Marret Asset Management Inc. has announced that Cline Mining Inc. has entered into a conditional term sheet for the proposed sale by Cline to Allegiance Coal Limited of all the shares in New Elk Coal Company, LLC (NECC).
NECC owns the New Elk Coal hard coking coal mine, located in Southeast Colorado. The main asset of Marret High Yield Strategies Fund (MHY) and Marret Multi-Strategy Income Fund (MMF) is senior secured debt and equity issued by Cline.
The principal terms of the proposed sale are as follows:
- The purchase price for the shares in NECC will be US$1, plus the assumption of certain obligations owed by NECC to Cline, equal to the balance owed on the Cline senior secured indebtedness of CAN$55 million (the debt).
- Completion of the purchase must take place before 14 July 2020. The parties hope to complete significantly earlier.
- The term sheet provides that the debt will be repaid by NECC to Cline as follows:
- US$3 million in cash on completion.
- US$3 million in Allegiance shares issued on completion, subject to a voluntary 12 month hold period.
- US$5 million on completion to replace the Colorado State Mine reclamation bond.
- The balance to be repaid from an agreed percentage of mine operating cash flow but in any event within 10 years of completion.
The term sheet also provides that Allegiance will have exclusivity to acquire NECC for 12 months in consideration for Allegiance contributing US$150 000/month to mine care and maintenance costs.
Infor Financial Inc. is acting as financial advisor to Cline and NECC in respect of the transaction.
Read the article online at: https://www.worldcoal.com/coal/16072019/marret-asset-management-announces-proposed-sale-of-new-elk-coal-company/
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