Convertible Loan Drawdown by Wega Mining


 

TIDMAVM 
 
RNS Number : 8161R 
Avocet Mining PLC 
07 May 2009 
 

 
 
 
 
 
 
Avocet Mining PLC 
 
 
CONVERTIBLE LOAN DRAWDOWN BY WEGA MINING 
 
 
Avocet Mining PLC (AIM: AVM) ('Avocet' or the 'Company') announces that all 
conditions have now been satisfied for the advancement of funds pursuant to the 
US$25 million convertible loan agreement entered into between Avocet and Wega 
Mining ASA ('Wega') as announced on 14 April 2009 (the 'Convertible Loan 
Agreement'). Accordingly, these funds have been transferred to Wega. 
 
 
The satisfaction of all conditions precedent follows the announcement made on 29 
April 2009 confirming that the general meeting of Wega shareholders held on that 
day had approved the terms of the Convertible Loan Agreement. Since that time, 
the formal consent of Macquarie Bank Limited ("MBL") to the issue of the 
Convertible Loan and the proposed change of control of Wega has been obtained 
and the provision of security arrangements has also been completed. MBL's formal 
consent was required as it has provided a US$65 million debt facility to a 
subsidiary of Wega for development of the Inata Gold Project in Burkina Faso, of 
which US$56 million is currently drawn down, and which is governed by a Project 
Finance Agreement ("PFA"). 
 
 
Terms of the Convertible Loan 
 
 
The convertible loan is to bear interest at a rate of 12.5 per cent per annum 
which is to be paid in arrears on 29 October 2009, the maturity date, subject to 
satisfaction of the terms of agreements with Macquarie Bank. The principal may 
be converted, at the sole option of Avocet, in whole or in part, into new Wega 
ordinary shares at a conversion price of NOK 0.55 per ordinary share. Were the 
loan to be converted in full, Avocet would hold 368,454,546 Wega Shares 
representing approximately 52.8 per cent of the Wega issued share capital as 
enlarged by the equity subscription by Avocet on 14 April 2009 and the 
conversion of the loan. The loan may only be converted in the following 
circumstances: 
 
 
  *  if Avocet launches a Voluntary Offer ("Offer") for Wega; 
  *  in the event of a material breach by Wega of the agreements in place between 
  Avocet and Wega; or 
  *  upon the occurrence of any event of default under the Convertible Loan Agreement 
  which is continuing. 
 
 
 
The loan is secured by a second priority charge (ranking after MBL's primary 
charge in respect of the PFA) over intercompany loans in the amount of 
approximately US$70 million provided by Wega and a second priority pledge 
(ranking after MBL's primary pledge in respect of the PFA) over the entire 
issued share capital of Resolute (West Africa) Limited, the Jersey registered 
holding company for Wega's 90% interest in the Inata Gold Project. 
 
 
Macquarie Bank Consent 
 
 
The PFA is currently in default as a result of, inter alia, project delays and 
shortfalls in funding prior to Avocet's involvement. As required under the PFA, 
Avocet, Wega and certain subsidiaries of Wega (the "Parties") have entered into 
certain agreements with MBL in order to gain MBL's formal consent to the issue 
of the Convertible Loan and for Avocet's acquisition of Wega. These agreements 
include giving certain undertakings to MBL aimed at ensuring future compliance 
with the terms of the PFA. Upon satisfaction of and compliance with all 
agreements and undertakings by the Parties, and based on facts and information 
currently available to MBL and Avocet, both MBL and Avocet expect that the 
Borrower will be in full compliance with the PFA. The PFA will have no recourse 
to Avocet at any time. 
 
 
Notwithstanding the above, the PFA currently remains in default. In conjunction 
with the above consent, MBL has confirmed that prior to July 31, 2009, or such 
later date which MBL agrees, but not later than August 31, 2009, it will not 
demand repayment of the debt or enforce any other remedies set out in the PFA as 
a result of any existing events of default known to MBL which have occurred up 
to the date of the consent. 
 
 
Proposed Offer 
 
 
The making of the Offer as announced on 14 April 2009 remains subject to the 
satisfaction of certain conditions precedent which include: 
 
 
  *  the compliance by Wega in all material respects with the provisions of the 
  transaction agreements to implement the Offer; and 
 
 
 
  *  no event of default under the Convertible Loan Agreement has occurred and is 
  continuing 
 
 
 
Once the pre-conditions to the Offer are either satisfied or waived, Avocet 
intends to dispatch a voluntary exchange offer document in accordance with the 
Norwegian Securities Trading Act and other relevant legislation (the "Voluntary 
Offer Document"). Currently Avocet expects the Voluntary Offer Document to be 
approved by Oslo Børs and to commence the Offer period on or around 15 May 2009, 
with an initial offer period of two weeks. 
 
 
 
 
 
