The Mission Group Regulatory News (TMG)

11 Apr 2007 17:02

Thistle Mining Inc.11 April 2007 THISTLE ANNOUNCES DEBT RESTRUCTURING PLAN Toronto, 11 April 2007 - Thistle Mining Inc. (AIM: TMG) Thistle Mining Inc. ("Thistle" or the "Company"), an AIM listed gold miningcompany, announces that it has entered into a non-binding financialrestructuring plan (the "Plan") with its major creditors, MC Resources Limited("MC") and Casten Holdings Limited ("Casten"). The Directors hope to request arestoration of the Company's AIM trading facility as soon as a legally bindingagreement is concluded. On 27 March 2007, both MC and Casten indicated in writing to Thistle that theywere not willing to defer payments of principal and interest due on 1 April2007. The indebtedness due and payable on 1 April 2007 (assuming a CAD$:US $exchange rate of 1:1.1578) was estimated at US$24.74 million comprising ofUS$12.371 million and US$12.369 million owing to MC and Casten respectively.Pursuant to the terms of the credit agreements and related loan notes, failureof Thistle to pay the 1 April payment in full constituted an event of default.Upon the occurrence of an event of default, MC and Casten are entitled under thecredit agreements and related loan notes to immediately accelerate and demandpayment of all indebtedness and to enforce the security that Thistle has grantedto MC and Casten, including, without limitation, the pledge of shares ofThistle's subsidiaries, including Toowong Mining BV ("Toowong") which holds anapproximate 25.4% equity interest in CGA Mining Limited (AUX:CGX) ("CGA"). Theestimated total amount of indebtedness owing to MC and Casten is US$51.99million. On 10 April 2007, Thistle reached agreement with MC and Casten on therestructuring of debt owing to them. In addition to being major creditors, MCand Casten each own 35% of the outstanding shares of Thistle and as a result areeach a "related party" of Thistle for the purposes of Ontario SecuritiesCommission Rule 61-501 ("Rule 61-501"). Accordingly, the completion of the Planwill constitute a "related party transaction" for the purposes of Rule 61-501.However, for the reasons outlined below, the completion of the Plan is exemptfrom the formal valuation and minority shareholder approval requirements of Rule61-501 as Thistle is relying on the "financial hardship" exemption described inRule 61-501. The Plan includes: i. Transfer of Shares of Thistle's 100% interest in Toowong to MC and Casten or transfer of the shares in CGA to MC and Casten for US$21.0 million. Toowong holds 40,985,538 CGA shares acquired as part of the recent transaction whereby Thistle sold its interest in the Masbate project in the Philippines to CGA (the "CGA Transaction"). ii. Assignment of or undertaking to pay when due amounts payable to Thistle to MC and Casten for US$4.5 million (the "Deferred Payment.") Under the terms of the CGA Transaction, US$1.0 million and US$4.0 million (less in each case any amount(s) which are required to meet any substantiated warranty and indemnity claims that may be made by CGA) are to be paid to Thistle on dates not later than 20 August 2007 and 20 March 2008, respectively. Under the Plan, notwithstanding the assignment by Thistle of its right to the Deferred Payments to MC and Casten, the sole responsibility and liability for any and all CGA claims shall remain with Thistle. iii. Commitment to underwrite in full a private placement for approximately 44.45 million shares at 20 pence per share by both MC and Casten at no fee ("First Private Placement"). The First Private Placement will raise approximately US$17.3 million before charges. The First Private Placement is to be made to MC and Casten, pro rata to their existing shareholdings, and select qualified investors in the UK. The 20 pence per share represents the average Thistle share price between the announcement of the shareholder approval of the CGA Transaction on 19 March 2007 and 28 March 2007 (the day preceding the suspension of trading of Thistle stock on AIM). In the event that no other investors subscribe for the Thistle common shares pursuant to the First Private Placement, MC and Casten will each increase their holding in Thistle from 35% to an estimated 42.35%. MC and Casten will satisfy their payment obligations for the subscription of Thistle shares by converting their principal debt outstanding into such shares, except that MC and Casten will pay cash (in equal amounts) to the extent they are required to fund the use of proceeds described in (ii) and (iii) below. The Plan is designed to significantly improve Thistle's financial position.Following implementation of the plan, Thistle's principal business will continueto be the operation of a gold mine owned by the President Steyn Gold Mine (FreeState) Proprietary Ltd. ("PSGM"), a South African subsidiary of Thistle. Theproceeds of the Plan will be applied as follows: i. the US$21.0 million consideration for the transfer of Towoong shares or CGA shares and the US$4.5 million Deferred Payment will be applied to repay the principal amount of outstanding CCAA debt owed by Thistle to MC and Casten. The application by Thistle of such consideration will be coupled with the conversion by MC and Casten of principal debt owing by Thistle as part of the First Private Placement. The total principal amount outstanding as at 1 April 2007 was US$39.498 