Shares of Highlands have been suspended from trading on both the Australian Securities Exchange (ASX) and the Port Moresby Stock Exchange (POMSoX) effective May 3, 2019, pending completion of the Scheme.
“We are pleased to receive the approval of the National Court of Papua New Guinea and look forward to completing the acquisition of Highlands. We are also pleased to announce an amendment to our previously announced credit facility which will provide Cobalt 27 with a reduction in stand-by fees and enhanced flexibility including the ability to increase the facility for the right cash-flowing acquisition opportunity from our extensive pipeline of investment opportunities. The facility is an endorsement of our acquisition of Highlands which further diversifies Cobalt 27’s asset base and commodity exposure. We look forward to working with majority owner and operator Metallurgical Corporation of China, as well as the Government and Stakeholders of Papua New Guinea,” said Anthony Milewski, Chairman and CEO, Cobalt 27.
Amended Credit Facility
Cobalt 27 announces that it has entered into an amended and restated revolving term credit facility (the “Amended Credit Facility”), whereby the Company will have access to a US$100 million credit facility and a US$50 million accordion facility which replaces its undrawn credit facility announced on October 24, 2018. National Bank of Canada, Bank of Montreal and The Bank of Nova Scotia acted as Joint-Lead Arrangers with National Bank of Canada acting as Sole Bookrunner and Administrative Agent. The Amended Credit Facility is secured by the Company’s assets, including its physical cobalt inventory, its streaming and royalty investments, and the ordinary shares of Highlands to be acquired under the Scheme. The Amended Credit Facility has an initial term of three years, which is extendable by mutual consent of the lenders and Cobalt 27. An initial drawdown under the Amended Credit Facility will be subject to the satisfaction or waiver of certain conditions precedent customary for a financing of this type.
Following the closing of the Highlands acquisition and the anticipated PanAust buyback agreement, the Company expects to have drawn approximately US$40 million under the facility, paying interest quarterly currently at a rate of LIBOR plus 375 basis points.
Highlands Scheme of Arrangement
Under the Scheme, Cobalt 27 will acquire all of the issued and outstanding ordinary shares of Highlands that it does not already own (the “Scheme Shares”) for an all-cash offer price of A$0.105 per share (the “Base Purchase Price”). In addition, if before December 31, 2019, the London Metal Exchange official closing cash settlement price for nickel is US$13,220 per tonne or higher for a period of 5 consecutive trading days, Cobalt 27 will also pay additional contingent consideration of A$0.010 per Scheme Share in cash (the “Contingent Purchase Price”). The Base Purchase Price consideration offered for all of the Scheme Shares is valued at approximately US$65 million, which is anticipated to be funded with cash on hand and available credit under the Amended Credit Facility. The Contingent Purchase Price consideration of US$6 million will be funded in escrow and funded with available credit. The transaction is expected to close on or about May 17, 2019.
Source: Company Press Release
