| Fri 12 Mar 2010, 13:44 | | FUM - First Uranium announces convertible note financing and restructuring |
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FUM
FIU
FUM - First Uranium announces convertible note financing and restructuring
First Uranium Corporation
(Continued under the laws of British Columbia, Canada)
(Registration number C0777384)
(South African registration number 2007/009016/10)
Share code: FUM ISIN: CA33744R1029
NEWS RELEASE - March 12, 2010
FIRST URANIUM ANNOUNCES CONVERTIBLE NOTE FINANCING AND RESTRUCTURING
(all amounts are in Canadian dollars unless otherwise indicated)
Toronto and Johannesburg - First Uranium Corporation (TSX:FIU, JSE:FUM)
(ISIN:CA33744R1029) ("First Uranium" or the "Company") announces that it has
entered into heads of agreement for a private placement offering (the
"Offering") of a minimum of $125 million and maximum of $150 million in senior
secured convertible notes due March 31, 2013 (the "Notes"). The Notes consist
of: (i) $40 million in South African Rand denominated Notes (the "Rand Notes")
to be purchased by Simmer and Jack Mines Ltd. ("Simmer and Jack"); (ii) $20
million in Canadian dollar denominated Notes (the "Canadian Notes") to be
purchased by Gold Wheaton Corporation ("Gold Wheaton"); and (iii) a minimum of
$65 million and maximum of $110 million Canadian Notes to be offered to
accredited investors by RBC Capital Markets Inc. acting as exclusive placement
agent for the Company. Gold Wheaton may reduce its $20 million commitment to
the extent that the private placement offering to accredited investors exceeds
$65 million in gross proceeds. The Offering is expected to close on March 31,
2010, unless otherwise agreed by the parties, but in any event will not close
earlier than March 26, 2010.
Each Canadian Note will have a principal amount of $1,000 and will be
convertible into 769.2307 common shares of First Uranium ("Common Shares")
representing a conversion price of $1.30, a 13% discount to the 5-day volume
weighted average price of Common Shares. Each Rand Note will have a principal
amount of ZAR1,000 and will be convertible into 107.36 Common Shares, also
representing a conversion price of $1.30.
The Notes will be guaranteed by the subsidiaries of the Company, secured by
second ranking security over all assets currently encumbered by Gold Wheaton and
first security over all other current and future assets of the Company, not be
redeemable until maturity and be subject to typical anti-dilution protections.
In connection with the Offering, Simmer and Jack has agreed to exchange its
$22.1 million loan amount plus accrued and unpaid interest for an equivalent
value of Rand Notes ("Debt Payment").
Also in connection with the Offering, Gold Wheaton has agreed to settle in part
the US$42 million completion penalty due pursuant to its gold stream transaction
for 14 million Common Shares and a commitment to complete construction of the
third gold plant module and satisfaction of the technical completion tests prior
to September 1, 2011 (the "Penalty Payment"). In the event that the
construction and tests are not met by such date a US$1.5 million payment shall
be payable by First Uranium to Gold Wheaton on the first day of each of
September, October, November and December 2011 unless such tests have been met
prior to such date. In the event that these commitments to construction and
technical completion are not met prior to December 1, 2011, a remaining penalty
of US$30 million will be payable.
The Company has 166,847,037 issued and outstanding Common Shares currently.
Assuming conversion of all of the Notes to be issued pursuant to the maximum
Offering, Debt Payment and the Penalty Payment 146,843,304 Common Shares, equal
to 88% of the currently issued and outstanding Common Shares and 47% of the post
conversion issued Common Shares will be issued. Simmer and Jack currently holds
62,122,653 Common Shares of the Company. If the $62,696,295 of Notes were
converted, Simmer and Jack would acquire an additional 48,227,920 common shares,
bringing its holdings to 48% of the issued and outstanding common shares of the
Company, assuming the other $110 million principal amount of Notes were not
converted but giving effect to the issuance to Gold Wheaton at closing of the 14
million Penalty Payment Common Shares. Gold Wheaton does not hold any Common
Shares of the Company currently. If the $20,000,000 of Notes were converted,
Gold Wheaton would acquire 15,384,615 Common Shares which, in addition to the
14,000,000 Penalty Payment Common Shares, would bring its holdings to 17% of the
issued and outstanding Common Shares of the Company, assuming the other
$152,696,295 principal amount of Notes were not converted.
The following table summarizes the Notes Offering:
Transaction Amount of Senior Secured Notes Conversion
Entitlement
Simmer and Jack Debt $22,696,295(1) 17,458,689
Conversion
Simmer and Jack Placement Rand equivalent of $40,000,000 30,769,231
Gold Wheaton Placement Up to $20,000,000 Up to 15,384,615
Private Placement $65,000,000 - $110,000,000 50,000,000 -
84,615,385
(1) includes accrued and unpaid interest to the date hereof.
The commitments of Simmer and Jack and Gold Wheaton are conditional upon, among
other things, raising a minimum of $125 million under the Offering, the Common
Shares remaining listed on the Toronto Stock Exchange ("TSX"), granting of
security, regulatory approval, settlement of definitive documentation and
settlement of an anti-dilution agreement permitting Simmer and Jack to retain
its pro rata holding.
