NORSK TILLITSMANN NORWEGIAN TRUSTEE

NORSK TILLITSMANN NORWEGIAN TRUSTEE Denne melding til obligasjonseierne er kun utarbeidet på engelsk. For ytterligere informasjon vennligst ta kontak...
3 downloads 2 Views 403KB Size
NORSK TILLITSMANN NORWEGIAN TRUSTEE

Denne melding til obligasjonseierne er kun utarbeidet på engelsk. For ytterligere informasjon vennligst ta kontakt med Norsk Tillitsmann ASA på telefon +47 22 87 94 00

To the bondholders in:

ISIN NO 001060119.8 11.75 per cent. Dannemora Mineral AB Callable Senior Secured Bond Issue 2011/2016

Oslo, 24 September 2013

Summons to Bondholders' Meeting regarding request for a temporary waiver of the interest coupon payment obligation and the Minimum Liquidity covenant in the Bond Agreement

Norsk Tillitsmann ASA ("NTM") acts as trustee for the holders of the bonds (the "Bonds") in the above mentioned issue with ISIN NO001 060119.8 (the "Bond Issue") issued by Dannemora Mineral AB ("Dannemora" or the "Company"). Unless otherwise defined herein, all capitalised terms used herein shall have the meanings assigned to them in the bond agreement dated 18 March 2011 (the "Bond Agreement"). The information in this summons regarding the Company and market conditions is provided by the Company, and NTM expressly disclaims all liability whatsoever related to such information.

1.

Introduction and Background

1.1

Operational Update The Company has initiated a number of activities to reduce costs and accelerate long­ term cost level improvements including, but not limited to, in-sourcing of core mine activities from sub-contractors. In addition, process plant performance has been significantly improved since the June Phase 1 investment, which was conducted on time and on budget, yielding an average recovery of approximately 40 per cent. (June to date). In combination, this has created a foundation for improved operational performance, with close to positive EBITDA levels reached momentarily in August. Furthermore, both suppliers and customers have been supportive to the Company and, for the most part, provided tangible support by for example allowing prolonged payment terms or increased number of monthly shipments. Albeit having substantially improved the short-term liquidity situation through these and other activities, the Company cannot reach a sufficient level of long-term operational efficiency and cash flow without considerable investments, primarily in the process plant (Phase 2) and in the mine (Hoist).

PO Box 1470 Vika, N-0116 Oslo | Haakon VIIs gate 1, Oslo Switchboard: +47 22 87 94 00 | Fax: +47 22 87 9410 ] www.trustee.no

NORSK TILLITSMANN

2 (9 )

NORWEGIAN TRUSTEE

1.2

Financial Update Based on the current cash-flow, the Company is not able to pay the interest falling due for payment in respect of the Bonds on 22 September 2013, as required by clause 9 of the Bond Agreement (the "22 September Interest Payment"). Failure to satisfy the 22 September Interest Payment constitutes an Event of Default under clause 15.2(a) of the Bond Agreement. Additionally, for the reasons explained in the summons dated 22 July 2013, the Company has breached the minimum liquidity covenant in Clause 13.5(f) of the Bond Agreement (which requires that the Company maintains a minimum Liquidity (as defined in the Bond Agreement) of SEK 50 million at all times) (the "Minimum Liquidity Covenant") on 16 August 2013. The Bondholders' Meeting authorised NTM to grant a temporary waiver of the Minimum Liquidity Covenant on 5 August 2013. In accordance with the terms of the Summons dated 22 July 2013, such temporary waiver of the Minimum Liquidity Covenant expires on 22 September 2013 (at the latest). The decline in the recovery in May 2013 has compromised the Company's ability to achieve a positive EBITDA for the rest of the financial year. Although this situation does not necessitate any adjustment to the production estimate for the rest of the year, the variations in run-of-mine (ROM) iron content and recovery create some ongoing uncertainty about production volumes going forward, which in turn means a continuing and increased uncertainty regarding the estimated cash flow for the future. Therefore, the Company is likely to continue to breach the Minimum Liquidity Covenant.

1.3

Strategic Review As previously reported, the Company has been working with various advisers (Swedbank First Securities as the Company's financial adviser, Recore AS as its Chief Restructuring Officer, Roschier Advokatbyrå AB as its legal adviser and Graneli to assist with financial topics, primarily modelling) to assess its financial and legal position and evaluate potential restructuring and refinancing options with a view to addressing its current financial difficulties for the benefit of its stakeholders as a whole (the implementation of any such option being a "Restructuring", evidenced by a "Restructuring Term Sheet"). The Company is continuing discussions with its shareholders, holders of 11.75 per cent, convertible bonds 2012/2015 issued by the Company (the "Convertible Bonds", the holders of such Convertible Bonds together being the "Convertible Bondholders"), trade partners and Bondholders to pursue viable options regarding a Restructuring. However, any such Restructuring solution has not been able to be implemented before the 22 September Interest Payment became due and payable.

