TORONTO, Feb. 1, 2018 /CNW/ - Banro Corporation
("Banro") and its Barbados
based subsidiaries (collectively, the "Companies") announced
today their consolidated plan of compromise and reorganization (the
"Plan") has been accepted for filing by the Ontario Superior
Court of Justice (Commercial List) (the "Court") in
connection with the Companies' restructuring proceedings under the
Companies' Creditors Arrangement Act (the "CCAA").
This filing marks a major milestone in the Court-supervised
restructuring process under the CCAA to restructure the Companies'
business.
In connection with filing of the Plan, the Court has also
granted orders (i) authorizing meetings of creditors of the
Companies to be held on March 9, 2018
to consider approval of the Plan (the "Meeting Order"); and
(ii) establishing a claims procedure to determine certain claims
against the Companies that are to be affected by the Plan and to
identify and determine all claims against the directors and
officers of the Companies (the "Claims Procedure Order"). As
described below, claims against the directors and officers of the
Companies must be filed and received by the Monitor by no later
than 5:00 pm Toronto time on March
6, 2018
FTI Consulting Canada Inc. is overseeing the Companies' CCAA
proceedings as the court-appointed Monitor. Terms not otherwise
defined herein have the meanings provided for in the Plan which is
available on the Monitor's website at
http://cfcanada.fticonsulting.com/banro/.
THE PLAN
The Companies will proceed with the Plan if no superior
transaction is identified and implemented under the previously
announced sale and investment solicitation process (the
"SISP") which was approved by the Court on January 18, 2018. The SISP process is currently
underway.
The Plan provides for (i) the exchange of certain parity lien
debt for all of the equity of restructured Banro (subject to
dilution on account of certain equity warrants to be issued in
connection with the Plan and associated transactions)
("Newco"); (ii) the compromise of certain unsecured claims
at Banro for nominal consideration; and (iii) the cancellation all
existing equity of Banro and any and all equity related claims. In
addition, concurrent with the implementation of the Plan,
amendments to certain priority lien debt and streaming obligations
held by Baiyin International Investment Ltd and Gramercy Funds
Management LLC or related parties of those entities, including
deferrals or partial forgiveness of certain obligations owing
thereunder, will continue in effect conditional upon the
implementation of the Plan.
The Plan is intended to restructure the Companies' business to
preserve its mining assets and permit the Companies to continue
normal operations in the Democratic
Republic of the Congo (the "DRC").
The above description is a summary only and is subject to final
provisions of the Plan.
CREDITORS' MEETINGS
Voting by Affected Creditors
The Plan contemplates two classes of creditors (collectively,
the "Affected Creditors"), a class of secured creditors (the
"Affected Secured Creditors") and a class of certain
unsecured creditors (the "Affected Banro Unsecured Class").
Affected Secured Creditors' votes will be counted in both the
Affected Secured Creditors' class and, with respect to their
deficiency claims (being 25% of their affected secured claims), in
the Affected Banro Unsecured Class.
The Court has ordered a meeting of Affected Secured Creditors
and a meeting of Affected Banro Unsecured Creditors to take place
on March 9, 2018 at 1:30 p.m. and 1:45
p.m. (Toronto time)
(together, the "Creditors' Meetings"), respectively, at the
offices of the Monitor's counsel, McMillan LLP, 181 Bay Street,
Suite 4400, Toronto, Ontario M5J
2T3. The purpose of the Creditors' Meetings will be to
consider and, if deemed advisable, to pass, with or without
variation, resolutions approving the Plan.
To become effective under the CCAA, the Plan must be submitted
to meetings of Affected Creditors of each class and each class must
approve the Plan by a majority in number representing at least two
thirds in value of the Voting Claims of creditors, who actually
vote (in person or by proxy) at the each of the Creditors' Meetings
(the "Required Majorities"). The Creditors' Meetings
will be conducted pursuant to the Meeting Order dated February 1, 2018.
Based on discussions with key stakeholders, the Companies
anticipate that there will be sufficient support from the Affected
Creditors for the Plan to be approved by the Required
Majorities.
No Voting by Equity Claims
The Plan provides that all shares and related equity
instruments and claims of Banro (collectively, the "Equity
Claims"), will be cancelled and extinguished for no consideration
and without any return of capital. Holders of Equity Claims will
not be entitled to attend or vote at the Creditors'
Meetings.
Sanction Motion
If the Plan is approved at the Creditors' Meetings, Banro
intends to bring a motion (the "Sanction Motion") before the
Court on March 16, 2018 at
10:00 am (Toronto time) or such later date as may be
posted on the Monitor's website, at the Court located at 330
University Avenue, Toronto,
Ontario M5G 1R8. The motion will be seeking the granting of
an order sanctioning the Plan under the CCAA and for ancillary
relief consequent upon such sanction. Any objections to the
Sanction Motion must be delivered more than seven (7) business days
prior to the hearing of the Sanction Motion.
Possible Adjournment of Creditors' Meetings and Sanction
Hearing
Should a letter of intent be received in accordance with the
SISP which could form the basis of a Qualified Alternative
Transaction Bid (as defined in the SISP), as determined by Banro in
accordance with the SISP, it is the intention to adjourn the
Creditors' Meetings to permit the SISP to continue. Notice of
such adjournment, if any, will be posted on the Monitor's website
and sent to the Service List in the CCAA proceedings, which is
available on the Monitor's website. No other notice of such
adjournment will be given.
