Excellon Announces Debenture Restructuring
Excellon Announces Debenture Restructuring
Toronto, Ontario--(Newsfile Corp. - September 21, 2023) -
Excellon Resources Inc. (TSX: EXN)
(OTCQB: EXNRF) (FSE: E4X2) ("Excellon"
or the
"Company")
is pleased to announce that the
Company has entered into a
binding term sheet with holders ("
Debentureholders
") representing over
66
2/3
%
of the principal amount of the outstanding
5.75% secured convertible debentures of the
Company (the "
Debentures
") to reduce the outstanding principal amount to C$7.5 million, representing
a 58% reduction in principal, and to amend the terms of the remaining Debentures to, among other
things, further extend the maturity date to August 31, 2026.
Highlights
Outstanding principal amount of the Debentures to C$7.5 million, representing a
reduction of C$10.4 million.
In exchange for C$10.4 million aggregate principal amount of the Debentures, Excellon to
pay C$3.5 million in equity, 25% interest in Silver City Project, plus additional non-dilutive
contingency and royalty payments.
Structure aligns investment return to Debentureholders through both equity and asset
value growth, a benefit to all stakeholders.
Maturity date of remaining Debentures extended to August 31, 2026.
No cash repayment or outlay required to restructure the Debentures.
Interest is payable at an annual rate of 6.5% in cash or 10% in shares, at the Company's
option.
Provides alignment with shareholders around future equity growth.
Shawn Howarth, President and CEO of Excellon, commented, "We are pleased to reach an agreement
with Debentureholders. The restructuring announced today reduces debt with zero cash outlay and
minimal equity dilution. We also thank Debentureholders, who have invested significant capital to
support Excellon and continue to believe in the long-term potential of the Company."
Mr. Howarth added, "Priorities in the Debenture Repurchase were to de-lever the balance sheet, but in a
structure that minimizes immediate dilution to Excellon shareholders at current share prices. One third of
the Debenture Repurchase consideration is equity of Excellon with the remainder of consideration on
successful milestone achievements and advancing the asset portfolio. Current Excellon shareholders will
continue to benefit in upside growth with reduced up-front dilution."
Debenture Restructuring
The Company has entered into a binding term sheet with Debentureholders representing approximately
66
2/3
%
of the aggregate principal amount of outstanding Debentures to repurchase and cancel
C$10,410,000 aggregate principal amount of the Debentures for the consideration set out below (the
"
Debenture Repurchase
") and to amend the terms of the remaining Debentures (the "
Debenture
Amendment
" and together with the Debenture Repurchase, the "
Debenture Restructuring
").
Debenture Repurchase
Pursuant to the Debenture Repurchase, the Company will repurchase and cancel C$10,410,000
aggregate principal amount of the Debentures in exchange for the following consideration payable pro
rata to the Debentureholders:
C$3.5 million in common shares in the capital of Excellon ("
Common Shares
") at a price of
C$0.09 per Common Share payable on the closing date of the Debenture Restructuring (the
"
Restructuring Closing Date
");
contingent value rights providing for three equal cash payments equivalent to 500 troy ounces of
gold for each payment, on achieving the following milestones.
Each cash payment will be based on
ounces multiplied by the average gold price for the five trading days prior to the achievement of the
applicable milestone:
Milestone 1: Updated resource estimate at the Company's Kilgore Project (the "
Kilgore
Project
");
Milestone 2: Revised preliminary economic assessment, feasibility study or economic
estimate at the Kilgore Project; and
Milestone 3: Achieving commercial production at the Kilgore Project;
2% NSR royalty on the Kilgore Project; and
25% interest in the common shares of Saxony Silver Corp., which holds the Company's Silver City
Project.
Debenture Amendment
The key terms of the Debenture Amendment are as follows:
extension of the maturity date from July 31, 2024 to August 31, 2026;
reduction of the conversion price to C$0.10 per Common Share (the "
New Conversion Price
");
provided that, in the event the Company completes an offering of Common Shares, subscription
receipts or other securities convertible, exercisable or exchangeable for Common Shares (an
"
Equity Offering
") prior to the Restructuring Closing Date, the New Conversion Price shall be
adjusted to a 20% discount to the Equity Offering price; provided further that the New Conversion
Price shall not be less than C$0.06 and not more than C$0.16;
interest payable at an annual rate of 6.5% in cash or 10% in Common Shares, at the Company's
option; and
no further warrants, restructuring fees or further dilution is contemplated in relation to the Debenture
Amendment.
The Debenture Amendment extends the maturity date of the Debentures to mid-2026 and provides
Excellon with significant runway to grow equity value. A floating conversion price is a potential benefit for
shareholders that will be fixed by the Restructuring Closing Date.
