Nemaska Lithium Inc. (“
Nemaska Lithium” or the
“
Corporation”) announces today that the
Corporation, Nemaska Lithium Whabouchi Mine Inc., Nemaska Lithium
Shawinigan Transformation Inc., Nemaska Lithium P1P Inc. and
Nemaska Lithium Innovation Inc. (collectively, the “
Nemaska
Entities”) have obtained an approval and vesting order
(the “
Approval and Vesting Order”) from the
Superior Court of Québec (Commercial Division) (the
“
Court”) issued in connection with the proceedings
under the Companies’ Creditors Arrangement Act (the
“
CCAA”).
The Approval and Vesting Order approved the
previously announced transactions (collectively, the
“Transaction”) contemplated in the sale proposal
structured as a credit bid from a group made up of the
Corporation’s largest secured creditor, Orion Mine Finance
(“Orion”), Investissement Québec and The
Pallinghurst Group, acting through a new entity named Quebec
Lithium Partners (The Pallinghurst Group collectively with
Investissement Québec being hereinafter, the
“Sponsors”). Pursuant to the Transaction, the
Sponsors are acquiring, on a 50-50 basis, all of the issued and
outstanding shares of an entity resulting from the amalgamation of
the Nemaska Entities, which will itself emerge from the CCAA
proceedings and subsequently be amalgamated with entities currently
controlled by Orion to form the entity that will operate the
business of the Corporation (“New Nemaska
Lithium”). New Nemaska Lithium will apply to the Canadian
securities regulatory authorities for a decision that, following
the completion of the Transaction, it would cease being a reporting
issuer under applicable Canadian securities laws.
The Approval and Vesting Order also approved the
implementation of a reorganization of the Nemaska Entities that
involves: (a) the incorporation of two new entities (collectively,
“Residual Nemaska Lithium”) to ultimately hold
certain excluded liabilities of the Nemaska Entities, certain
excluded cash of the Corporation on hand at closing, subject to
certain adjustments (the “Residual Cash”), and
certain excluded assets (the “Excluded Assets”),
and (b) the exchange of the shares of the Corporation, on a
one-for-one basis for common shares of Residual Nemaska Lithium
(the “Exchange”), that will result in Residual
Nemaska Lithium becoming a successor reporting issuer under
applicable Canadian securities laws.
The Approval and Vesting Order will enable Residual
Nemaska Lithium to submit a joint plan of compromise and
arrangement and to call a creditors’ meeting to vote on such plan.
Such meeting will be called shortly after the closing of the
Transaction.
The Excluded Assets include, among other things,
15,000,000 common shares in the capital of Vision Lithium Inc.
currently held by the Corporation, which, based on the closing
price of such shares on the TSX Venture Exchange on October 14,
2020, are worth approximately $525,000. Unfortunately, based on the
terms of the Transaction and the consideration to be received by
Residual Nemaska Lithium, holders of the Corporation’s shares will
not receive any payments for, or distributions on, their shares in
connection with the CCAA proceedings, nor will they hold any
interest in New Nemaska Lithium following the completion of the
plan of compromise or arrangement.
Exchange of shares
The Exchange will occur on the date that is four
business days before the closing date of the Transaction. At the
same time all issued and outstanding options, warrants or other
securities of the Corporation (including securities convertible,
exchangeable or exercisable for shares of the Corporation) shall be
canceled for no consideration. Following the Exchange, each share
certificate (or other evidence of ownership of shares of the
Corporation) representing shares of the Corporation shall be deemed
to represent for all purposes the same number of common shares of
Residual Nemaska Lithium. Accordingly, shareholders will not be
required to surrender their share certificates representing shares
of the Corporation and in the context of the Transaction, since
there is no residual value for shareholders, no action is required
from shareholders to complete the Exchange.
The Corporation will confirm by press
release once the Exchange occurs. All
non-residents of Canada should determine with their own tax
advisors if any tax filings are required related to the disposition
having regards to their own circumstances.
