TIDMCGH
RNS Number : 2680B
Chaarat Gold Holdings Ltd
06 October 2020
6 October 2020
Chaarat Gold Holdings Limited - (AIM:CGH)
("Chaarat" or the "Company")
Debt Refinancing of Investor Loan
Chaarat (AIM:CGH), the AIM-quoted gold mining company with
assets in the Kyrgyz Republic and Armenia is pleased to announce
that it has entered into legally binding agreements relating to the
extension and refinancing of its US$19.4 million investor loan plus
US$1.1 million of accrued interest ("Investor Loan").
Debt Refinancing
The Company has entered into legally binding agreements to
optimise the balance sheet and extended the Investor Loan by
lowering the interest expenses and extending the maturities. This
is being undergone through a refinancing of the Investor Loan with
two new tranches ("Debt Refinancing").
As part of the Debt Refinancing, US$13.5 million of the Investor
Loan will be assumed and extended to 31 December 2024 at 9.5%
interest by Labro Investments Limited ("Labro") via a new facility
with the Company (the "Refinanced Loan"). The US$7.0 million
remaining under the Investor Loan will continue with similar terms
to the existing Investor Loan but with an option of being extended
at Chaarat's discretion to 31 December 2021.
However, it is Chaarat's intention to redeem the US$7.0 million
by year end as the Company is in discussions with financing parties
in negotiating term sheets in order to repay this loan.
It is expected that completion of the Debt Refinancing will take
place shortly, following satisfaction of customary conditions
precedent for a transaction of this nature.
US$13.5 million Refinanced Loan
The US$13.5 million of the Investor Loan has been assumed by the
Company's largest shareholder Labro and a new US$13.5 million
facility has been entered into between the Company and Labro. The
parties were able to agree on more favourable terms reflecting the
progress of the Company and the development into a producer since
the original Investor Loan was entered into on 15 November
2018.
Highlights of the Refinanced Loan facility with Labro
include:
- Principal amount of US$13.5 million
- Interest rate of 9.5%, approximately 3.5% lower than
the existing Investor Loan
- Loan Maturity of 31 December 2024, an extension of four
years to a point in time when Tulkubash is expected
to be in full operation and existing Kapan loan been
fully repaid
- Comparable security package as the Investor Loan but
will only be transferred to Labro when the outstanding
Investor Loan is redeemed
Chaarat has the option to prepay all or part of the Refinanced
Loan without penalty at any time.
As part of the overall refinancing, Chaarat has agreed to issue
7,500,000 new ordinary shares of US$ 0.01 each in the Company
("Ordinary Shares") to Labro in conjunction with the Refinanced
Loan (the "Refinancing Fee Shares"). The Refinancing Fee Shares
will be issued on completion of the Debt Refinancing.
As set out in the 15 April 2020 announcement, Labro provided a
guarantee for the extension of the Investor Loan to 31 December
2020 and was compensated at that time through the issuance of
12,000,000 new Ordinary Shares. In addition, Labro would be issued
a further 8,000,000 new Ordinary Shares should the Investor Loan
not have been repaid by 31 October 2020. Accordingly, these
8,000,000 new Ordinary Shares will remain issuable to Labro on 31
October 2020 if the remaining Investor Loan has not been redeemed
by Chaarat by that date.
US$7.0 million finance facility
US$7.0 million remaining on the Investor Loan is held with the
same lender and Chaarat has the option to extend the loan to a
maturity date of 31 December 2021 (the "Extension"). Chaarat has
also secured an option to repay the loan at any time before this
extended date without penalty. Chaarat will issue warrants to
subscribe for 8,920,341 Ordinary Shares exercisable for a period of
three years at a price of 26 pence per Ordinary Share as
compensation for the Extension option.
If the loan is extended, the terms of the Extension will be
revised to the following:
- Interest rate to increase from 13% to 14%
- Principal repayment to increase from US$7.0 million
to US$7.5 million, unless Loan repaid by 8 January 2021
- A fee payable of US$250,000
As part of Chaarat's overall finance strategy and a s announced
in the Company's interim results on 11 September 2020, the Company
continues to evaluate all financing options in order to fund its
corporate expenses and strategic initiatives, optimise the
Company's capital structure, refinance existing facilities and/or
reduce its overall cost of capital.
