(TSX: TVI)
CALGARY, Jan. 20 /CNW/ - TVI Pacific Inc. (TSX: "TVI" or the "Company") announced today that the Company and its Philippine affiliate, TVI Resource Development (Phils.) Inc. ("TVIRD"), have signed an Omnibus Loan and Security Agreement ("OLSA") with LIM Asia Multi-Strategy Fund Inc. (formerly LIM Asia Arbitrage Fund Inc.) and LIM Asia Special Situations Master Fund Limited (collectively, the "Lenders") providing for a US$29,926,801 principal amount Term Loan Facility (the "Facility").
The purpose of the Facility is to convert to a term loan the bridge loans previously made to TVIRD by the Lenders (in the aggregate amount of approximately US$25.2 million) and accrued interest and fees (in the aggregate amount of approximately US$1,731,801); and to provide TVIRD with additional working capital funding to further advance commissioning and construction activities and to support mining and processing activities at the Canatuan mine site, located on the Zamboanga Peninsula in the southern Philippines.
"We are pleased to conclude these financing discussions with the LIM Group", stated Clifford M. James, President and CEO of TVI. "By converting the previous bridge loan funds into a longer term facility, together with the new funds provided by the facility, management of the Company believes that it now has sufficient funds to establish commercial production from the Sulphide Project at Canatuan."
The OLSA provides that immediately on fulfilment of a number of conditions precedent, including the receipt of satisfactory due diligence reports of TVIRD and related companies, all outstanding amounts payable to the Lenders under the previous bridge financing facility will be converted to an initial advance under the Facility. Subsequent advances will be available for a period of three months. Background information regarding the previous bridge financing facility is set out in news releases disseminated by the Company on March 13, October 14, November 10, and December 12, 2008, copies of which are available at www.tvipacific.com.
The Term of the Facility is five years ending January 20, 2014. After an initial 180 day period from the date of the initial advance, the Company is required to begin repaying principal and interest amounts outstanding. The Facility is subject to a fixed arrangement fee in the amount of US$195,000 and funds borrowed under the Facility bear interest at the rate of 10% per year calculated on the original principal balance, irrespective of the actual outstanding balance of the loans payable, until the outstanding principal balance of the Facility is paid in full. In connection with the execution and delivery of the OLSA, the Company has agreed to issue to the Lenders share purchase warrants entitling them to purchase up to 71,689,734 common shares in the capital of TVI at any time and from time to time until January 20, 2014, at a purchase price of CDN$0.016 per share.
The Facility is secured by a charge on all of the present and after acquired assets of TVIRD. The Company has guaranteed the obligations of TVIRD under the OSLA, has granted a security interest in its intercompany receivables, and caused its indirectly wholly owned subsidiary, TVI International Marketing Limited, to grant a security interest to the Lenders in all of the outstanding shares of TVIRD. As contemplated by the OLSA, all of the intercompany loans made by the Company or its subsidiary, TVI Minerals Processing Inc., to TVIRD are subordinated and postponed to the Facility.
Under the OLSA the Lenders, collectively, have the right to nominate a person for election as a director of each of TVIRD and TVI Pacific and TVIRD and TVI Pacific have each agreed to use reasonable efforts to cause the election of the director nominees designated by the Lenders.
The Company has also entered into an Advisory Agreement with a third party (the "Advisor"). The Advisor will be entitled to a fee equal to 10% per year of the Facility as defined in the OLSA, payable on the last business day of each quarter. In addition, commencing December 31, 2010, the Advisor will be entitled to profit participation of 40% of any cash surplus in TVIRD.
In connection with the execution and delivery of the OLSA, TVI has entered into a debt conversion agreement (the "Debt Conversion Agreement") with Clifford M. James and each of Seajay Management Enterprises Ltd. ("Seajay") and Regent Parkway Management Ltd. ("Regent") (both corporations controlled by Clifford M. James), pursuant to which Seajay and Regent have agreed to convert indebtedness owing to them by TVI into common shares of TVI, subject to the receipt of all necessary regulatory and other approvals, including the approval of the Toronto Stock Exchange. As at the date hereof, an aggregate of approximately $2 million is owing by TVI to Seajay and Regent. Those amounts have been advanced to TVI from time to time to support ongoing operations and for working capital purposes. Additional information relating to such indebtedness is set out in the notes to the unaudited interim consolidated financial statements of TVI as at and for the three and nine month periods ended September 30, 2008 (copies of which have been filed with various securities regulatory authorities in Canada and which are available through the SEDAR website at www.SEDAR.com). Under the Debt Conversion Agreement, the price at which the indebtedness of TVI to Seajay and Regent is to be converted will be equal to the market price of the Company's common shares at the time of conversion, being the weighted average trading price of such shares on the Toronto Stock Exchange for the 10 trading day period immediately preceding the date of conversion. The Debt Conversion Agreement contemplates that the indebtedness of TVI to Seajay and Regent will be converted over time, in a manner intended to ensure that the ownership of TVI common shares by Clifford M. James and his associates and affiliates does not exceed certain thresholds. The execution and delivery of the Debt Conversion Agreement was a condition to the signing of the OLSA by the Lenders. Discussion of this condition arose late in negotiations relating to the OLSA and the terms of the Debt Conversion Agreement were only finalized on Monday, January 19, 2009. Accordingly, public disclosure of the terms of the Debt Conversion Agreement at an earlier time was not feasible.
About TVI Pacific Inc. (TSX: TVI) ---------------------------------
TVI Pacific Inc. is a publicly traded Canadian mining company focused on exploring for and producing precious and base metals within district scale systems in the Philippines. The Company's interest in the Canatuan Mine and its other Philippine assets are held through its affiliate, TVI Resource Development (Phils.) Inc.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.