| Tue 10 Nov 2009, 15:00 | | BCD - BRC Diamondcore Announces Debt Settlements And Financing |
|
BCD
BCD
BCD - BRC Diamondcore Announces Debt Settlements And Financing
BRC DIAMONDCORE LTD.
(Incorporated in Canada)
(Corporation number 627115-4)
Share code: BCD & ISIN Number: CA05565C1095
("BRC DiamondCore" or "the Company")
BRC DIAMONDCORE ANNOUNCES DEBT SETTLEMENTS AND FINANCING
Toronto, Canada and Johannesburg, South Africa - November 10, 2009 - BRC
DiamondCore Ltd. ("BRC" or the "Company") (TSX - "BCD"; JSE - "BCD") announces
that it has entered into agreements with certain of its creditors pursuant to
which such creditors have agreed to accept common shares of the Company, to be
issued from treasury by the Company at a price of Cdn$0.20 per share, in
satisfaction of the indebtedness owed to them by the Company (the "Debt
Settlements"). The total number of common shares to be issued by the Company
to the creditors under the Debt Settlements is 43,317,330 shares (the "Debt
Shares"), and the total amount of Company debt to be settled by such share
issuances is Cdn$8,663,466. The 43,317,330 Debt Shares represent
approximately 166% dilution to the currently outstanding common shares of the
Company.
The Company also announces that it proposes to carry out a non-brokered
private placement of up to 20,000,000 units of the Company (the "Units") at a
price of Cdn$0.05 per Unit for proceeds to the Company of up to Cdn$1,000,000.
Each Unit is to be comprised of one common share of the Company and one
warrant of the Company (a "Warrant"), with each Warrant entitling the holder
to purchase one common share of the Company at a price of Cdn$0.066 for a
period of four years. The 20,000,000 common shares comprising part of the
Units, together with the 20,000,000 common shares issuable upon exercise of
the Warrants (the "Warrant Shares"), represent approximately 153% dilution to
the currently outstanding common shares of the Company. The Company intends
to use the proceeds from this financing (the "Financing") for working capital
and general corporate purposes. The Financing may be entirely subscribed for
by directors of the Company, although it is expected that there will be other
subscribers in addition to directors.
Closing of the Debt Settlements and the Financing is expected to occur within
the next three weeks.
One of the creditors involved in the Debt Settlements is Banro Corporation
("Banro"), which currently holds 3,744,032 (or 14.35%) of the outstanding
common shares of the Company. 31,689,955 of the Debt Shares are to be issued
to Banro pursuant to its debt settlement agreement, such that upon closing
Banro will own 35,433,987 common shares of the Company, which will represent
39.63% of the outstanding common shares of the Company assuming completion of
all of the Debt Settlements and the Financing (but not taking into account the
exercise of the Warrants). See below for additional information in respect of
Banro required under the "early warning" rules of Canadian securities laws.
The 43,317,330 Debt Shares, together with the 20,000,000 common shares
comprising part of the Units and the 20,000,000 Warrant Shares, represent in
aggregate approximately 319% dilution to the currently outstanding common
shares of the Company. As the debt settlement transaction with Banro and the
Financing will result in the issuance to insiders of securities representing
more than 10% of the currently outstanding common shares of the Company, the
debt settlement transaction with Banro may materially affect control of the
Company, and the Financing will result in the issuance of securities
representing more than 25% of the currently outstanding common shares of the
Company, the rules of the Toronto Stock Exchange (the "TSX") generally require
disinterested shareholder approval of such transactions. However, the Company
is relying upon the TSX`s financial hardship exemption (the "Exemption") from
the said shareholder approval requirements. The Company currently has a large
working capital deficit, which will be significantly decreased upon completion
of the Debt Settlements and assuming the Financing is fully subscribed. The
making of the Exemption application has been approved by a committee of
independent directors of the Company. In connection with the Exemption
application, the board of directors of the Company has determined that the
Company is in serious financial difficulty, the debt settlement transaction
with Banro and the Financing are designed to improve the Company`s financial
situation, and, based on the determination of the committee referred to above,
the said transactions are reasonable for the Company in the circumstances.
BRC DiamondCore Ltd. is an African-focused diamond explorer with projects in
the Democratic Republic of the Congo. Led by a management team with extensive
experience in diamond exploration and mine development, the Company works in a
systematic and responsible manner to discover, assess and develop diamond
resources for the benefit of its shareholders and local stakeholders.
JOHANNESBURG
10 November 2009
For further information, please visit our website, www.brc-diamondcore.com, or
contact:
In Toronto: Martin D. Jones, Vice President, Corporate Development, (416) 366-
2221 or 1-800-714-7938.
In Johannesburg: Brian P. Scallan, Vice President, Finance, +27 11 9582885.
Forward-Looking Information: Statements in this press release announcing the
proposed Debt Settlements and Financing are forward-looking information within
the meaning of applicable Canadian securities laws. Forward-looking
information is subject to a number of risks and uncertainties that may cause
the actual results of the Company to differ materially from those discussed in
the forward-looking information, and even if such actual results are realized
or substantially realized, there can be no assurance that they will have the
expected consequences to, or effects on the Company. Factors that could cause
actual results or events to differ materially from current expectations
include, among other things, failure to complete the proposed transactions,
the need to satisfy regulatory and legal requirements with respect to the
proposed transactions, risks related to the exploration stage of the Company`s
projects, market fluctuations in prices for securities of exploration stage
companies, uncertainties about the availability of additional financing,
uncertainties related to fluctuations in commodity prices and the other risks
involved in the mineral exploration business. Although the Company believes
that the assumptions inherent in the forward-looking information are
reasonable, forward-looking information is not a guarantee of future
performance and accordingly undue reliance should not be put on such
information due to the inherent uncertainty therein.
Additional Information Required under the "Early Warning" Rules of Canadian
Securities Laws
Assuming completion of all of the Debt Settlements as well as the Financing
(and assuming that the Financing is fully subscribed, but not taking into
account the exercise of the Warrants), the 31,689,955 Debt Shares to be issued
to Banro pursuant to its debt settlement agreement and the 35,433,987 shares
to be owned by Banro upon closing will represent 35.44% and 39.63%,
respectively, of the outstanding common shares of the Company. Banro
currently does not have any future intention to acquire additional securities
of the Company. Banro`s address is Suite 7070, 1 First Canadian Place, 100
King Street West, Toronto, Ontario, M5X 1E3, Canada. A copy of the "early
warning" report to be filed by Banro under the early warning rules of Canadian
securities laws, may be obtained from Donat Madilo at (416) 366-2221.
Date: 10/11/2009 15:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
