TORONTO, Jan. 18, 2018 /CNW/ - Banro Corporation
("Banro" or the "Company") (NYSE American - "BAA";
TSX - "BAA") announced today that the Company and its Barbados based subsidiaries have obtained
approval from the Ontario Superior Court of Justice (Commercial
List) to commence a sales and investment solicitation process (the
"SISP") in the context of its proceedings under the
Companies' Creditors Arrangement Act ("CCAA").
Banro also announced that certain significant conditions
precedent to the effectiveness of the previously approved
US$20 million interim financing
facility (the "DIP Facility") have been satisfied and the
DIP Facility is expected to be available to the Company sometime
during the week ending January 27,
2018 to support its continuing operations during the CCAA
proceedings. The Company also announced that it has obtained an
extension of the stay of proceedings in the CCAA proceedings to
March 30, 2018.
As previously announced, Banro entered into a Support Agreement
with certain of its major stakeholders on December 22, 2017 (the "Support
Agreement") in connection with its filing under the CCAA. The
Support Agreement provides that a recapitalization plan (the
"Recapitalization Plan") will be implemented by the end of
March or mid-April 2018, in the event
that a superior transaction is not identified and implemented under
the SISP.
The SISP will commence on or about January 22, 2018. Interested parties will be
given an opportunity to submit offers for the acquisition of the
business and assets of some or all of the business and assets of
the Company and its subsidiaries (i) for cash proceeds equal to the
outstanding amount of the DIP Facility, the priority debt, 75% of
the affected parity lien debt of Banro, and cash consideration
sufficient to repay all amounts due under the stream agreements or
treatment of the stream agreements on the same terms as the
Recapitalization Plan, or (ii) on other terms determined to be
superior to the Recapitalization Plan, in accordance with the terms
of the SISP.
A copy of the SISP and all related CCAA materials can be found
on the Monitor's website at:
http://cfcanada.fticonsulting.com/banro/. Any potential buyer
interested in participating in the SISP should contact the Monitor
at banro@fticonsulting.com. Similarly, any questions in
respect of the SISP should be directed to the Monitor at
banro@fticonsulting.com.
The key features of the Recapitalization Plan pursuant to the
Support Agreement include: (i) an exchange of certain parity lien
debt (including the amounts owing under the US$197.5 million 10.00% secured notes due
March 1, 2021, the Company's
US$10 million dore loan and the
US$20 million gold forward sale
agreement relating to production at the Company's Namoya mine) for
all of the equity of restructured Banro (subject to dilution on
account of certain equity warrants to be issued as in connection
with the Recapitalization Plan); (ii) consensual amendment of
priority lien debt and streaming obligations held by Baiyin
International Investment Ltd ("Baiyin") and Gramercy Funds
Management LLC ("Gramercy") or related parties of those
entities, including deferrals or partial forgiveness of certain
obligations owing thereunder; (iii) compromising certain unsecured
claims at Banro for nominal consideration; and (iv) a cancellation
of all existing equity of Banro and any and all equity related
claims. A copy of the Support Agreement (and detailed
recapitalization term sheet) can be found on Banro's SEDAR
profile.
As noted in the Company's December 22,
2017 press release, all debt and other obligations of Banro
within the Democratic Republic of the
Congo (the "DRC") will be unaffected under the
Recapitalization Plan. It is expected that the Company's operations
in the DRC will continue in the ordinary course of business and
that obligations to DRC lenders, employees and key suppliers of
goods and services, both during the CCAA proceedings and after the
reorganization is completed, will continue to be met on an ongoing
basis.
Further news releases will be provided on an ongoing basis
throughout the CCAA process as may be determined necessary.
Banro Corporation is a Canadian gold mining company
focused on production from the Twangiza and Namoya mines, which
began commercial production in September
2012 and January 2016
respectively. The Company's longer-term objectives include
the development of two additional major, wholly-owned gold
projects, Lugushwa and Kamituga. The four projects, each of
which has a mining license, are located along the 210 kilometres
long Twangiza-Namoya gold belt in the South Kivu and Maniema
Provinces of the DRC. All business activities are followed in
a socially and environmentally responsible manner.
Cautionary Note Concerning Forward-Looking
Statements
This press release contains
forward-looking statements. All statements, other than statements
of historical fact, that address activities, events or developments
that the Company believes, expects or anticipates will or may occur
in the future (including, without limitation, statements
regarding the CCAA proceedings, the restructuring process
and the ability of the Company to meet its obligations, the
ability of the Company to implement financing or other appropriate
strategic transactions as part of the ongoing process, the
Company's liquidity and ability to meet payment obligations and the
timing of meeting such payment obligations, the Company's
intentions for the future of its business operations and long-term
strategy, and the Company's commitment to its employees and
suppliers) are forward-looking statements. These
forward-looking statements reflect the current expectations or
beliefs of the Company based on information currently available to
the Company. Forward-looking statements are 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 statements, 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, the possibility that the Company will be unable to
implement the Recapitalization Plan or obtain advances under the
DIP Facility due to the failure of one or more of the conditions
precedent to be satisfied, or that the SISP will be
unsuccessful. In addition, actual results or
events could differ materially from current
expectations due to instability in the eastern DRC
where the Company's mines are located; political developments in
the DRC; uncertainties relating to the availability and
costs of financing or other appropriate strategic
transactions; uncertainty of estimates of capital and
operating costs, production estimates and estimated economic return
of the Company's projects; the possibility that actual
circumstances will differ from the estimates and assumptions used
in the economic studies of the Company's projects; failure to
establish estimated mineral resources and mineral reserves (the
Company's mineral resource and mineral reserve figures are
estimates and no assurance can be given that the intended levels of
gold will be produced); fluctuations in gold prices and currency
exchange rates; inflation; gold recoveries being less than
expected; changes in capital markets; lack of infrastructure;
failure to procure or maintain, or delays in procuring or
maintaining, permits and approvals; lack of availability at a
reasonable cost or at all, of plants, equipment or labour;
inability to attract and retain key management and personnel;
changes to regulations affecting the Company's activities; the
uncertainties involved in interpreting drilling results and other
geological data; and the other risks disclosed under the heading
"Risk Factors" and elsewhere in the Company's annual report on Form
20-F dated April 2, 2017 filed on
SEDAR at www.sedar.com and EDGAR at www.sec.gov. Any
forward-looking statement speaks only as of the date on which it is
made and, except as may be required by applicable securities laws,
the Company disclaims any intent or obligation to update any
forward-looking statement, whether as a result of new information,
future events or results or otherwise. Although the Company
believes that the assumptions inherent in the forward-looking
statements are reasonable, forward-looking statements are not
guarantees of future performance and accordingly undue reliance
should not be put on such statements due to the inherent
uncertainty therein. The forward-looking statements
contained in this press release are expressly qualified by this
cautionary note.
Enquiries for the Monitor may be directed to:
FTI Consulting Canada Inc., in its capacity as Monitor of Banro
Corporation et al
Telephone: +1 (416) 649-8131
Toll Free: +1-888-425-0980
Email: banro@fticonsulting.com
Web: http://cfcanada.fticonsulting.com/banro
SOURCE Banro Corporation