Arianne Phosphate, Saguenay, Quebec, a development-stage phosphate mining company advancing the Lac à Paul project in Quebec’s Saguenay-Lac-Saint-Jean region, said on March 18 it has entered into an agreement with its senior secured lender, Mercury Financing Corp., by which the lender has agreed to exercise the 26,780,000 warrants that it currently holds, thereby reducing the amount owed under the credit facility by roughly $6.6 million to $24.9 million.
The lender has also agreed to extend the loan under the credit facility for a period of five years and reduce the annual interest rate to 8 percent from the previous 15 percent. In conjunction with the amended credit facility, the lender will receive 32 million non-transferable share purchase warrants, exercisable at a price of $0.33 per share for a period of five years.
Arianne also reported that it has entered into agreements with its subordinate unsecured debt holders amounting to a total of $5,970,155, whereby these debt holders have agreed to a conversion of their existing debt into common shares of the company at a price of $0.275 per share, representing the volume weighted average price of Arianne’s common shares on the TSX-V for the previous 30 trading days.
“This is very significant news for Arianne and its shareholders,” said Brian Ostroff, Arianne CEO. “By addressing this, Arianne has removed a significant concern of its shareholders and put the Company on a more solid foundation. This agreement allows Arianne to cut its overall debt by roughly a third, extend the maturity of its outstanding loan by a full five years, and cut the interest rate almost in half, which will save the Company close to $3 million a year in interest payments. This agreement also fully aligns the company and its lender, as Mercury through its decision to exercise its warrants, will now become a major shareholder of Arianne with over a 17 percent equity holding.
“This deal comes at an ideal time,” added Ostroff. “Over the last few years, Arianne has been able to weather a very difficult macro while many others have not. The company has advanced its Lac à Paul project to what is today, arguably a best of breed asset.
“Now, we are seeing a drastic improvement in the agricultural sector, with many grains trading at multi-year highs and improved conditions for farmers, along with tightness in markets, [which] has led to a significant increase in the price of phosphate fertilizers, with DAP prices having doubled in the last year,” Ostroff continued. “Arianne should now be very well-placed to take advantage of its position and advance its project, thus unlocking substantial returns for its investors and stakeholders.”