million; ii. approximately US$1.586 million of the net proceeds of the First Private Placement is intended to be used to replace cash held on deposit and to assume certain bank suretyship and pledge obligations that have been provided by Thistle Holdings to Standard Bank of South Africa Limited on behalf of PSGM in respect of various trade creditors; and iii. the balance of the net proceeds of the private placement of approximately US$1.750 million in cash will be used to fund Thistle's budgeted working capital requirements for the remainder of 2007. While the board of directors of Thistle considered the amount raised to be adequate based upon an internal assessment of cash flow requirements, it has not obtained an independent verification by external auditors of Thistle's working capital needs for 2007. Future cash flows are subject to a number of risk factors, most significantly, the performance of PSGM, the gold price and ZAR:US $ exchange rates. Depending on these and other factors, the board recognizes that it may be necessary for Thistle to raise further funds during 2007. There is no assurance that Thistle will be successful in its future fundraising efforts. The internal working capital assessment assumes that gold production from PSGM for 2007 is anticipated to be 144,000 oz at a cash cost and total cost of $565 to $575 per oz and $597 to $610 per oz respectively assuming an exchange rate of 7.30 South African rand per US $. These production and cost metrics are comparable to that achieved for 2006. Following completion of the repayment of the principal debt owed to MC andCasten, Thistle will continue to owe deferred interest and fees to MC and Casten("Remaining Indebtedness") which amounts to CAD$6.892 million and US$6.539million as at the date hereof. The blended interest rates for this debt atcurrent exchange rates amounts to approximately 11.33% per annum. A second private placement ("Second Private Placement") is contemplated underthe Plan whereby the consideration for shares shall be paid by MC and Casten byway of set-off against the Remaining Indebtedness. The Second Private Placementis however subject to a change in domicile of Thistle out of the Province ofYukon (the "Continuance"), which is expected to be considered by theshareholders of Thistle at the next shareholders meeting currently scheduled forJuly 2007 (the "Thistle Meeting"). The subscription price of the shares underthe Second Private Placement will be equal to the weighted average closing priceper Thistle share on AIM for the 10 trading days immediately prior to the secondbusiness day prior to the completion of the Second Private Placement (or suchother price as is agreed to by Thistle, MC and Casten). There is however noassurance that the Continuance or the Second Private Placement will beundertaken as the Continuance remains subject to further analysis by Thistle, MCand Casten. Under the Plan, the payment of the interest on the Remaining Indebtedness is tobe deferred until the earlier of 1 April 2008 and the completion of the SecondPrivate Placement and thereafter shall be payable quarterly on 31 March, 30June, 30 September and 31 December in each calendar year. Such interest shallbe compounded quarterly in arrears on 31 March, 30 June, 30 September and 31December in each calendar year. The payment of the balance of the RemainingIndebtedness is to be deferred until the earliest of 1 April 2010 or the date ofthe occurrence of certain events including: • the (direct or indirect) sale, disposal, transfer, scheme, plan, consolidation, amalgamation, merger, compromise, arrangement, distribution or situation of or involving Thistle or all or substantially all or a majority of the assets or rights of Thistle and/or its subsidiaries or which results in a change in control of Thistle; • completion of the Second Private Placement or any other private placement, rights issue or fund raising; • any event of default in relation to any of the Remaining Indebtedness or under any loan or facility agreement to which Thistle or any of its subsidiaries is a party from time to time; • any legal or other proceedings being commenced against Thistle or any of its subsidiaries for the repayment of any debt or amount due, or for execution against (or the perfection of any security in respect of) any of its or their respective assets, or any corporate action or legal proceedings are commenced for the winding-up, dissolution, administration, receivership, liquidation, bankruptcy, re-organization or similar event relating to or involving Thistle, any of its subsidiaries or any of their respective revenues, assets or rights; or • any breach, in any material respect, occurring or reasonably likely to occur in respect of any of the terms or conditions of the Plan. As disclosed above, the completion of the Plan constitutes a "related partytransaction" under Rule 61-501. Thistle is relying on the "financial hardship"exemptions from the formal valuation and minority shareholder approvalrequirements of Rule 61-501. The Directors, with the exception of any directorwho is involved in the transaction as a related party, (the "IndependentDirectors") have each unanimously determined that (i) Thistle is in seriousfinancial difficulty, (ii) the terms of the Plan are designed to improveThistle's financial position and (iii) the terms of the Plan