1.4

The Bondholder Committee As previously notified to the Bondholders generally, a group of the largest Bondholders holding approximately 65 % of the principal amount outstanding of the Bonds have formed themselves into an informal ad hoc committee of Bondholders (the "Committee") for the purpose of engaging with the Company in connection with a potential Restructuring.

NORSK TILLITSMANN

3 (9 )

NORWEGIAN TRUSTEE

With the support of the Committee, NTM has, as previously reported, retained Bingham McCutchen (London) LLP ("Bingham") as its lead legal counsel (for and on behalf of the Bondholders). NTM has further engaged The Blackstone Group International Partners LLP ("Blackstone") as its financial adviser and Advokatfirman Vinge KB ("Vinge", and together with Bingham and Blackstone the "NTM Advisers") as its Swedish legal counsel (in each case, for and on behalf of the Bondholders) and may engage further local counsel in relevant jurisdictions if necessary. Bondholders may contact Blackstone and Bingham using the following details: Bingham: Margaret M urray-Tel: +44 20 7661 5478 Email: [email protected] Blackstone: Pavlin Kumchev - Tel: +44 20 7104 4708 Email: [email protected]

1.5

Request for waiver Dannemora hereby requests, subject to the Waiver Conditions (as defined below), that the Bondholders temporarily waive: (i)

the requirement in clause 9 of the Bond Agreement to satisfy the 22 September Interest Payment; and

(ii)

the Minimum Liquidity Covenant

(together, the "Waiver"). Notwithstanding the granting of the Waiver, the unpaid 22 September Interest Payment shall bear interest from 22 September 2013 (being the date on which the interest falls due for payment in respect of the Bonds) at an interest rate equivalent to the interest rate set out in Clause 9 of the Bond Agreement plus 5% per annum, as required by Clause 11.4 of the Bond Agreement.

1.6

Conditions Precedent to the Waiver The effectiveness of the Waiver will be subject to NTM's determination, in its sole discretion, that the following matters have been satisfied by the date of the Bondholders' Meeting referred to in Section 4 below: (a)

no member of the Group having entered into any bankruptcy, reconstruction, liquidation, administration, receivership or any other insolvency procedure (or any analogous proceeding in any other jurisdiction), whether voluntary or involuntary;

(b)

no enforcement or acceleration or debt recovery action having been taken by or on behalf of any of the other creditors and/or suppliers of the Company or any member of the Group under or in connection with any other indebtedness or due amounts of the Company or any member of the Group;

(c)

NTM having received the executed technical due diligence report being produced by SRK Consulting (Sweden) AB ("SRK") in a form complying with the

NORSK TILLITSMANN

4 (9 )

NORWEGIAN TRUSTEE

terms of the engagement letter entered into between SRK, NTM and the Company dated 1 August 2013 (the "SRK Report"); (d)

NTM having received evidence in a form satisfactory to it that an application to the companies register for the annulment of the pre-emption rights stipulated in the respective articles of association of the Company, Dannemora Magnetit AB and Dannemora Forvaltnings AB has been filed or, if shareholder approval is required in connection with any such annulment, that all necessary steps have been commenced (and within reasonable deadlines determined by NTM), including the convening of a shareholders' meeting, to implement such annulment;

(e)

the Company having signed a customary engagement letter with Blackstone on terms satisfactory to them and NTM; and

(f)

all invoices issued to the Company by the NTM Advisers, for fees and expenses (including the provision of appropriate fee reserves) have been paid in full (items 0 to (d) being the "Conditions Precedent").

Ongoing Conditions to the Waiver NTM may, by notice to the Company, terminate the Waiver at any time with immediate effect following NTM's determination, in its sole discretion, that any of the following events has occurred: (a)

the Company has failed to prepare and provide NTM with a rolling weekly cash flow statement, in a form reasonably satisfactory to NTM, by Wednesday of each week showing the costs and amounts to be payable by each member of the Group for a period of at least the following 12 weeks (it is understood that the liquidity forecasts which have been provided to the NTM Advisers during the last weeks preceding this letter constitutes a satisfactory form);

(b)

the Company has failed to maintain in place and comply with:

(c)

(i)

the fee agreement dated 10 July 2013 between the Company and Bingham;

