MINERA TRES VALLES & SRHI INC. COMPLETE CUSTOMARY DOCUMENTATION REQUIRED UNDER JRA
Toronto, November 20, 2020 – (TSX: SRHI, SRHI.WT) – SRHI Inc. (the “Company” or “SRHI”) is pleased to announce that the Company and Minera Tres Valles SpA (“MTV”) have completed the customary documentation and formalization of terms under the Judicial Reorganization Agreement (“JRA”) between MTV, MTV’s senior lenders (“Lenders”) and the Company.
MTV is the Company’s 70% owned producing copper mine in Salamanca, Chile.
A summary of the financial commitments arising from the JRA (and as disclosed in prior press releases) is as follows:
SRHI to Provide $10 Million to MTV by June 2021
- Up to $10 million secured second ranking debt to be financed from the Company’s cash resources (the “SRHI New Loan”)
- To be drawn down by MTV by June 2021
- Principal and interest subordinated to the senior secured prepayment facility (the “Facility”) and New Senior Debt (defined below)
- Expected payback beginning 2025
- Fulfills (and will reduce, pro-rata) the Company’s $10 million corporate guarantee provided under the agreement governing the Facility (the “Facility Agreement”) entered into between the Lenders, MTV and the Company in December 2019
- No dilution to the Company’s 70% equity holding of MTV
Lenders Amend Facility Agreement Terms and Commit to Additional $6 Million
- Immediate release of $7 million of cash, previously restricted by the Lenders pursuant to the Facility Agreement, to support MTV’s operations
- Extension of the Facility Agreement’s maturity by 12 months to December 2024
- Extension of the Facility Agreement’s commencement for principal repayments by 12 months to begin March 31, 2022
- Extension by 18 months of the requirement to pay 50% of interest under the Facility Agreement. Full interest payments begin March 31, 2022
- Up to $6 million of new senior debt (“New Senior Debt”) to have substantially the same security and terms as currently contemplated in the Facility Agreement (with some amendments)
- The New Senior Debt is to be made available to MTV, if needed, after SRHI has fully advanced the SRHI New Loan
Unsecured Creditors Convert Amounts Owed to Unsecured Debt
- Effective August 24, 2020, approximately $22 million of MTV’s accounts payable and accrued liabilities were converted to long-term debt (the “Unsecured Debt”)
- Effective August 24, 2020, Unsecured Debt amounting to approximately $17 million converted from accounts payable of MTV to long-term debt (“Unsecured Term Debt”)
- Effective August 24, 2020, Unsecured Debt amounting to approximately $5 million converted from accounts payable of MTV to subordinated long-term debt (“Subordinated Debt”) to be repaid only after all amounts due to the Lenders and unsecured creditors are fully repaid
- Principal and interest repayment grace period for Unsecured Term Debt – first payment to begin March 31, 2022
- 50% of Unsecured Term Debt to be repaid in 13 quarterly payments beginning March 31, 2022
- Remaining 50% of Unsecured Term Debt to be repaid on June 30, 2025
- Annual interest rate of New Unsecured Debt is 5%
- Opportunity for accelerated prepayments
- Subordinated Debt and Unsecured Term Debt totaling approximately $7 million is due to Vecchiola S.A, a related party to the minority Shareholder of MTV.
About SRHI Inc.
SRHI is a publicly-listed company based in Toronto and its principal operating business is its 70% equity interest in the producing copper mine Minera Tres Valles in Salamanca, Chile. For more information about SRHI, please visit www.srhi.ca www.srhi.ca