are reasonable inthe circumstances of Thistle. The Independent Directors have consulted with theCompany's nominated adviser and believe that the Plan is in the best interestsof the Company and shareholders as a whole. If the Plan is not completed, theIndependent Directors believe the Company will be unable to meet its financialcommitments as they fall due and consequently will be unable to continue totrade. In this event, the Major Creditors will utilise any legal meansnecessary, including appointment of a receiver, liquidator or administrator torealise upon their security interests. The Plan also constitutes a related party transaction for the purposes of theAIM rules. As such, the Independent Directors have concluded that, followingconsultation with the Company's nominated adviser, Grant Thornton, the terms ofthe Plan are fair and reasonable insofar as Thistle's shareholders areconcerned. In giving its advice, Grant Thornton has taken into account thedirectors' commercial assessment. Completion of the Plan is subject to certain customary conditions including butnot limited to the execution of definitive documentation by the parties andreceipt of all necessary approvals, including any required regulatory approvalsand consents of CGA, in each case by 22 April, 2007 (or such other date as maybe agreed to by the parties). In addition, certain aspects of the Plan mayclose less than 21 days after the filing by Thistle of a material change reportconcerning the Plan due to Thistle's immediate need for financing in order tocarry on its business and achieve its business objectives. This news release contains forward-looking statements with the meaning ofapplicable securities laws including amongst others, statements made or impliedabove relating to the Company's objectives, strategies to achieve theseobjectives, future cash flow and financing requirements, and similar statementsconcerning anticipated future events, results, circumstances, performance orexpectations that are not historical facts. Such forward-looking statementsreflect the Company's current beliefs and are based on information currentlyavailable to management. These statements are not guarantees of futureperformance and are based on the Company's estimates and assumptions that aresubject to risk and uncertainties inherent in the business of the Companyincluding those discussed in the Company's materials filed with the Canadiansecurities regulatory authorities from time to time, which could cause theactual results and performance of the Company to differ materially from theforward-looking statements contained in this news release. Those risks anduncertainties include, among other things, risks related to: the mining industry(including operational risks in exploration development and production; delaysor changes in plans with respect to exploration or development projects orcapital expenditures; the uncertainties involved in the discovery anddelineation of mineral deposits, resources or reserves; the uncertainty ofmineral resource and mineral reserve estimates and the ability to economicallyexploit mineral resources and mineral reserves; the uncertainty of estimates andprojections in relation to production, costs and expenses; the uncertaintysurrounding the ability of the Company to obtain all permits, consents andauthorizations required for its operations and activities; competition for theacquisition, exploration and development of mineral interests; and health andsafety and environmental risks), the risk of gold and other commodity price andforeign exchange rate fluctuations; the ability of the Company to fund thecapital and operating expenses necessary to achieve the business objectives ofthe Company; the uncertainty associated with commercial negotiations andnegotiating with foreign governments; the risks associated with internationalbusiness activities; the dependence on key personnel; the ability to accesscapital markets; the indebtedness of the Company; and labor relations matters.Material factors or assumptions that were applied in drawing a conclusion ormaking an estimate set out in the forward-looking statements include that thegeneral economy remains stable, the demand and price of gold continues toincrease and the Rand remains strong against the US$. It is also assumed thatthere will be no major disruptions in production including failure ofinfrastructure, seismic activity, underground fires and labor unrest. TheCompany cautions that this list of factors is not exhaustive. Although theforward-looking statements contained in this news release are based upon whatthe Company believes are reasonable assumptions, there can be no assurance thatactual results will be consistent with these forward-looking statements. Allforward-looking statements in this news release are qualified by thesecautionary statements. These forward-looking statements are made as of the datehereof and the Company, except as required by applicable law, assumes noobligation to update or revise them to reflect new information or the occurrenceof future events or circumstances. For further information, contact: Andy Graetz, Chief Financial Officer at + 27 82 929 5562 or email toagraetz@disselgroup.com Gerry Beaney, Grant Thornton Corporate Finance at +44 (0) 207 383 5100 This information is provided by RNS The company news service from the London Stock Exchange