Assuming they fulfil certain conditions precedent, including receipt of shareholder and TSX approvals, Sentient Executive GP IV and Marengo Mining plan to complete the issuance of new debentures as part of a refinancing agreement on or about January 15, 2014. The refinancing ensures, among other things, financial support for Marengo’s PNG operations through 2014.
Marengo and its major shareholder, Sentient Executive GP IV, Limited for the General Partner of Sentient Global Resources Fund IV, LP have agreed, among other things, to convert the US$10 million working capital debt facility dated February 6, 2013, as amended in order to provide the company and its PNG subsidiaries with additional flexibility to conduct their business.
As such, Sentient has agreed to a transaction pursuant to which each of the Sentient loan and the US$17,121,855 principal amount of debentures outstanding as of January 15, 2014, including all interest and fees payable thereto, will be restructured into senior unsecured convertible debentures, which shall bear interest from and including the date of issuance at the annual rate of 9%, payable in equal semi-annual instalments in arrears on April 30 and October 30 in each year, with the aggregate principal amount of $27,509,621 maturing on June 30, 2016.
Each US$1000 face value new debenture will be convertible, at the option of Sentient, into approximately 50,000 common shares or Chess Depositary Interests (CDIs) of the company at a conversion price of Can$0.02 per common share or CDI. The conversion price of the new debentures will be adjusted in the event there is a reorganization of capital or an issue of new common shares below the conversion price.
Sentient and its related entities currently hold approximately 21.97% of the common shares of the company and would hold approximately 69.94% of the common shares of the company, assuming the conversion of all the new debentures issued in connection with the refinancing.
Marengo is also pleased to advise that it has appointed Alexander Dann to the role of chief financial officer of the company, based in Toronto, Canada, effective January 1, 2014. He is a Chartered Accountant with more than 20 years’ experience leading financial operations and strategic planning for multi-national companies primarily in the mining sector.
Marengo’s Australian-based CFO Dennis Wilkins will step down effective January 1, 2014. The company thanks Dennis Wilkins for his efforts since the closure of Marengo’s Australian office and redomicile of the company to Canada.