bwire
EDMONTON, Alberta (Business Wire) -- Liberty Mines Inc. (LBE:TSX) ("Liberty" or the "Company") announced
today that it has entered into a Memorandum of Understanding (the "MOU")
with Jilin Jien (together with its related parties, "Jien"), its
majority shareholder, that provides funding to support the Company's
2011 business plan and a comprehensive financial re-engineering proposal
intended to create a better capital structure for Liberty and to
substantially reduce dilution risk to its minority shareholders.
In order to fund Liberty's 2011 business plan, Jien is advancing a
further $8.0 million to the Company, to be provided in tranches that
begin immediately and that are intended to be complete in Q2 2011.
As part of the proposed financial re-engineering, Jien and Liberty have
agreed in principal:
1.
To consolidate all of Jien's outstanding debt instruments, including
promissory notes, credit facility, advances and accrued interest,
and the $8.0 million in new advances contemplated in the MOU,
totaling approximately $49.0 million as at December 31, 2010, into
two secured term loans maturing 18 months and 36 months after the
closing of the proposed transaction, respectively. The interest
rates on the two term loans will be 10% per annum. In the first 18
months, all interest will be capitalized to lessen the cash
requirements of the Company.
2.
That Jien will convert 38,098,908 Preferred Shares of Liberty to
Common Shares, at the current conversion ratio of 1:1. This
conversion will increase Jien's common share ownership of Liberty
from 51% to 60%. Jien agrees not to convert any further Preferred
Shares of Liberty.
3.
That the terms of the remaining 148,895,602 Preferred Shares not
converted pursuant to 2, above, shall be amended such that the right
to convert to common shares will be cancelled. In consideration,
Jien will be granted an option to cause Liberty to redeem the
remaining Preferred Shares, such redemption, if occurring in the
first 24 months following the closing of the proposed transaction,
to be funded by increasing the amount of one of the two secured term
loans referenced in 1, above, so as to lessen the cash requirements
of the Company.
4.
That Jien will be granted anti-dilution protection in that one of
the two secured term loans referenced in 1, above, will be
convertible to common shares of the Company, at the option of Jien,
limited to the maximum number of shares required to maintain its 60%
ownership in the event of a dilutive transaction, such conversion to
be priced at the same price realized in the dilutive transaction.
The above transactions are subject to regulatory and shareholder
approval as applicable. Closing is anticipated as soon as reasonably
possible following receipt of all requisite approvals, currently
expected to be in approximately mid 2011.
Liberty Interim CEO Jay Richardson referred to the Memorandum of
Understanding "as a milestone in Liberty's development. The end
result is a new capital structure; one that eliminates all short term
debt obligations to Jien, creates long term debt that better matches our
assets and cash flow, and eliminates the uncertainties of the more
generous conversion opportunities that were available to Jien. We are
very excited with the prospects of Liberty and this continued support
from Jien opens the door for us to execute on our future plans."
Mr. Wu Shu, Jien's Chairman and a director representing Jien, said: "We
are very pleased with this agreement. The re-capitalization of Liberty
is consistent with our long term desire to see the Company achieve
greater significance as a nickel producer and with our goal to enhance
value for all the Company's shareholders."
About Liberty Mines Inc.
Liberty Mines Inc. is a producer of nickel and is focused on the
exploration, development and production of nickel, copper, cobalt and
platinum group metals from its properties in Ontario, Canada. It owns
and operates the Redstone nickel concentrator near Timmins Ontario.
About Jilin Jien Nickel Industry Co., Ltd.
Jilin Jien is one of the largest holding subsidiaries of Jilin Horoc
Nonferrous Metal Group Co., Ltd., which was founded in 1960.
Horoc and Jien own four nickel mines, one molybdenum mine, one silver
mine, two smelters, seven refineries, and two chemical plants with total
assets over RMB 3.0 billion. The company professionally provides all
kinds of nickel, copper, cobalt salts and nonferrous metal products for
plating, chemical plating, battery materials and metallurgy.
Jilin Jien is one of the biggest producers of nickel sulfate in the
world, with annual output of 25,000 tons. In September 2003, Jilin Jien
Nickel Industry Co., Ltd. was listed on the A-share market of the
Shanghai Stock Exchange with stock code of 600432.
Liberty Mines Inc.Bill Woods, CFO780 485-2299 work780
964-8875 cellbwoods@libertymines.com
