5E Advanced Materials, Inc. (Nasdaq: FEAM) (ASX: 5EA) (“5E” or the
“Company”), a boron and lithium company with U.S. government
Critical Infrastructure designation for its 5E Boron Americas
Complex, today announced that it has entered into a Restructuring
Support Agreement (“RSA”) with its primary lender and the holder of
the Company’s senior secured convertible notes, BEP Special
Situations IV, LLC (“Lender”), along with new strategic investors
("New Investors”), to restructure the Company’s capital and secure
new capital (the “Transaction”) that will enable the commencement
of initial mining operations and production of boric acid and
lithium.
Agreement Highlights
The Company has agreed to a funding package with
its Lender and the New Investors for the following:
-
The New Investors to commit up to $25m USD under the Transaction
and the terms of the Company’s existing senior secured convertible
notes to be amended to reduce the conversion rate, extend the
maturity date by one year and increase the paid-in-kind interest
rate to ten percent (10%).
-
Bluescape Special Situations IV, LLC provided an option to invest
an additional $10M USD under the Transaction.
-
The New Investors to acquire 50% of the outstanding principal
amount of the convertible notes from the Lender under the RSA.
-
Pursuant to the previously announced Standstill Agreement, the
Lender has agreed to reduce the minimum required cash covenant in
the notes to zero until June 28, 2024. Upon the closing of the
Transaction, the Notes will be amended to provide for a minimum
required cash covenant of $7.5M USD beginning June 28, 2024.
The Transaction will further secure the
Company’s pathway to operations and the extraction of boric acid
and lithium at its 5E Boron Americas complex. This comes on the
heels of 5E’s recent authorization from the Environmental
Protection Agency (EPA), to begin In-Situ mining operations,
helping facilitate the Company’s mission of becoming the leading
domestic supplier and producer of critical materials boron and
lithium.
The Board of Directors have added Stefan Selig
to the board, effective December 5, 2023. Mr. Selig brings valuable
experience through his tenure as executive vice chairman of global
corporate and investment banking at Bank of America Merrill Lynch
and as President Obama’s Under Secretary for International Trade at
the Department of Commerce, experience that the Company will look
to utilize as it engages more deeply in discussions with government
entities and advance additional financing conversations.
The Transaction is supported unanimously by the
Board of Directors. The closing of the Transaction remains subject
to the satisfaction of all remaining closing conditions, including
the 5E stockholder vote, to be held at the upcoming special
stockholder meeting.
“We are pleased to finalize the Agreement with
our existing Lender and New Strategic Investors to strengthen our
balance sheet and enable the move to commence initial mining
operations of boric acid and lithium in the new year,” said Susan
Brennan, Chief Executive Officer of 5E Advanced Materials. “With
the recent receipt of authorization from the EPA allowing 5E to
begin in-situ mining, 2024 looks to be a transformational year for
the Company and the Transaction helps to secure our immediate
future, providing 5E with capital support while expanding our
opportunities for additional commercial and financing
discussions.”
The Company’s legal advisors are Winston &
Strawn LLP and Pachulski, Stang, Ziehl and Jones LLP. The Company’s
financial advisor is Province. The New Investors legal advisors are
Latham & Watkins LLP. The Lender’s legal advisors are Kirkland
& Ellis, LLP.
Special Meeting of
Stockholders
5E intends to file a preliminary proxy statement
for a special meeting of stockholders seeking approval of the
Transaction. The Transaction is crucial to strengthening the
Company’s balance sheet, funding the Company’s next phase of
development, and commencing mining operations for boric acid and
lithium.
The Board of Directors view the Transaction as
being in the best interest of the Company and stockholders as a
whole, and recommend that all stockholders vote in favor of the
Transaction at the company’s upcoming Special Meeting.
Contingency Considerations
The Company expects to implement the Transaction
and restructuring through an out-of-court restructuring. If the
conditions precedent to the out-of-court restructuring cannot be
timely satisfied, including approval by the Company’s stockholders
of certain proposals, the Company expects to implement the
restructuring through bankruptcy in a pre-packaged Chapter 11 plan.
The Company believes that completing the out-of-court restructuring
will allow it to avoid possible disruptions of the business,
preserve valuable capital and avoid additional expenses, and other
uncertainties that would result from commencing the bankruptcy
cases to effectuate the pre-packaged Chapter 11 plan.
No Offer or Solicitation
This document is for information purposes only,
and is not intended to and does not constitute an offer to sell or
the solicitation of an offer to subscribe for or buy or an
invitation to purchase or subscribe for any securities or the
solicitation of a proxy, consent, or authorization in any
jurisdiction or any vote or approval in any jurisdiction pursuant
to the Transaction or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. No offering of securities shall be
made except by means of a prospectus in accordance with the
requirements of Section 10 of the Securities Act of 1933, as
amended or an exemption therefrom.
Additional Information and Where to Find
It
This communication may be deemed to be
solicitation material in respect of the Transactions and certain
stockholder approvals required thereby. In connection with the
Transaction, the Company expects to file a preliminary proxy
statement on Schedule 14A with the Securities and Exchange
Commission (the “SEC”) and intends to file other relevant materials
with the SEC, including a proxy statement in definitive form.
