GOLD Reserve Announces up to US$65 Million IN Financing Transactions IN Connection with a Potential Bid IN Relation to the Sale of the Shares of Pdv Holdings, Inc., Under the Delaware Proceedings
May 27, 2024 TSX.V: GRZ
NR-24-05
NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS OR FOR
DISTRIBUTION TO U.S. NEWSWIRE SERVICES
GOLD RESERVE ANNOUNCES UP TO US$65 MILLION IN FINANCING TRANSACTIONS IN
CONNECTION WITH A POTENTIAL BID IN RELATION TO THE SALE OF THE SHARES OF
PDV HOLDINGS, INC., UNDER THE DELAWARE PROCEEDINGS
Toronto, Ontario – May 27, 2024 – Gold Reserve Inc. (TSX.V: GRZ) (OTCQX: GDRZF) (“Gold
Reserve” or the “Company”) announced today that it has entered into an agreement with Cantor
Fitzgerald Canada Corporation (“CFCC”) to undertake a best efforts private placement of Class
A common shares of the Company (the "Common Shares") for anticipated gross proceeds of up
to US$10 million at a price per Common Share of US$3.50 (the “Share Offering”). The Share
Offering is expected to be completed on a best efforts basis pursuant to a formal agency
agreement to be entered into between the Company and CFCC, as lead agent and bookrunner
(the “Agent”).
The number of Common Shares to be sold will be determined in the context of the market in
conjunction with the marketing efforts and there can be no assurance as to completion of the
Share Offering. The closing of the Share Offering is expected to occur on or about June 7, 2024
(the “ Offering Closing Date”) and is subject to the completion of formal documentation and
receipt of regulatory approvals, including the approval of the TSX Venture Exchange.
The Company has granted the Agent an over-allotment option exercisable, in whole or in part, in
the sole discretion of the Agent, to arrange for the purchase of up to an additional 50% of the
number of Common Shares sold in the Share Offering at any time up to two days prior to the
Offering Closing Date, on the same terms and conditions as the Share Offering. If exercised in
full, the Company would raise up to US$15 million in gross proceeds from the issuance of
Common Shares.
The Common Shares will be offered on a private placement basis pursuant to applicable
exemptions in each of the provinces of Canada under National Instrument 45- 106 – Prospectus
Exemptions and in the United States on a private placement basis pursuant to applicable
exemptions from the registration requirements of the United States Securities Act of 1933 , as
amended (the “ U.S. Securities Act ”) and applicable state securities laws, and in such other
jurisdictions as may be permitted. The Common Shares issuable to Canadian subscribers in
connection with the Share Offering will be subject to a statutory hold period in Canada which will
run for four months from the Offering Closing Date of the Share Offering. Any Common Shares
sold to investors outside of Canada will be sold pursuant to OSC Rule 72-503.
In connection with the Share Offering, the Agent will receive a commission equal to 6% of the
gross proceeds from the sale of the Common Shares subject to certain exceptions at the Offering
Closing Date.
The Company has also entered into a binding term sheet with Monarch Alternative Capital LP
(“Monarch”) to obtain a borrowing facility (the “Facility”). The Facility allows the Company, in its
sole discretion, to borrow up to US$50 million. The sole purpose of the Facility is to fund any cash
deposits required by the Company with respect to a Potential Bid (as defined below) submitted
pursuant to the Bidding Procedures (as defined below). The closing of the Facility is subject to
entering into definitive documentation and it is expected to close on or before June 5, 2024. The
Facility is secured solely by an assignment of up to US$75 million of the Company’s potential
claim recovery against the parent of PDVH. Monarch has the right to redeem the amount drawn
under the Facility upon the earlier of (a) the closing of a sale transaction under the Sale Process
(as defined below), (b) the long stop date of any sale agreement pursuant to the Sales Process,
(c) the date the Sales Process is terminated without a sale agreement, and (d) December 31,
2025. If on such date Monarch has not received the drawn amount, Monarch has the right to
cause the Company to pay US$75 million plus interest calculated thereon at (i) the s ecured
overnight financing rate plus 200 basis points through December 31, 2025, plus (ii) the secured
overnight financing rate plus 800 basis points thereafter, by the issuance to Monarch of an 18
month term note. Further details will be provided once definitive documentation is entered into.
The Company is evaluating and considering engaging in a potential transaction (the “ Potential
Transaction”) in relation to the sale of the common shares of PDV Holdings, Inc. (“ PDVH”), the
indirect parent company of CITGO Petroleum Corp (the “ Sale Process”) . The Potential
Transaction may include the Company submitting a bid (a “Potential Bid”), either solely or jointly
with certain undetermined parties, pursuant to the sales and bidding procedures managed by the
Special Master of the U.S. District Court for the District of Delaware (the “Bidding Procedures”).
The Company has most recently discussed the Sales Process in its January 9, 2024 and July 28,
2023 press releases.
The net proceeds from the above-mentioned Share Offering and Facility, as well additional cash
on hand, provide the Company with in excess of U S$65 million to be used to assist in funding
certain expenses in connection with the Potential Transaction, including the cash deposit required
for a Potential Bid submitted pursuant to the Bidding Procedures; however, there can be no
assurance that a Potential Bid will be made or that the Potential Transaction will be consummated
and in such case, the net proceeds of the Share Offering may also be used for working capital
and general corporate purposes.
“This transaction provides the Company with sufficient liquidity to potentially bid, either solely or
jointly, to acquire the PDVH shares on June 11 in accordance with the requisite bidding
procedures established by the Delaware Court and demonstrates we are taking proactive steps
to protect the interests of our shareholders ,” said Paul Rivett, Executive Vice-Chairman of Gold
Reserve.