(ii)

the engagement and fee agreement between the Company, Blackstone and NTM;

(iii)

the fee agreement dated 31 July 2013 between the Company and Vinge;

(iv)

any other fee agreement entered into with NTM's advisers from time to time;

the Company (or any Group entity) has failed to ensure that Blackstone is, to the extent practicable, promptly informed of and able to participate in (i) the preparations and planning, which are not only ideas and discussions in a preliminary stage, for any potential M&A or fund-raising process in respect of

NORSK TILLITSMANN

5 (9 )

NORWEGIAN TRUSTEE

the Company and/or the Group (or any member or business unit of the Group) and (ii) the material discussions and meetings with, any potential sponsor, strategic partner or similar or analogous third party in the context of any capital raising for, and/or a restructuring of, the Company's and/or the Group's capital structure; (d)

the Company has ceased to continue to provide on an ongoing basis, subject to customary confidentiality obligations, to NTM, NTM's advisers and the Committee full access to the Company and its Group entities and their respective advisers and consultants for the purpose of undertaking due diligence and appraising the Company's ongoing legal and financial position;

(e)

any member of the Group has entered into any bankruptcy, , liquidation, administration, receivership, reconstruction or any other insolvency procedure (or any analogous proceeding in any other jurisdiction), whether voluntary or involuntary;

(f)

any enforcement or acceleration or debt recovery action has been taken by or on behalf of any of the other creditors and/or suppliers of the Company or any member of the Group under or in connection with any other indebtedness or due amounts of the Company or any member of the Group;

(g)

a member of the Group has failed promptly to:

(h)

(i)

agree to any amendments and/or supplements to the Security Interests or Security Documents or completion of any arrangements with respect thereto;

(ii)

take any actions, measures or do all things required by NTM in relation to the security package securing the Bonds; or

(iii)

take such steps and do all things required by NTM in relation to all mining exploitation and exploration permits and license arrangements held by a member of the Group; or

in NTM's opinion it has, or will, become, impractical or impossible to implement a restructuring of the Group that will leave it commercially and financially viable on a medium-term basis, (events (a) to (h) being the "Ongoing Conditions").

Milestone Conditions to the Waiver Following the granting of the Waiver, the continuing effectiveness of the Waiver will be subject to NTM's satisfaction of the occurrence of the following events by the dates indicated in relation to each event: (a)

by 7 October 2013, receipt by NTM of a binding agreement in a form satisfactory to NTM from the Convertible Bondholders to defer the interest payment which becomes due and payable in respect of the Convertible Bonds

NORSK TILLITSMANN

6 (9 )

NORWEGIAN TRUSTEE

on 30 November 2013 at least until such time as the 22 September Interest Payment on the Bonds becomes due and payable (b)

by 29 November 2013; receipt by NTM of a Restructuring Term Sheet, together with: (i)

evidence in a form satisfactory to NTM that the Group has procured binding underwriting commitments in respect of any new money element of the restructuring contemplated in the Restructuring Term Sheet, which (other than market-standard conditions) may remain subject only to approvals of (i) the requisite majority of the shareholders of the Company in an extraordinary general meeting and (ii) the requisite majorities of Bondholders and Convertible Bondholders, in each case as are necessary to implement the agreed Restructuring Term Sheet;

(ii)

a lock-up agreement in respect of the Restructuring Term Sheet in a form satisfactory to NTM and signed by:

(iii)

(A)

Bondholders holding at least at least % of the principal amount outstanding of the Bonds; and

(B)

each member of the Group; and

evidence in a form satisfactory to NTM that the Group has (A)

sufficient cash available; or

(B)

secured binding commitments on terms satisfactory to NTM

for funding of any amounts required to meet the Group's short term liquidity needs and to ensure that the Groups continues to operate as a normal going concern until at least 15 January 2014; (c)

by 13 December 2013, the receipt of all requisite approvals from Convertible Bondholders to enter into the restructuring contemplated in the Restructuring Term Sheet;

(d)

by 22 December 2013, the receipt of any approvals of the shareholders of the Company required to implement the Restructuring; and

(e)

by 15 January 2014, completion of the restructuring as contemplated by the Restructuring Term Sheet (events (a) to (e) being the "Milestone Conditions" and, together with the Conditions Precedent and the Ongoing Conditions, the "Waiver Conditions").