Following the filing of the definitive proxy statement with the
SEC, the Company will mail the definitive proxy statement and a
proxy card to each stockholder entitled to vote at the special
meeting relating to the Transactions. INVESTORS AND SECURITY
HOLDERS OF THE COMPANY ARE URGED TO READ CAREFULLY AND IN THEIR
ENTIRITY ALL RELEVANT DOCUMENTS (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) FILED WITH THE SEC, INCLUDING THE COMPANY’S
PROXY STATEMENT, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE
TRANSACTIONS. Copies of the proxy statement and other relevant
materials and any other documents filed by the Company with the SEC
may be obtained free of charge at the SEC’s website, at
www.sec.gov. In addition, stockholders may obtain free copies of
the proxy statement and other relevant materials by directing a
request to: 5E Advanced Materials, Inc., 9329 Mariposa Road, Suite
210, Hesperia, CA 92344.
Participants in Proxy
Solicitation
The Company and its directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from the
Company’s stockholders in respect of the Transactions. Information
about the directors and executive officers of the Company is set
forth in its Annual Report on Form 10-K/A filed with the SEC on
October 27, 2023 and the Preliminary Proxy Statement expected to be
filed with the SEC in connection with the Transaction. Other
information regarding the persons who may be deemed participants in
the proxy solicitations in connection with the Transaction, and a
description of any interests that they have in the Transaction, by
security holdings or otherwise, will be contained in the definitive
proxy statement and other relevant materials to be filed with the
SEC regarding the Transaction when they become available.
Stockholders, potential investors, and other interested person
should read the definitive proxy statement carefully when it
becomes available before making any voting or investment decisions.
You may obtain free copies of these documents from the sources
indicated above.
About 5E Advanced Materials,
Inc.
5E Advanced Materials, Inc. (Nasdaq: FEAM) (ASX:
5EA) is focused on becoming a vertically integrated global leader
and supplier of boron specialty and advanced materials,
complemented by lithium co-product production. The Company’s
mission is to become a supplier of these critical materials to
industries addressing global decarbonization, food and domestic
security. Boron and lithium products will target applications in
the fields of electric transportation, clean energy infrastructure,
such as solar and wind power, fertilizers, and domestic security.
The business strategy and objectives are to develop capabilities
ranging from upstream extraction and product sales of boric acid,
lithium carbonate and potentially other co-products, to downstream
boron advanced material processing and development. The business is
based on our large domestic boron and lithium resource, which is
located in Southern California and designated as Critical
Infrastructure by the Department of Homeland Security’s
Cybersecurity and Infrastructure Security Agency.
Forward Looking Statements
This press release includes “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended. All statements other than
statements of historical fact included in this press release
regarding our business strategy, plans, goal, and objectives are
forward-looking statements. When used in this press release, the
words “believe,” “project,” “expect,” “anticipate,” “estimate,”
“intend,” “budget,” “target,” “aim,” “strategy,” “estimate,”
“plan,” “guidance,” “outlook,” “intent,” “may,” “should,” “could,”
“will,” “would,” “will be,” “will continue,” “will likely result,”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. These forward-looking statements are based
on 5E’s current expectations and assumptions about future events
and are based on currently available information as to the outcome
and timing of future events. We caution you that these
forward-looking statements are subject to all of the risks and
uncertainties, most of which are difficult to predict and many of
which are beyond our control, incident to the extraction of the
critical materials we intend to produce and advanced materials
production and development. These risks include, but are not
limited to: our limited operating history in the borates and
lithium industries and no revenue from our proposed extraction
operations at our properties; our need for substantial additional
financing to execute our business plan and our ability to access
capital and the financial markets; our status as an exploration
stage company dependant on a single project with no known
Regulation S-K 1300 mineral reserves and the inherent uncertainty
in estimates of mineral resources; our lack of history in mineral
production and the significant risks associated with achieving our
business strategies, including our downstream processing ambitions;
our incurrence of significant net operating losses to date and
plans to incur continued losses for the foreseeable future; risks
and uncertainties relating to the development of the Fort Cady
project, including our ability to timely and successfully complete
our Small Scale Boron Facility; our ability to obtain, stockholder
approval for and successfully implement the Transaction, and
related matters on a timely manner or at all; the implementation of
and expected benefits from certain reduced spending measures, and
other risks and uncertainties set forth in our filings with the
U.S. Securities and Exchange Commission from time to time. Should
one or more of these risks or uncertainties occur, or should
underlying assumptions prove incorrect, our actual results and
plans could differ materially from those expressed in any
forward-looking statements. No representation or warranty (express
or implied) is made as to, and no reliance should be place on, any
information, including projections, estimates, targets, and
opinions contained herein, and no liability whatsoever is accepted
as to any errors, omissions, or misstatements contained herein. You
are cautioned not to place undue reliance on any forward-looking
statements, which speak only as to the date of this press
release.
For additional information regarding these
various factors, you should carefully review the risk factors and
other disclosures in the Company’s Form 10-K filed on August 30,
2023. Additional risks are also disclosed by 5E in its filings with
the U.S. Securities and Exchange Commission throughout the year,
including its Form 10-K, Form 10-Qs and Form 8-Ks, as well as in
its filings under the Australian Securities Exchange. Any
forward-looking statements are given only as of the date hereof.
Except as required by law, 5E expressly disclaims any obligation to
update or revise any such forward-looking statements. Additionally,
5E undertakes no obligation to comment on third party analyses or
statements regarding 5E’s actual or expected financial or operating
results or its securities.
For further information contact:
Davis Snyder or Joseph CaminitiAlpha IR GroupFEAM@alpha-ir.comPh:
+1 (312) 445-2870 |
J.T. StarzeckiChief Marketing
Officerjstarzecki@5eadvancedmaterials.comPh: +1 (612)
719-5076 |
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