www.aldridgeminerals.ca
TSX-V: AGM
TORONTO, Sept. 18, 2018 /CNW/ - Aldridge Minerals Inc.
(TSX-V: AGM) ("Aldridge" or the "Company") today
announced that it has entered into an agreement (the
"Arrangement Agreement") pursuant to which Virtus Mining
Ltd. ("Virtus") will acquire all of the issued and
outstanding common shares of Aldridge (the "Aldridge
Shares") not already owned by Virtus. Under the
Agreement, shareholders of Aldridge will receive Cdn.$0.10 in cash for each Aldridge Share. This represents a 25.5%
premium to the volume-weighted average trading price of the
Aldridge Shares over the last 90 trading days. Virtus has also
agreed to loan Aldridge up to US$700,000 in order to permit Aldridge to fund
its near-term working capital requirements pending closing of the
transaction.
The Board of Directors of Aldridge has determined, after
receiving the recommendation of a special committee of independent
directors and following an exhaustive effort by the Company over
the past several years to uncover strategic and financing
alternatives, that the transaction is the best way forward given
the current difficult conditions and limited options available to
the Company.
As the Company has communicated in its recent quarterly and
annual reports, it has faced significant challenges in raising
development capital for the Yenipazar Project. With very difficult
capital markets for junior mining companies, Aldridge has not only
been unable to secure project financing but has also struggled to
raise adequate working capital. As a result, the Company has
seen its cash balance decline and faces a looming liquidity crisis
in light of the Company's obligations under its US$40,000,000 secured term credit facility (the
"BKT Credit Facility") with Banka Kombetare Tregtare sh.a.
("BKT"), which matured on September
16, 2018. The Company did not repay the BKT Credit Facility
at maturity. However, BKT has not yet given the Company
written notice of default pursuant to the BKT Credit Facility. Upon
receipt of such notice, the Company would have 15 business
days to remedy such default before BKT would be entitled to demand
repayment of the BKT Credit Facility and enforce its rights under
security granted for Aldridge's obligations under the BKT Credit
Facility.
Transaction Details
The transaction will be carried out by way of a court-approved
plan of arrangement under the Canada Business Corporations
Act (the "Arrangement") and will require the approval of
the holders of at least 66⅔% of the Aldridge Shares present in
person or represented by proxy at a special meeting of Aldridge
shareholders (the "Aldridge Meeting") to be called to
consider the Arrangement. In addition, the Arrangement will
require the approval of a simple majority of votes cast on such
resolution, after excluding for this purpose the votes attaching to
the Aldridge Shares held by Virtus, Mr. Ahmet Taçyildiz (a director
of Aldridge) or their respective affiliates, as well as all other
votes which are required to be excluded pursuant to applicable
securities laws. Directors (other than Mr. Ahmet Taçyildiz and Mrs.
Hande Taçyildiz), senior executive officers and certain
shareholders of Aldridge, which together represent an aggregate of
approximately 13.6% of the issued and outstanding Aldridge Shares
(calculated on a non-diluted basis), have entered into voting
agreements with Virtus and agreed to vote their Aldridge Shares in
favour of the Arrangement at the Aldridge Meeting. In addition, the
Company understands that, at the closing of the Arrangement, Virtus
will hold approximately 44.30% of the issued and outstanding
Aldridge Shares, which the Company understands Virtus intends to
vote or cause to be voted in favour of the Arrangement.
The board of directors of Aldridge, after consultation with its
financial and legal advisors and on the unanimous recommendation of
a Special Committee of Aldridge's board of directors (the
"Special Committee"), has resolved (with Mr. Ahmet Taçyildiz
and Mrs. Hande Taçyildiz abstaining) to unanimously recommend that
Aldridge shareholders vote in favour of the Arrangement.
Aldridge's board of directors and the Special Committee have also
received a fairness opinion from Ernst & Young LLP in
connection with the Arrangement to the effect that, as of the date
of such opinion, and subject to the assumptions, limitations and
qualifications set forth therein, the consideration to be received
by Aldridge's security holders (other than Virtus, Ahmet Taçyildiz
and their affiliates) pursuant to the Arrangement is fair from a
financial point of view.
In addition to shareholder and court approvals and other
customary conditions, closing of the Arrangement is conditional
upon the Company refinancing, extending or otherwise making
commercial arrangements with BKT in respect of the BKT Credit
Facility which are acceptable to the Company and Virtus, each
acting reasonably. The Company is engaged in ongoing discussions
with BKT in an effort to reach agreement on an extension to the BKT
Credit Facility. There can be no assurance that the Company will be
able to reach agreement with BKT on a refinancing, extension or
other satisfactory commercial arrangement in respect of the Credit
Facility on terms satisfactory to the Company and Virtus or that
BKT will not take steps to enforce its security under the BKT
Credit Facility. In addition, if the Company is not able to
reach agreement with BKT on a refinancing, extension or other
satisfactory commercial arrangement in respect of the BKT Credit
Facility, there can be no assurance that the Arrangement will be
completed or that the Company can continue as a going concern.
The Arrangement Agreement also includes a non-solicitation
covenant on the part of Aldridge, subject to a right to match
provision and customary fiduciary out provisions, and provides for
the payment of a termination fee of Cdn.$200,000 to Virtus in certain circumstances.
