TORONTO, March 5, 2018 /CNW/ - Banro Corporation
("Banro" or the "Company") and its Barbados-based subsidiaries (collectively, the
"Companies") announce that, in connection with the
Companies' restructuring proceedings under the Companies'
Creditors Arrangement Act (the "CCAA"), the Companies
intend to proceed with the Amended Consolidated Plan of Compromise
and Reorganization (the "Recapitalization Plan").
As previously announced, Banro entered into a Support Agreement
(the "Support Agreement") with certain of its major
stakeholders on December 22, 2017 in
connection with its filing under the CCAA. The Support Agreement
provided that the Companies would proceed to implement the
Recapitalization Plan by the end of March or mid-April 2018, in the event that a superior
transaction was not identified and implemented under a
court-approved sale and investment solicitation process (the
"SISP"). No letters of intent were received by the
deadline of 12:00 p.m. eastern time
on March 2, 2018 as required by the
SISP. Accordingly, the SISP has now been terminated and the
Companies will proceed with the Recapitalization Plan, the key
terms of which are outlined below.
Key Terms of the Recapitalization
As previously announced, 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 US$10 million doré
loan and the US$20 million gold
forward sale agreement relating to production at Banro'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 and Gramercy Funds Management
LLC or related parties of those entities, including deferrals or
partial forgiveness of certain obligations owing thereunder; (iii)
a compromise of 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.
All debt and other obligations of Banro within the Democratic Republic of the Congo (the
"DRC") will be unaffected under the Recapitalization Plan
and it is expected that Banro'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.
Key Dates
In accordance with the order authorizing meetings of creditors
of the Companies to be held on March 9,
2018 to consider approval of the Recapitalization Plan
granted by the Ontario Superior Court of Justice (Commercial List)
in the Companies' CCAA proceedings, a meeting of secured
creditors and a meeting of unsecured creditors shall take
place at 1:30 p.m. and 1:45 p.m. eastern time on March 9, 2018, respectively, and as
described in the Companies' press release of February 1, 2018. Provided the required
creditor approval is obtained, the Companies intend to seek an
order (the "Sanction Order") from the Court
sanctioning the Recapitalization Plan at a hearing scheduled for
9:00 a.m. eastern time on
March 16, 2018. Should the
Sanction Order be granted, the intention is to proceed to implement
the Recapitalization Plan by March 31, 2018.
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. Banro'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 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. 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