+------------------+---------------------+------------------+--------------------------+---------------+ 
| For further information please         |                  |                          |               | 
| contact:                               |                  |                          |               | 
+----------------------------------------+------------------+--------------------------+---------------+ 
| Avocet Mining    | Buchanan            | Ambrian Partners | J.P. Morgan              | First         | 
| PLC              | Communications      | Limited          | Cazenove                 | Securities    | 
+------------------+---------------------+------------------+--------------------------+---------------+ 
|                  | Financial PR        | Financial        | Lead Broker and          | Norwegian     | 
|                  | Consultants         | Adviser, NOMAD   | Joint Financial          | Financial     | 
|                  |                     | and Joint Broker | Adviser                  | Adviser       | 
+------------------+---------------------+------------------+--------------------------+---------------+ 
| Mike Norris,     | Bobby Morse         | Richard Brown    | Michael                  | Geir Lie      | 
| Finance Director | Ben Willey          | Richard          | Wentworth-Stanley        | Stein Hansen  | 
| Jonathan Henry,  | Katharine Sutton    | Greenfield       | Sam Critchlow            | Eirik         | 
| CEO              |                     | Andrew Craig     |                          | Lilledahl     | 
|                  |                     |                  |                          |               | 
+------------------+---------------------+------------------+--------------------------+---------------+ 
| +44 (0) 20 7907  | +44 (0) 20 7466     | +44 (0) 20 7634  | +44 (0) 20 7588          | +47 2323 8000 | 
| 9000             | 5000                | 4700             | 2828                     |               | 
+------------------+---------------------+------------------+--------------------------+---------------+ 
| www.avocet.co.uk | www.buchanan.uk.com | www.ambrian.com  | www.jpmorgancazenove.com | www.first.no  | 
+------------------+---------------------+------------------+--------------------------+---------------+ 
 
 
Notes to Editors 
On 14 April 2009, Avocet and Wega jointly announced that they had entered into a 
legally binding transaction agreement pursuant to which Avocet intends to make a 
pre-conditional, recommended share for share public exchange offer for the 
entire issued share capital of Wega. In order to provide interim funding for the 
continued development of Wega's flagship Inata Gold Project in Burkina Faso, and 
in addition to entering into the Convertible Loan Agreement, Avocet subscribed 
for 61,409,091 Wega shares on 14 April for consideration of approximately US$5 
million. 
 
 
Avocet is a mining company listed on the AIM market of the London Stock Exchange 
(Ticker: AVM). The Company's principal activities are gold mining and 
exploration in Malaysia (as 100 per cent owner of the Penjom mine, the country's 
largest gold producer), and Indonesia (as 80 per cent owner of the North Lanut 
gold mine and Bakan project in North Sulawesi). The Company has a number of 
other advanced evaluation stage projects in South East Asia. 
 
Wega is an Oslo based international mining company focused on 
exploring, developing and operating gold deposits. The company currently 
operates in Guinea, Burkina Faso, and Mali. Wega trades on Oslo Axess (Ticker: 
WEMI). 
 
Wega's main asset is the Inata Gold Project in northern Burkina Faso, 
West Africa, of which Wega became the owner as a result of the acquisition of 
Goldbelt Resources in 2007. The Inata Gold Project is currently under 
construction, with first gold production expected in Q3 2009, and full steady 
state production in FY2011. Inata will produce greater than 120,000 ounces of 
gold over an initial 7 year mine life. Wega's other assets include 27 
exploration licences in Burkina Faso, Guinea and Mali, including the Koulekoun 
gold exploration project in Guinea, a 58.1 per cent interest in TSX Venture 
Exchange listed Merit Mining Corp and a 36.2 per cent interest in base metals 
company, Metallica Mining AS. 
 
 
Ambrian Partners Limited (which is regulated in the UK by the Financial Services 
Authority) is acting exclusively for Avocet as financial adviser, nominated 
adviser and broker and no one else (including the recipients of this 
announcement) in connection with the arrangements described in this announcement 
and will not be responsible to anyone other than the Company for providing the 
protections afforded to customers of Ambrian Partners Limited or for advising 
any other person in connection with the arrangements described in this 
announcement. Ambrian Partners Limited makes no representation, express or 
implied, with respect to the accuracy or completeness of any information 
contained in this announcement and accepts no responsibility for, nor does it 
authorise, the contents of, or the issue of this announcement, or any other 
statement made or purported to be made by the Company, or on its behalf, in 
connection with the Company or any or the other arrangements described in this 
announcement and accordingly disclaims all and any liability whatsoever whether 
arising out of tort, contract or otherwise which it might otherwise have in 
respect of this announcement or any other statement. 
J.P. Morgan Cazenove Limited ("J.P. Morgan Cazenove") (which is regulated in the 
UK by the Financial Services Authority) is acting exclusively for Avocet as 
financial adviser and broker and no one else (including the recipients of this 
announcement) in connection with the arrangements described in this announcement 
and will not be responsible to anyone other than the Company for providing the 
protections afforded to customers of J.P. Morgan Cazenove or for advising any 
other person in connection with the arrangements described in this announcement. 
J.P. Morgan Cazenove makes no representation, express or implied, with respect 
to the accuracy or completeness of any information contained in this 
announcement and accepts no responsibility for, nor does it authorise, the 
contents of, or the issue of this announcement, or any other statement made or 
purported to be made by the Company, or on its behalf, in connection with the 
Company or any or the other arrangements described in this announcement and 
accordingly disclaims all and any liability whatsoever whether arising out of 
tort, contract or otherwise which it might otherwise have in respect of this 
announcement or any other statement. 
 
 
First Securities (which is regulated in Norway by the Kredittilsynet) is acting 
exclusively for Avocet and no one else (including the recipients of this 
announcement) in connection with the arrangements described in this announcement 
and will not be responsible to anyone other than the Company for providing the 
protections afforded to customers of First Securities or for advising any other 
person in connection with the arrangements described in this announcement. First 
Securities makes no representation, express or implied, with respect to the 
accuracy or completeness of any information contained in this announcement and 
accepts no responsibility for, nor does it authorise, the contents of, or the 
issue of this announcement, or any other statement made or purported to be made 
by the Company, or on its behalf, in connection with the Company or any or the 
other arrangements described in this announcement and accordingly disclaims all 
and any liability whatsoever whether arising out of tort, contract or otherwise 
which it might otherwise have in respect of this announcement or any other 
statement. 
 
 
 
 
 
 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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