Changes to management and board of directors are proposed, subject to TSX
approval of the nominees. The changes include the appointment of Deon van der
Mescht as Interim Chief Executive Officer. Mr. van der Mescht will resign as
CEO of Simmers immediately prior to his appointment by First Uranium. The board
will also be restructured on closing of the Offering to include three nominees
of Simmer and Jack. If Gold Wheaton subscribes for a minimum of $10 million of
the Notes, then Gold Wheaton shall be entitled to nominate one of the
independent directors.
A mining engineer by profession, Deon van der Mescht has over 25 years`
experience in the South African gold mining industry. Following his tenure as
General Manager of DRD`s Blyvooruitzicht operation, Deon was appointed
Divisional Director of DRDGold`s South African operations in 2003 which included
Buffelsfontein Gold Mine. He joined Simmer and Jack in November 2005 as chief
operating officer and was appointed as the managing director of Simmers` Gold
Division early in 2009. In January 2010, he was appointed CEO of Simmer and
Jack.
The Offering is subject to the approval of the TSX. Since the Offering will
(i) provide for the issuance of common shares to an insider of the Company of
greater than 10% of the number of common shares of the Company which are
currently outstanding and (ii) provide for the issuance of common shares of
greater than 25% of the current outstanding common shares of the Company, the
rules of the TSX require that, unless an exemption is applicable, the Company
obtain approval of the Offering from the holders of a majority of the common
shares of the Company, excluding the votes attached to the common shares held by
Simmer and Jack. The Company is relying upon exemptions from the security
holder approval requirements of the TSX in Subsection 604(e) of the TSX Company
Manual available in cases of financial hardship. Specifically, the Company has
received an exemption from the security holder approval requirement applicable
to the size of the Offering proposed. The Company`s board of directors, and its
independent directors, acting in good faith, have determined that the Company
faces serious financial difficulty and that the proposed Offering has been
designed to improve the financial position of the Company. As a consequence of
relying upon the financial hardship exemptions, the TSX has informed the Company
that it will, in the ordinary course, commence a delisting review. The Company
believes that, upon completion of the Offering, it will be in compliance with
TSX listing requirements.
In addition, the Company is relying upon exemptions from the minority approval
and valuation requirements of Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions, on the basis of financial
hardship. The Company`s current payables do not, in the Company`s estimation
provide comfort to wait for 21 days to begin closing the Offering. As
previously announced, the Company`s financial situation has been severely
compromised by the termination of discussions regarding certain financing
options as a result of the decision to withdraw and subsequently reinstate the
Company`s environmental authorization for the new Tailings Storage Facility
designed to accommodate future tailings deposition at the Company`s Mine Waste
Solutions tailings recovery project.
The completion of the Offering is subject to the approval of the TSX, all other
necessary regulatory approvals and the settlement of definitive documentation.
The securities issuable pursuant to the Offering will be subject to applicable
regulatory hold periods. Proceeds of the Offering will be used for MWS capital
expenditures including completion of the first gold module and uranium plant,
new tailings facility, the third gold plant module, restructuring, financing
and interest expenses and for general corporate purposes.
For this transaction, the Special Committee of First Uranium was advised by RBC
Capital Markets Inc. Fraser Milner Casgrain LLP provided the Special Committee
with legal advice relating to the transaction. Simmer and Jack was advised by
Rand Merchant Bank and Stikeman Elliott LLP and Gold Wheaton was advised by
Paradigm Capital Inc. and Cassels Brock & Blackwell LLP.
These securities have not been and will not be registered under the United
States Securities Act of 1933, as amended, or the securities laws of any state,
and may not be offered or sold in the United States or to, or for the account or
benefit of, U.S. persons unless an exemption from the registration requirements
of the United States Securities Act of 1933, as amended, and all applicable
state securities laws is available. This press release does not constitute an
offer to sell or the solicitation of an offer to buy these securities in the
United States or to, or for the account or benefit of, U.S. persons.
About First Uranium Corporation
First Uranium Corporation (TSX:FIU, JSE:FUM) is focused on its goal of becoming
a significant low-cost producer of uranium and gold through the expansion of the
underground development to feed the new uranium and gold plants at the Ezulwini
Mine and through the expansion of the plant capacity of the Mine Waste Solutions
tailings recovery facility, both operations situated in South Africa. First
Uranium also plans to grow production by pursuing value-enhancing acquisition
and joint venture opportunities in South Africa.
For further information, please contact:
Bob Tait, Vice President, Investor Relations at bob@firsturanium.ca
+1 416 342-5639 (office) or +1 416 558-3858 (mobile)
1240-155 University Avenue, Toronto, ON M5H 3B7
Sponsor:Investec Bank Limited
Cautionary Language Regarding Forward-Looking Information
This news release contains and refers to forward-looking information
based on current expectations. All other statements other than statements
of historical fact included in this release are forward-looking statements
(or forward-looking information). No assurance can be given that the
transactions contemplated herein will be concluded. The Company`s plans involve
various estimates and assumptions and its business and operations are subject
to various risks and uncertainties. For more details on these estimates,
assumptions, risks and uncertainties, see the Company`s most recent Annual
Information Form and most recent Management Discussion and Analysis on file
with the Canadian provincial securities regulatory authorities on SEDAR at
www.sedar.com. These forward-looking statements are made as of the date hereof
and there can be no assurance that such statements will prove to be accurate,
such statements are subject to significant risks and uncertainties, and actual
results and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue reliance on
forward-looking statements that are included herein, except in accordance
with applicable securities laws.
Date: 12/03/2010 13:44:01 Produced by the JSE SENS Department.
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