leadf
logo-loader
viewChaarat Gold Holdings Ltd

Chaarat Gold Hlgs Ld - Debt Refinancing of Investor Loan

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 as 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.

 

 

1Regulation 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.

 

 

 

Chaarat Gold Holdings Limited

+44 (0)20 7499 2612

Artem Volynets (CEO)

[email protected]



Canaccord Genuity Limited (NOMAD and Joint Broker)

+44 (0)20 7523 8000

Henry Fitzgerald-O'Connor


James Asensio




finnCap Limited (Joint Broker)

+44 (0)20 7220 0500

Christopher Raggett




SP Angel Corporate Finance LLP (Joint Broker)

+44 (0)20 3470 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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
MSCFSEFEMESSEFS

Quick facts: Chaarat Gold Holdings Ltd

Price: -

Market: AIM
Market Cap: -
Follow

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Chaarat Gold praise 'true character' of employees, operating as normal...

Chaarat Gold Ltd's (LON:CGH) Artem Volynets speaks to Proactive London about the peace deal brokered by Russia between Azerbaijan and Armenia in relation to the Nagorno-Karabakh region. He says despite this conflict the company has maintained its current production guidance and fortunately...

2 weeks, 2 days ago

10 min read