Notification of Voting Process
As soon as practicable after today's Court order, the Monitor is
required to: (i) send meeting materials, including a notice of
meeting, information circular and related form of proxy, to known
Affected Creditors (other than beneficial holders of the 10%
Secured Notes due 2020, (such notes the "Secured Notes" and
such holders the "Beneficial Noteholders")) by regular
pre-paid mail, courier or email at their last known address as set
out in the books and records of the Companies. The Monitor has
posted a copy of the meeting materials, including the information
circular, on the Monitor's website.
Detailed instruction as to how Affected Creditors (other than
Beneficial Noteholders) can vote at the applicable Creditors'
Meeting are set out in the information circular. However,
generally, speaking, an Affected Creditor may attend at the
applicable Creditors' Meeting(s) in person or may appoint another
person as its proxyholder by inserting the name of such person in
the space provided in the form of proxy provided to Affected
Creditors, or by completing another valid form of proxy.
Special procedures apply to voting by Beneficial Noteholders. As
at the date hereof, CDS Clearing and Depositary Services Inc., is
the sole registered holder of the Secured Notes. All other holders
of Secured Notes are Beneficial Noteholders. BENEFICIAL NOTEHOLDERS
SHOULD PROMPTLY CONTACT THE BROKER, CUSTODIAN, TRUSTEE, NOMINEE OR
OTHER INTERMEDIARY THROUGH WHICH THEY HOLD THEIR SECURED NOTES
(EACH AN "INTERMEDIARY") AND OBTAIN AND FOLLOW THEIR
INTERMEDIARIES' INSTRUCTIONS WITH RESPECT TO THE APPLICABLE VOTING
PROCEDURES AND DEADLINES, WHICH MAY BE EARLIER THAN THE DEADLINES
THAT ARE APPLICABLE TO OTHER AFFECTED SECURED CREDITORS. IT SHOULD
BE NOTED THAT THE ONLY WAY FOR A SECURED NOTEHOLDER TO VOTE IS TO
PROVIDE VOTING AND REGISTRATION INSTRUCTION INSTRUCTIONS TO HIS/HER
INTERMEDIARY. NO OTHER VOTING CHANNEL WILL BE AVAILABLE AND
OTHER FORM OF PROXY WILL BE USED. SECURED NOTEHOLDERS SHOULD
NOT ATTEMPT TO VOTE BY COMMUNICATING WITH THE COMPANY, ITS TRANSFER
AGENT OR TRUSTEE, OR MONITOR.
Any requests for assistance relating to the procedure for
delivering Beneficial Noteholder Voting Instructions or
Registration Instructions may be directed to Kingsdale Advisors
(the Depositary and Solicitation Agent) by email,
contactus@kingsdaleadvisory.com, or by calling the toll free number
1-866-229-8874.
CLAIMS PROCEDURE
This claims procedure is the next step in the Companies'
restructuring process and will assist the Companies in identifying
and quantifying certain claims against the Companies in order to
determine the voting and distribution rights of Affected Creditors
under the Plan as well as the identification of any claims against
the Applicants' directors and officers. A copy of the Claims
Procedure Order and other public information concerning the
Companies' CCAA proceedings can be found at the following website:
http://cfcanada.fticonsulting.com/banro/.
Listed Creditors
The Monitor will mail (within five business days of today's
Court order) a notice of claim and claims package to each Affected
Banro Unsecured Creditor, other than the Noteholders in respect of
their Affected Banro Unsecured Deficiency Claims, having a claim
against Banro that is to be compromised under the Plan (a
"Listed Claim") according to a schedule of claims to be
provided to and maintained by the Monitor in accordance with the
Claims Procedure Order (the "Claims Schedule"). The claims
package will set out the nature and amount of such Listed Claim.
Creditors will have until 5:00 p.m.
on March 6, 2018 (Toronto time) (the "Claims Bar Date")
to file a dispute of such Listed Claim failing which Listed
Creditors will be deemed to have accepted the claim as it appears
on the Claims Schedule. The Claims Procedure Order also
provides for an adjudication process for any claims that cannot be
resolved informally by the Companies, the Affected Creditors, and
the Monitor.
Director & Officer Claims
Under the Claims Procedure Order, any person who wishes to
assert a claim against any of the current or former directors or
officers of the Companies must file a Director/Officer Proof of
Claim with the Monitor on or before 5:00
p.m. Toronto time on the
Claims Bar Date (March 6,
2018). Director/Officer Proof of Claims form and additional
information regarding the filing of Director/Officer Claims may be
obtained from the Monitor's website or by contacting the Monitor at
the contact information below.
Only Director/Officer Proof of Claim Forms received by the
Monitor on or before 5:00 pm
(Toronto time) on March 6, 2018 will be considered filed by the
Claims Bar Date. Director/Officer Claims (as defined in the
Claim Procedure Order) that are not received by the Claims Bar Date
will be barred and such claims extinguished forever.
Additional Information
A copy of the Meeting Order, Claims Procedure Order and all
related CCAA materials can be found on the Monitor's website at:
http://cfcanada.fticonsulting.com/banro/
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,
the sale and investment solicitation 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 restructuring or obtain advances under the interim
financing 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.
SOURCE Banro Corporation