securing experienced personnel; access to adequate infrastructure to support mining,
processing, development and exploration activities; the risks associated with changes in the
mining regulatory regime governing the Company; completion of the environmental
assessment process; risks related to regulatory and permitting delays; risks related to
potential conflicts of interest; the reliance on key personnel; financing, capitalization and
liquidity risks including the risk that the financing necessary to fund continued exploration
and development activities at Lac à Paul project may not be available on satisfactory terms,
or at all; the risk of potential dilution through the issue of common shares; the risk of
litigation. Forward-looking information is based on assumptions management believes to be
reasonable at the time such statements are made, including but not limited to, continued
exploration activities, no material adverse change in commodity prices, exploration and
development plans proceeding in accordance with plans and such plans achieving their
stated expected outcomes, receipt of required regulatory approvals, and such other
assumptions and factors as set out herein. Although the Company has attempted to identify
important factors that could cause actual results to differ materially from those contained in
the forward-looking information, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such forward-looking
information will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such forward-looking information. Accordingly, readers
should not place undue reliance on forward-looking information. Forward-looking
information is made as of the date of this press release, and the Company does not
undertake to update such forward-looking information except in accordance with applicable
securities laws.
SOURCE
Arianne Phosphate Inc.
View original content:
http://www.newswire.ca/en/releases/archive/March2021/18/c5112.html
%SEDAR: 00003556E
For further information:
Contact Information: Source: Jean-Sébastien David, C.O.O.,
Tel. : 418-
549-7316, [email protected]; Info: Brian Ostroff, C.E.O., Tel. : 514-908-4202,
CO: Arianne Phosphate Inc.
CNW 13:06e 18-MAR-21