Under the Arrangement, each Aldridge
Share (other than Aldridge Shares then held by Virtus) will
be transferred for a payment of Cdn.$0.10 in cash and each outstanding stock option
of Aldridge will be cancelled at the effective time of the
Arrangement in exchange for a cash payment equal to the greater
of: * $0.10 less the exercise
price of that option; and (y) Cdn.$0.005.
In addition, Virtus has agreed to loan (the "Loan") to
the Company up to US$700,000.
The Loan bears interest at 4% per annum and will be due and payable
by the Company on demand, provided that that no demand may be made
prior to the earlier of December 31,
2018 and the occurrence of an event of default under the
Loan agreement. Events of default include certain breaches of
the agreement governing the Loan and the termination of the
Arrangement Agreement.
Complete details of the Arrangement are set out in the
Arrangement Agreement, which will be filed by Aldridge on SEDAR and
will be available for viewing under Aldridge's profile at
www.sedar.com.
It is anticipated that the Aldridge Meeting to consider the
Arrangement will be held in November
2018. The parties expect that the transaction will be
completed shortly after the Meeting, subject to satisfaction of all
conditions to closing. The Company is exempt from the requirement
to obtain a formal valuation in connection with the Arrangement
under applicable securities laws, because the Aldridge Shares are
listed on the TSX Venture Exchange rather than on the Toronto Stock
Exchange or another prescribed exchange.
McCarthy Tetrault LLP is acting as legal counsel to Aldridge and
Pilot Law LLP is acting as legal counsel to the Special Committee.
Ernst & Young LLP is acting as financial advisor to
Aldridge.
Gowling WLG (Canada) LLP is
acting as legal counsel to Virtus.
About Aldridge
Aldridge is a development-stage mining company focused on its
wholly owned and permitted Yenipazar polymetallic VMS Project
(Gold, Silver, Copper, Lead, and Zinc) in Turkey. Aldridge completed the Yenipazar
Optimization Study and filed the related NI 43-101 compliant
technical report in May 2014, which
updated the original May 2013
Feasibility Study. The Optimization Study demonstrated that the
Yenipazar Project is highly robust with an after-tax NPV of
US$330 million at a 7% discount rate
and an after-tax IRR of approximately 32%. The Company is currently
advancing the Yenipazar Project with a focus on obtaining project
financing.
About Virtus
The Company understands that Virtus is a development-stage
mining company formed under the laws of the British Virgin Islands. The Company further
understands that Mr. Ahmet Taçyildiz, a director of Aldridge, will
indirectly hold a 70% interest in Virtus immediately prior to
closing of the Arrangement, and that Virtus will hold approximately
44.30% of the issued and outstanding Aldridge Shares, which Virtus
intends to vote or cause to be voted in favour of the
Arrangement.
Caution Regarding Forward-Looking Information
This news release contains forward-looking information within
the meaning of applicable securities laws that reflects the current
expectations, estimates and projections of management about the
future results, performance, achievements, prospects or
opportunities for the companies following the transaction and
expectations regarding whether a transaction will be consummated,
including whether conditions to the consummation of the transaction
will be satisfied, or the timing for completing the transaction.
When used in this press release, words such as "proposed", "may",
"would", "could", "will", "expect", "anticipate", "estimate",
"believe", "intend", "plan", and other similar expressions are
intended to identify forward-looking statements.
Forward-looking statements set out in this news release are
subject to a number of known and unknown risks, uncertainties and
other factors that could cause actual results, performance,
prospects and opportunities to differ materially from those
expressed in or implied by such forward-looking statements. Such
risks, uncertainties and factors, include, but are not limited to,
the ability of the Company to satisfy the conditions to completion
of the Arrangement, including to reach an acceptable commercial
arrangement with BKT in respect of its secured term credit
facility, and to obtain shareholder and court approvals of the
Arrangement; the occurrence of any event, change or other
circumstance that could give rise to the termination of the
Arrangement Agreement; the retention of employees, tenants,
suppliers and other personnel being adversely affected by
uncertainty surrounding the Arrangement; the availability of funds
pursuant to the Loan; and the other factors discussed under the
heading "Risk Factors" in the Company's Management's Discussion and
Analysis for the year ended December 31,
2017 and in other continuous disclosure filings made by the
Company with Canadian securities regulatory authorities and
available at www.sedar.com. Any number of important factors could
cause actual results to differ materially from these
forward-looking statements as well as future results.
Forward-looking statements set out in this news release are
based on a number of factors and assumptions which have been used
to develop such information but which may prove to be incorrect,
including, but not limited to, assumptions in connection with the
continuance of Aldridge and its subsidiaries as a going concern,
Aldridge's ability to complete the transaction and the absence of
viable alternative transactions; that funds will be made available
to Aldridge pursuant to the Loan; and general economic, political
and market conditions, mineral prices, and the accuracy of mineral
resource estimates. Although Aldridge believes that the assumptions
and factors used in making the forward-looking statements are
reasonable, undue reliance should not be placed on these
statements, which only apply as of the date of this news release,
and no assurance can be given that such events will occur in the
disclosed time frames or at all. Aldridge disclaims any intention
or obligation to update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise
unless required by law.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
SOURCE Aldridge Minerals Inc.