Tax Considerations of the
Exchange
The following section provides a general summary of
certain Canadian federal tax considerations to beneficial owners of
common shares of the Corporation (the “Shares”)
who, for the purposes of the Income Tax Act (Canada) (the
“Tax Act”) and at all relevant times, are or are
deemed to be resident in Canada hold their shares as capital
property, deals at arm’s length and are not affiliated with
Residual Nemaska Lithium (“Canadian Holders”).
For purposes of the Tax Act, the Exchange will
generally not result, pursuant to subsection 85.1(1) of the
Tax Act, in a Canadian Holder realizing a capital loss. A Canadian
Holder may, however, elect to realize a capital loss upon the
Exchange by including in its return of income for the taxation year
in which the Exchange occurred the capital loss, as otherwise
determined, resulting from the Exchange.
This summary does not discuss all of the
tax considerations potentially applicable to Canadian Holders or to
other holders of shares and all holders should consult their own
tax advisors as to the federal, provincial and foreign tax
considerations applicable to them having
regard to their own circumstances.
Questions and Answers about the
Exchange
The following are some questions that you, as a
shareholder, may have relating to the CCAA proceedings and proposed
Transaction and answers to those questions. These questions and
answers are of general nature and do not provide all of the
information relating to the CCAA proceedings and the Transaction or
the matters to be considered in connection thereto and are
qualified in their entirety by the more detailed information
contained elsewhere in this press release, the CCAA proceedings and
Court related documentation, all of which are important and should
be reviewed carefully.
Q: As a shareholder, will I receive any payment or
distribution in connection with the CCAA proceedings?
A: No. Unfortunately, there is no residual value for
shareholders. Shareholders will not receive any payments for, or
distributions on, their shares in connection with the CCAA
proceedings.
Q: Why are my shares of Nemaska being
exchanged?
A: Your shares are being exchanged (on a one-for-one basis for
common shares of Residual Nemaska Lithium) as part of a
reorganization of the Nemaska Entities. However, as indicated
above, unfortunately there is no residual value for shareholders in
connection with the CCAA proceedings. As result of the Exchange,
you will not hold any interest in New Nemaska Lithium which will
operate the business of Nemaska following the completion of the
CCAA proceedings.
Q: Do I need to do anything to complete the exchange of
my shares or contact my broker?
A: No. The context of the transaction provides an automatic
exchange of shares and no action is required from shareholders to
complete the Exchange. Following the Exchange, each share
certificate (or other evidence of ownership of shares of the
Corporation) representing shares of the Corporation shall be deemed
to represent for all purposes the same number of common shares of
Residual Nemaska Lithium. Accordingly, shareholders will not be
required to surrender their share certificates representing shares
of the Corporation.
Q. Will the common
shares of Residual Nemaska Lithium, which I will receive as a
result of the Exchange, have any value?
A. The common shares of Residual Nemaska Lithium will not be of
any value. The Exchange is only made for reorganization purposes,
and Residual Nemaska Lithium will not conduct any business
activities.
Q: How can I claim my tax losses?
A: Generally, a shareholder may elect to realize a capital loss
upon the Exchange by including in its income tax return for the
taxation year in which the Exchange occurred the capital loss
resulting from the Exchange. It is important to understand that the
automatic exchange of shares upon the proposed transaction results
in the deferral of the capital loss to the shareholder on his or
her shares unless the shareholder elects to include any portion of
the capital loss otherwise determined, in computing its income for
the relevant taxation year. For this purposes, no tax form, tax
slips or other similar documentation will be provided to any such
shareholder. It is the shareholder's sole responsibility to elect
to realize the capital loss otherwise determined.
In any cases, shareholders should consult their own tax advisors
as to the possibility of realizing a capital loss upon the Exchange
as well as to obtain assistance and advice in determining the
capital loss otherwise realized upon the Exchange.
Q: If I am a non-resident of Canada, what do I need to
do?
A: The Corporation will confirm by press release once the
Exchange occurs and will make available on www.sedar.com and on the
Monitor’s website certain tax documentation and forms that may be
required to be completed and filed, within 10 days following the
Exchange, by certain shareholders, option holders or warrant
holders, as applicable, which are non-resident of Canada. All
non-residents of Canada should determine with their own tax
advisors if any tax filings are required related to the disposition
having regards to their own circumstances.
