BC Miner Mercator Minerals advances exploration of strategic alternatives
CEO Bruce McLeod leads Strategic Alternatives for Mercator Minerals.
Vancouver-based Mercator Minerals Ltd. (TSX:ML) has recently announced that in light of the commodity price environment, capital market conditions and the challenges these pose for the company, the board of directors has advanced and accelerated its ongoing process to review strategic alternatives. Its special committee of the board of directors (comprised of Robert J. Quinn, Stephen P. Quin and Ron Vankoughnett) will oversee the process on behalf of and in consultation with the full board. In addition, BMO Capital Markets has been engaged as financial advisor in connection with the process. The strategic alternatives being considered include, but are not limited to, a sale of the company, a business combination with another entity, a sale of all or a portion of the assets of the company, a strategic investment in the company or any combination thereof.
The company has conducted discussions with, executed confidentiality agreements with, and received non-binding proposals from a number of interested parties. At present, there can be no assurance as to what, if any, strategic alternatives might be pursued by the company. The company does not intend to disclose further details with respect to its review of strategic alternatives unless and until the board of directors has approved a specific transaction or it otherwise determines that disclosure is appropriate.
In addition, the company and its indirect wholly owned subsidiary, Mineral Park Inc. ("MPI" or "Mineral Park"), have entered into amending and ancillary documentation with the syndicate of lenders (the "Lenders") under the MPI credit facility ("Credit Facility") which facilitates the review of strategic alternatives.
The Credit Facility, originally entered into by MPI and the Lenders in April 2010, has undergone a number of amendments since that time in order to, among other things: consolidate the original term and revolving loans into a single term loan; defer and extend principal payments; establish maximum allowable overdue vendor account balance requirements; and establish a debt service reserve account.
The Credit Facility currently consists of a term loan that has a principal amount outstanding of approximately US$86.8 million. Highlights of recent developments concerning the agreement include:
MPI will have the right to withdraw up to US$5.0 million from the restricted cash in the debt service reserve account (US$3.0 million having been drawn) through to and including October 31, 2013, which will be used to fund ongoing operating activities at MPI.
Mineral Park will not be making the principal payment of US$4.8 million which is scheduled to be paid on September 30, 2013, and the requisite Lenders have agreed to forbear in exercising any remedies under the Credit Facility until October 31, 2013. The forbearance can be extended beyond October 31, 2013 with the approval of the requisite Lenders.
The requisite Lenders have further agreed to waive certain other covenants until October 31, 2013 which will enable the company to pursue strategic alternatives.
"We are pleased to have the support of our lenders who recognize Mineral Park's long-term value despite the near-term operating challenges," commented D. Bruce McLeod, Mercator's President & CEO. "The impact of the concessions made under the Credit Facility should allow Mineral Park to continue to operate in this challenging environment which in turn will facilitate the review of strategic alternatives currently underway."