Completion of the Debenture Restructuring is subject to, among other things, approval by the requisite
majorities of Debentureholders and holders of Common Shares, as well as the approval of the Toronto
Stock Exchange. The Debenture Restructuring is expected to close in the fourth quarter of 2023.
Annual Meeting of Shareholders
The annual meeting of shareholders has been scheduled for November 7, 2023.
The record date is
September 25, 2023. Meeting materials will follow in due course.
About Excellon
Excellon's vision is to realize opportunities through the acquisition of advanced development or
producing assets with further potential to gain from an experienced management team for the benefit of
our employees, communities and shareholders. The Company is advancing a portfolio of silver, base
metals and precious metals assets including Kilgore, an advanced gold exploration project in Idaho; and
Silver City, a high-grade epithermal silver district in Saxony, Germany with 750 years of mining history
and no modern exploration.
Additional details on Excellon's properties are available at
www.excellonresources.com
.
For Further Information, Please Contact:
Excellon Resources Inc.
Shawn Howarth, President & Chief Executive Officer
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, contained, referenced or incorporated by
reference in this news release constitute "forward-looking statements" and "forward looking
information" (collectively, "
forward-looking statements
") within the meaning of applicable Canadian
and United States securities legislation. Generally, these forward-looking statements can be identified
by the use of forward-looking terminology such as: "actively", "advance", "anticipated", "assess",
"believe", "cause", "commence", "completion", "conditions", "consideration", "continues",
"development", "due course", "expectation", "exploration", "extend", "extension", "flexibility",
"focused", "forbearance", "forward", "further", "future", "if", "implement", "liquidity", "looking",
"maturity", "may", "negotiations", "occur", "opportunities", "options", "outcome", "outstanding",
"potential", "providing", "reach", "restructuring", "risk", "subject to", "to be", "update", "vision", "waive",
"when", "will", and "would", or variations of such words, and similar such words, expressions or
statements that certain actions, events or results can, could, may, should, to, will, would (or not) be
achieved, occur, provide, result, complete or support in the future or which, by their nature, refer to
future events. In some cases, forward-looking information may be stated in the present tense, such as
in respect of current matters that may be continuing, or that may have a future impact or effect.
Forward-looking statements include statements regarding the terms of and completion of the
Debenture Restructuring; the timing and ability of the Company to complete the Debenture
Restructuring; and the timing and ability of the Company to receive necessary regulatory and third
party approvals for the Debenture Restructuring (including the approval of the Toronto Stock
Exchange, the holders of the Debentures and the holders of the Common Shares and the form or
means thereof). Although the Company believes that such statements are reasonable, it can give no
assurance that such expectations will prove to be correct, and any forward-looking statements by the
Company are not guarantees of future actions, results or performance. Forward-looking statements
are based on assumptions, estimates, expectations and opinions, which are considered reasonable
and represent best judgment based on available facts, as of the date such statements are made. If
such assumptions, estimates, expectations and opinions prove to be incorrect, actual and future
results may be materially different than expressed or implied in the forward-looking statements.
Forward-looking statements are inherently subject to known and unknown risks, uncertainties,
contingencies and other factors which may cause the actual results or performance of the Company to
be materially different from any future results or performance expressed or implied by the forward-
looking statements. Such risks, uncertainties, contingencies and other factors include, among others,
the inability of the Company to complete the Debenture Restructuring, the inability of the Company to
satisfy the conditions precedent to the Debenture Restructuring, including the receipt of necessary
regulatory and third party approvals, the termination of the binding term sheet, the "Risk Factors" in
the Company's annual information form dated March 31, 2023 (the "
2023 AIF
"), and the risks,
uncertainties, contingencies and other factors identified in this news release, the Company's
Management's Discussion and Analysis, and accompanying financial statements, for the year ended
December 31, 2022 and quarters already ended in 2023, and the Company's other applicable public
disclosure (collectively, "
Company Disclosure
"). The foregoing list of risks, uncertainties,
contingencies and other factors is not exhaustive; readers should consult the more complete
discussion of the Company's business, financial condition and prospects that is provided in the 2023
AIF and the other Company Disclosure. The forward-looking statements referenced or contained in
this news release are expressly qualified by these Cautionary Statements as well as the Cautionary
Statements in the other Company Disclosure. Forward-looking statements contained herein are made
as of the date of this news release (or as otherwise expressly specified) and the Company disclaims
any obligation to update any forward-looking statements, whether as a result of new information, future
events or results or otherwise, except as required by applicable laws.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/181386