Q: Who can I call if I have any questions?
A: You may call 514-205-5698, a number set up by the Monitor,
for any questions or additional information. You should also
consult with your own tax advisors as to the tax considerations
resulting from the Exchange.
Next
Steps in the CCAA
Restructuring
As previously announced, the Transaction is
conditional upon the satisfaction of customary closing conditions.
Nemaska Lithium and the Sponsors expect to close the Transaction in
the fourth quarter of 2020.
As mentioned above, the Court also approved
procedures under the CCAA for Residual Nemaska Lithium to file and
submit, following closing of the Transaction, a plan of compromise
or arrangement to its creditors in respect of the Residual Cash and
any proceeds of the Excluded Assets.
More information regarding the Corporation’s
situation, decisions or actions will continue to be provided on an
ongoing basis, as required by applicable law or as may be
determined by the Corporation or the Court. For more information,
visit www.nemaskalithium.com. You can also refer to the
Monitor’s website for more information regarding the CCAA
procedures
at https://www.pwc.com/ca/en/services/insolvency-assignments/nemaska-lithium-inc.html.
Cautionary Statement on Forward-Looking
Information
All statements, other than statements of historical
fact, contained in this press release including, but not limited
to, those relating to the CCAA proceedings, the Transaction and the
Corporation’s activities and its ability to meet its obligations,
constitute “forward-looking information” and “forward-looking
statements” within the meaning of certain securities laws and are
based on expectations and projections as of the date of this press
release. Certain important assumptions by the Corporation in making
forward-looking statements include, but are not limited to,
satisfaction of all closing conditions under the Transaction during
the fourth quarter of 2020.
Forward-looking statements contained in this press
release include, without limitation, those related to the ability
of the Corporation to close the Transaction and the timing of
closing, the value of the common shares of Vision Lithium Inc. as
Excluded Assets, the emergence from the CCAA proceedings, and the
presentation of a plan of compromise or arrangement to Residual
Nemaska Lithium’s creditors and calling of a meeting of creditors.
Forward-looking statements are based on expectations, estimates and
projections as of the time of this press release. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Corporation as
of the time of such statements, are inherently subject to
significant business, economic and competitive uncertainties and
contingencies. These estimates and assumptions may prove to be
incorrect.
Many of these uncertainties and contingencies can
directly or indirectly affect, and could cause, actual results to
differ materially from those expressed or implied in any
forward-looking statements. In addition, there can be no assurance
that the CCAA proceedings will result in the maximization of the
return in respect of the Corporation’s assets and those of its
subsidiaries.
By their very nature, forward-looking statements
involve inherent risks and uncertainties, both general and
specific, and risks exist that estimates, forecasts, projections
and other forward-looking statements will not be achieved or that
assumptions do not reflect future experience. Forward-looking
statements are provided for the purpose of providing information
about management’s expectations and plans relating to the future.
Readers are cautioned not to place undue reliance on these
forward-looking statements as a number of important risk factors
and future events could cause the actual outcomes to differ
materially from the beliefs, plans, objectives, expectations,
anticipations, estimates, assumptions and intentions expressed in
such forward-looking statements. All of the forward-looking
statements made in this press release are qualified by these
cautionary statements and those made in our other filings with the
securities regulators of Canada including, but not limited to, the
cautionary statements made in the “Risk Factors” section of the
Corporation’s Annual Information Form dated September 30, 2019, and
the “Risk Exposure and Management” section of the Corporation’s
quarterly Management Discussion & Analysis. The Corporation
cautions that the foregoing list of factors that may affect future
results is not exhaustive, and new, unforeseeable risks may arise
from time to time. The Corporation disclaims any intention or
obligation to update or revise any forward-looking statements or to
explain any material difference between subsequent actual events
and such forward-looking statements, except to the extent required
by applicable law.
Further information regarding Nemaska Lithium is
available in the SEDAR database (www.sedar.com) and on the
Corporation’s website at: www.nemaskalithium.com.
FOR FURTHER INFORMATION, PLEASE
CONTACT: Gabrielle TellierMedia Relations514
348-0466gabrielle.tellier@nemaskalithium.com