Related Party Transactions
The arrangements with Labro to enter into the Refinanced Loan
constitutes a related party transaction under AIM Rule 13 of the
AIM Rules for Companies as Labro is a substantial shareholder of
the Company and Martin Andersson (the executive chairman of
Chaarat) is indirectly beneficially interested in the majority of
the shares in Labro. The independent directors of the Company for
the purposes of this transaction (being all of the Company's
Directors save Martin Andersson) consider, having consulted with
the Company's nominated adviser, that the terms of the transaction
are fair and reasonable insofar as the Company's shareholders are
concerned.
On 5 October 2020, the Board (excluding Martin Andersson)
exercised its discretion to waive the requirement for a mandatory
offer under Regulation 19 of the Company's articles of association
in respect of the issue of the Refinancing Fee Shares (1) .
Artem Volynets, Chief Executive Officer of Chaarat, said:
"We appreciate the strong support from our major shareholder,
Labro, and the continued support from the existing lender. This
refinancing and extension of the maturity of the debt is another
key milestone in optimising the balance sheet of our Company. It is
a reflection of the progress the Company has made since the
original loan was granted with the transformation from an
exploration to a producing company. The maturity extension provides
headroom to repay this debt financing at a point in time when
Chaarat has grown further organically and potentially also through
M&A."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
(1) Regulation 19 Waiver
There is a provision in the Company's articles of association
(Regulation 19) which states that the Board has the right to
require any holder of more than 20% of ordinary shares in the
capital of the Company (the "Ordinary Shares") to make a mandatory
offer to all the Company's shareholders to acquire their Ordinary
Shares if they acquire an additional interest in any Ordinary
Shares.
The Refinancing Fee Shares to be issued to Labro do not fall
under the waiver for market share purchases of up to three million
Ordinary Shares announced by the Company on 16 September 2020 (RNS
number 2004Z). On 5 October 2020 the Board (excluding Martin
Andersson) exercised its discretion to waive the requirement for a
mandatory offer for the Company by Labro, to allow Labro to receive
the Refinancing Fee Shares.
+44 (0)20 7499
Chaarat Gold Holdings Limited 2612
Artem Volynets (CEO) info@chaarat.com
Canaccord Genuity Limited (NOMAD + 44 (0)20
and Joint Broker) 7523 8000
Henry Fitzgerald-O'Connor
James Asensio
+44 (0)20 7220
finnCap Limited (Joint Broker) 0500
Christopher Raggett
SP Angel Corporate Finance LLP (Joint + 44 (0)20 3470
Broker) 0470
Ewan Leggat
About Chaarat
Chaarat is a gold mining company which owns the Kapan operating
mine in Armenia as well as Tulkubash and Kyzyltash Gold Projects in
the Kyrgyz Republic. The Company has a clear strategy to build a
leading emerging markets gold company with an initial focus on
Central Asia and the FSU through organic growth and selective
M&A.
Chaarat is engaged in active community engagement programmes to
optimise the value of the Chaarat investment proposition.
Chaarat aims to create value for its shareholders, employees and
communities from its high-quality gold and mineral deposits by
building relationships based on trust and operating to the best
environmental, social and employment standards. Further information
is available at www.chaarat.com
Appendix
Summary of the key terms of the reduced Investor Loan
1. Principal - US$7.0 million (includes accrued interest).
2. Interest - 13% per annum payable at maturity.
3. Maturity date - 8 January 2021.
4. Extension Option - Chaarat has the option to extend to
31 December 2021. Terms for extension include: Interest
rate to increase to 14%, a fee payable of US$250,000, and
principal to be repaid to increase to US$7.5 million or
US$500,000 above whatever the outstanding principal is
at that time.
5. Security Package includes:
(a) Pledge over shares in Chaarat Gold International Limited
which owns the Kapan mine operating subsidiary.
(b) 100% of any new incremental debt must be used to prepay
the reduced Investor Loan.
6. Other security - Labro continuing to provide an extended
and additional security package directly to the Lender
including a personal guarantee from Chaarat's Executive
Chairman.
Summary of the key terms of the Refinanced Loan
1. Principal - US$13.5 million (includes accrued interest).
2. Interest - 9.5% payable at maturity.
3. Maturity date - 31 December 2024.
4 Security package once reduced Investor Loan repaid in full
. includes:
(a) Pledge over shares in Chaarat Gold International Limited
which owns the Kapan mine operating subsidiary.
(b) 100% of any new incremental debt incurred in relation
to Kapan must be used to prepay the Refinanced Loan.
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