SRHI Inc. Provides Update on MTV’s Creditor Protection Process in Chile
SRHI Inc. Provides Update on MTV’s Creditor Protection Process in
Chile
Toronto, August 21, 2020 – (TSX: SRHI, SRHI.WT) – SRHI Inc. (the “Company” or “SRHI”) provides
the following update of the ongoing creditor protection process and proposed restructuring plan
for Minera Tres Valles SpA (“ MTV”), the Company’s 70% owned producing copper mine in
Salamanca, Chile.
In May 2020, MTV filed a Judicial Restructuring Procedure (“ JRP”) in Chile providing MTV
protection from creditors to give itself sufficient time to complete its refinancing efforts to allow
for the completion of the construction of its underground mine.
Over the past 3 months, MTV and the Company have conducted constructive negotiations with
MTV’s senior lenders (“ Lenders”), Vecchiola S.A. (“ Vecchiola”, a related party to MTV’s 30%
minority shareholder) and other unsecured creditors.
Although no formal agreement has yet been entered into, the Company, the Lenders and
Vecchiola (together, the “ Parties”) have negotiated a framework to support MTV’s future
operations including the construction of the Papomono Masivo incline block caving underground
mining project. Subject to a successful reorganization process to be voted on by all creditors of
MTV and the necessary internal approvals of the Parties, it is expected that the Lenders,
Vecchiola and the Company will provide the following additional debt financing to MTV:
SRHI Inc.
Up to $10 million secured second ranking debt to be financed from the Company’s cash
resources (the “SRHI New Loan”)
Drawn down by MTV over the next 12 months
Subordinated to the Lenders’ existing and new financing amounts
Expected payback beginning 2025
Fulfills (and will reduce, pro-rata) the Company’s $10 million corporate guarantee
provided under the facility agreement (the “ Facility Agreement”) entered into between
the Lenders, MTV and the Company in December 2019
Vecchiola
Conversion to subordinated long-term debt, of 75% of amounts owed by MTV to
Vecchiola, to be repaid only after all other amounts due to unsecured creditors are fully
repaid.
Lenders
Release of $7 million cash, currently restricted by the Lenders pursuant to the Facility
Agreement, to support MTV’s operations - $2 million has already been released to
support MTV during the reorganization process
Extension of the maturity by 12 months to December 2024
Extension of the commencement for principal repayments by 12 months to begin March
31, 2022
Extension by 18 months of the requirement to pay 50% of interest
Up to $6 million of new senior debt (“ New Senior Debt”) to have substantially the same
security and terms as currently contemplated in the Facility Agreement (with some
amendments)
The New Senior Debt is to be made available to MTV, if needed, after SRHI has fully
advanced the SRHI New Loan
In addition, MTV and the offtake provider are in agreement that certain amendments to the
offtake agreement are expected to be implemented resulting in the (i) acceleration of payment
terms for the receipt of cash by MTV and (ii) increases to the fixed price portion originally agreed
to in the offtake agreement from 25% to 40%.
The Company expects that a judicial reorganization agreement implementing the proposed
reorganization of MTV will be voted on by MTV’s creditors in late August or early September.
About SRHI Inc.
SRHI is a publicly-listed company based in Toronto and its principal operating business is its 70%
equity interest in the producing copper mine Minera Tres Valles in Salamanca, Chile. For more
information about SRHI, please visit www.srhi.ca.
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this news release, contain forward-looking information (collectively
referred to herein as the "Forward-Looking Statements") within the meaning of applicable
Canadian securities laws. The use of any of the words "expect", "anticipate", "continue",
"estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar
expressions are intended to identify Forward-Looking Statements. In particular, but without
limiting the foregoing, this news release contains Forward-Looking Statements pertaining to: the
JRP process; giving MTV sufficient time to complete its refinancing efforts, providing the
necessary protection to allow MTV to negotiate repayment terms, and timing thereof; the
providing of a financial foundation to grow MTV’s business; beginning the construction of the
Papomono Masivo underground mine; constructive negotiations with MTV’s Lenders and
unsecured creditors; the Company, the Lenders and Vecchiola agreeing to a framework to
support MTV’s future operations; the expected terms of the additional financing to MTV;
expected amendments to the offtake agreement; and the expected vote date for the proposed
reorganization of MTV.
Although SRHI believes that the Forward-Looking Statements are reasonable, they are not
guarantees of future results, performance or achievements. A number of factors or assumptions
have been used to develop the Forward-Looking Statements, including: a successful negotiation
with creditors, including the Lenders during the stay period; additional financing available from
the Company, Vecchiola and Lenders; a successful vote by creditors to approve MTV’s
restructuring; the conversion of the framework to definitive documentation; there being no
additional significant disruptions affecting the development and operation of MTV; and
assumptions concerning general marketing, political, business and economic conditions.
Actual results, performance or achievements could vary materially from those expressed or
implied by the Forward-Looking Statements should assumptions underlying the Forward-Looking
Statements prove incorrect or should one or more risks or other factors materialize, including: (i)
risks associated with the mining industry in general (e.g., operational risks in development,
exploration and production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of estimates and projections
relating to mineral reserves, production, costs and expenses; and labour, health, safety and
environmental risks) and risks associated with the other portfolio companies' industries; (ii) risks
associated with investments in emerging markets; (iii) general economic, market and business
conditions; (iv) failure to secure additional financing in the future on acceptable terms, if at all;
(v) failure to obtain a successful reorganization vote from MTV’s creditors; (vi) commodity price
fluctuations and uncertainties; (vii) risks associated with catastrophic events, manmade disasters,
terrorist attacks, wars and other conflicts, or an outbreak of a public health pandemic or other
public health crises, including COVID-19; (viii) risk that MTV and/or the Company cease to be
going concerns and the Company’s guarantee of the MTV debt is called and the related pledge is
realized (ix) those risks disclosed under the heading "Risk Management" in SRHI’s Management’s
Discussion and Analysis for the year ended December 31, 2019; and (x) those risks disclosed
under the heading "Risk Factors" or incorporated by reference into SRHI’s Annual Information
Form dated March 24, 2020.
The Forward-Looking Statements speak only as of the date hereof, unless otherwise specifically
noted, and SRHI does not assume any obligation to publicly update any Forward-Looking
Statements, whether as a result of new information, future events or otherwise, except as may
be expressly required by applicable Canadian securities laws.
Investor contact information:
Michael Staresinic
President and CFO
(416) 943-7107
Source: SRHI Inc.