NTM’s Discretion NTM may, at its discretion,

NORSK TILLITSMANN

7 (9 )

NORWEGIAN TRUSTEE

(i)

elect to waive any of the Waiver Conditions which are set out in SubSections 1.7 and 1.8 hereof or waive or extend the time period applicable to any such Waiver Conditions on behalf of the Bondholders, where it considers, following consultation with the NTM Advisers, that to do so would benefit the Bondholders generally; or

(ii)

terminate the Waiver if any of the Milestone Conditions set out in SubSection 1.8 are not achieved,

together, "NTM's Discretion". NTM shall have no liability whatsoever to any Bondholder or any other person in connection with the exercise of NTM's Discretion.

1.10

Further information For further information on the above mentioned issues and other updates, please refer to the Company's stock exchange announcements and the Company's financial reports. The latest interim report for Q2 2013 is available on www.newsweb.no. For further information about the Company, please visit the Company's website www.dannemoramineral.se.

2.

Proposal

2.1

Waiver Proposal The Company proposes that the Bondholders grant the Waiver, subject to the Waiver Conditions, and approve NTM's ability to exercise NTM's Discretion.

2.2

Effectiveness The Waiver shall remain in effect until the earliest of: (i)

Following a determination by NTM, in its sole discretion, that any of the events set out in either sub-Section 1.7 or sub-Section 1.8 has occurred, the date on which NTM informs the Company that, as a consequence of the occurrence of such event, NTM has terminated the Waiver; and

(ii)

without prejudice to (i) immediately above, 31 January 2014, if a Restructuring has not been completed by that date.

3.

Evaluation of the Proposals

3.1

Non-Reliance The proposals in this summons are presented to the Bondholders without evaluation or recommendations from NTM. The Bondholders must independently evaluate whether the above proposals are acceptable.

NORSK TILLITSMANN

8 (9 )

NORWEGIAN TRUSTEE

Summons for Bondholders' Meeting Bondholders are hereby summoned to a Bondholders' Meeting:

Time: 2 October 2013 at 13:00 hours (Oslo time) Place: The premises of Norsk Tillitsmann ASA, Haakon VIIs gt 1, 01061 Oslo - 5th floor

Agenda: 1.

Approval of the summons.

2.

Approval of the agenda.

3.

Election of two persons to co-sign the minutes together with the chairman.

4.

Request for adoption of proposals:

It is proposed that the Bondholders' Meeting resolve the following: "The Bondholders approve the Waiver (subject to the Waiver Conditions) and the exercise of NTM's Discretion, each as described in section 2 of the summons for the Bondholders' Meeting. The Bondholders further authorise NTM to enter into such agreements and documents, consent to such waivers and amendments, take any actions and do ail such things on behalf of the Bondholders as may be necessary or desirable to support or give effect to the Waiver and the Waiver Conditions and the exercise of NTM's Discretion, including, without limitation, amending and/or waiving the terms of the Bond Agreement and/or the other Finance Documents." To approve the above resolution, Bondholders representing more than 66% per cent, of the Voting Bonds represented in person or by proxy at the meeting for the Bonds must vote in favour of the resolution. In order to have a quorum, at least 5/10 of the Voting Bonds must be represented at the meeting.

Please find attached a Bondholder's Form from the Securities Depository (VPS), indicating your bondholding at the printing date. The Bondholder's Form will serve as proof of ownership of the Bonds and of the voting rights at the Bondholders' Meeting. (If the bonds are held in custody - i.e. the owner is not registered directly in the VPS the custodian must confirm; (i) the owner of the bonds, (ii) the aggregate nominal amount of the bonds and (iii) the account number in VPS on which the bonds are registered.)

NORSK TILLITSM ANN

9 (9)

NORWEGIAN TRUSTEE

The individual Bondholder may authorise NTM to vote on its behalf, in which case the Bondholder's Form also serves as a proxy. A duly signed Bondholder's Form, authorising NTM to vote, must then be returned to NTM promptly before the meeting is scheduled (by scanned e-mail, telefax or post to [email protected], +47 22 87 94 10, or Norsk Tillitsmann ASA, PO Box 1470 Vika, 0116 Oslo, Norway). In the event that Bonds have been transferred to a new owner after the Bondholder's Form was signed, the new Bondholder must bring to the Bondholders' Meeting or enclose with the proxy, as the case may be, evidence that NTM accepts as sufficient proof of the new Bondholder's ownership of the Bonds. For practical purposes, we request those persons who intend to attend the Bondholders' Meeting, either in person or other than by advance proxy delivered to NTM, to notify NTM by telephone or by e-mail (details on the first page of this letter) by 16:00 hours (4 pm) (Oslo time) on the Business Day before the Bondholders' Meeting is scheduled to take place.

Yours sincerely, Norsk Tillitsmann ASA

i ,

r

'

Suggest Documents