Key points
- Nautilus received a $750,000 (U.S.) loan from Deep Sea Mining Finance Ltd. shortly before its CCAA application, under an existing facility of up to $34-million (U.S.).
- The initial court order authorized a new interim loan agreement allowing the lender to advance up to $4-million (U.S.) for operations and restructuring.
- Total loans received from the lender to date are $18.25-million (U.S.), bearing 8 per cent annual interest and maturing March 8, 2019.
- The lender is owned 50 per cent each by USM Finance Ltd. (affiliated with Metalloinvest Holding) and Mawarid Offshore Mining Ltd. (a subsidiary of MB Holding Company LLC), both related to Nautilus’s two largest shareholders.
NAUTILUS FILES FOR RELIEF UNDER THE COMPANIES’ CREDITORS ARRANGEMENT ACT AND RECEIVES ADDITIONAL LOAN UNDER SECURED LOAN FACILITY
Nautilus Minerals Inc. has obtained an order of the Supreme Court of British Columbia providing the company protection from its creditors pursuant to the Companies’ Creditors Arrangement Act (Canada) (CCAA) so as to enable Nautilus to restructure its business and financial affairs.
Shortly prior to the company’s application for protection under the CCAA, the company received a loan from Deep Sea Mining Finance Ltd. (the lender) in the principal amount of $750,000 (U.S.) under the previously announced loan agreement, as amended, between the company, two of its subsidiaries and the lender which provides for a secured structured credit facility of up to $34-million (U.S.).
The initial order also authorized the company and two of its subsidiaries to enter into a new interim loan agreement with the lender, pursuant to which the lender has agreed to advance to the company up to $4-million to finance the company’s continuing operations and restructuring.
CCAA
The company is evaluating a range of alternatives to recapitalize Nautilus so that the reality of its sea floor mining projects can be achieved. The options could include the sale of Nautilus’s polymetallic nodule business unit and its sea floor massive sulphide business unit.
Nautilus is not bankrupt and remains in possession and control of its business, while continuing to receive support in the form of loans from the lender.
For any updates on the CCAA proceedings, please refer to the website of the company’s monitor appointed under the initial order, PricewaterhouseCoopers Inc.
Secured loan facility
In connection with the most recent $750,000 (U.S.) portion of the existing loan agreement, the lender waived the requirement for the company to issue share purchase warrants to the lender as contemplated by the existing loan agreement.
To date, the company has received loans from the lender totalling $18.25-million (U.S.). The loans bear interest at 8 per cent per year, payable biannually in arrears. All loans have a maturity date of March 8, 2019.
As previously disclosed, the lender is a private company owned 50 per cent by each of: (i) USM Finance Ltd., a wholly owned subsidiary of USM Holdings Ltd, an affiliate of Metalloinvest Holding (Cyprus) Ltd.; and (ii) Mawarid Offshore Mining Ltd., a wholly owned subsidiary of MB Holding Company LLC. As the lender is indirectly controlled by affiliates of the company’s two largest shareholders, the lender is a related party of the company and the loan transaction constitutes a related party transaction of the company under Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. The transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101.
The company did not file a material change report more than 21 days before the expected closing of this transaction as the details of the transaction were not finalized until immediately prior to the closing and the company wished to close the transaction as soon as practicable for sound business reasons.
The company continues to seek short-term and long-term financing solutions while assessing its options, including various restructuring options. Negotiations with various third parties continue. There can be no assurances that the company will be able to successfully negotiate and complete any financing or other transactions. Any transactions will be subject to all necessary stock exchange, third party and government approvals as well as compliance with all other regulatory requirements. The company will provide further updates as circumstances warrant.
About Nautilus Minerals Inc.
Nautilus is the first company to explore the ocean floor for polymetallic sea floor massive sulphide deposits. Nautilus was granted the first mining lease for such deposits at the prospect known as Solwara 1 in the territorial waters of Papua New Guinea, where it is aiming to produce copper, gold and silver. The company has also been granted its environmental permit for this site.
Nautilus also holds prospective exploration acreage in the Western Pacific (granted and under application) as well as in international waters in the Central Pacific.