The securities referred to in this news release have not been and will not be registered under the
U.S. Securities Act, or the securities laws of any state of the United States and may not be offered
or sold within the United States or to, or for the account or benefit of, "U.S. persons" (as defined
in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and
applicable state securities laws or pursuant to an exemption from such registration requirements.
This news release does not constitute an offer to sell or a solicitation of an offer to buy nor shall
there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful.
On Behalf of the Board of Directors
Paul Rivett
Executive Vice-Chairman
Gold Reserve Inc. Contact
Jean Charles Potvin
999 W. Riverside Ave., Suite 401 Spokane, WA 99201 USA
Tel: (509) 623-1500
Fax: (509) 623-1634
Cautionary Statement Regarding Forward-Looking statements
This release contains “forward-looking statements” within the meaning of applicable U.S. federal
securities laws and “forward- looking information” within the meaning of applicable Canadian
provincial and territorial securities laws and state Gold Reserve’s and its management’s
intentions, hopes, beliefs, expectations or predictions for the future. Forward-looking statements
are necessarily based upon a number of estimates and assumptions that, while considered
reasonable by management at this time, are inherently subject to significant business, economic
and competitive uncertainties and contingencies. They are frequently characterized by words
such as "anticipates", "plan", "continue", "expect", "project", "intend", "believe", "anticipate",
"estimate", "may", "will", "potential", "proposed", "positioned" and other similar words, or
statements that certain events or conditions "may" or "will" occur. Forward-looking statements
contained in this press release include, but are not limited to, statements relating to the Share
Offering, the Facility, the Potential Transaction and the Potential Bid.
We caution that such forward-looking statements involve known and unknown risks, uncertainties
and other risks that may cause the actual events, outcomes or results of Gold Reserve to be
materially different from our estimated outcomes, results, performance, or achievements
expressed or implied by those forward-looking statements, including but not limited to: failure to
obtain any necessary regulatory approvals in connection with the Share Offering; the completion
of the Share Offering and the closing thereof; the entering of definitive documentation (including
the terms thereof) with respect to the Facility and the completion thereof ; that the proceeds
obtained under the Share Offering or the Facility will be less than expected; the failure of the
Company to negotiate or enter into any agreements required for the Share Offering or the Facility;
the failure of the Company to negotiate and/or submit a Potential Transaction, including as a result
of failing to obtain sufficient equity and/or debt financing to fund the expenses in connection with
any Potential Transaction; that the proceeds of any equity/debt financing are used for purposes
other than expenses associated with the making of any Potential Transaction; that any Potential
Bid submitted by the Company will not be selected as a “Successful Bid” under the Bidding
Procedures, and if selected may not close due to the Sale Process not being completed, including
as a result of the United States Office of Foreign Asset Control (“ OFAC”) not granting an
authorization in connection with any potential sale of PDVH shares and/or whether it changes its
decision or guidance regarding the S ale Process; failure of the Company or any other party to
obtain any required shareholders and/or regulatory approvals (including approvals of the TSX
Venture Exchange) for, or satisfy other conditions to effect, any transaction resulting from a
Potential Bid; that the Company forfeit any cash amount deposit made due to failing to complete
a Potential Bid or otherwise; that the making of the Potential Transaction or any transaction
resulting therefrom may involve unexpected costs, liabilities or delays; that, prior to or as a result
of the completion of any transaction contemplated by a Potential Transaction, the business of the
Company may experience significant disruptions due to transaction related uncertainty, industry
conditions or other factor; the ability to enforce the writ of attachment granted to the Company;
the timing set for various reports and/or other matters with respect to the S ale Process may not
be met; the ability of the Company to otherwise participate in the Sale Process (and related costs
associated therewith; the amount, if any, of proceeds associated with the Sale Process; the
competing claims of certain creditors, the “Other Creditors” (as detailed in the applicable court
documents filed with the Delaware Court) of Venezuela and the Company, including any interest
on such creditors’ judgements and any priority afforded thereto; uncertainties with respect to
possible settlements between Venezuela and other creditors and the impact of any such
settlements on the amount of funds that may be available under the S ale Process; and the
proceeds from the Sale Process may not be sufficient to satisfy the amounts outstanding under
the Company’s September 2014 arbitral award and/or corresponding November 15, 2015 U.S.
judgement in full and the ramifications of bankruptcy with respect to the Sale Process and/or the
Company’s claims, including as a result of the priority of other claims. This list is not exhaustive
of the factors that may affect any of the Company’s forward -looking statements. For a more
detailed discussion of the risk factors affecting the Company’s business, see the Company’s
Annual Information Form on Form 40 -F and Management’s Discussion & Analysis for the year
ended December 31, 2023 and other reports that have been filed on SEDAR+ and are available
under the Company’s profile at www.sedarplus.ca and which have been filed on EDGAR and are
available under the Company’s profile at www.sec.gov/edgar.
Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent
written and oral forward-looking statements attributable to Gold Reserve or persons acting on its
behalf are expressly qualified in their entirety by this notice. Gold Reserve disclaims any intent or
obligation to update publicly or otherwise revise any forward-looking statements or the foregoing
list of assumptions or factors, whether as a result of new information, future events or otherwise,
subject to its disclosure obligations under applicable rules promulgated by the Securities and
Exchange Commission and applicable Canadian provincial and territorial securities laws.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER
(AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.