European Goldfields Limited - Full finance package secured for project portfolio
Terms of US$600 million Loan Facility agreed with Qatar Holding
US$150 million additional financing to be offered to existing shareholders
Qatar Holding acquires shareholding in European Goldfields
WHITEHORSE, Oct. 3, 2011 /CNW/ - European Goldfields Limited
('European Goldfields' or the 'Company') is pleased to announce that it has agreed heads of terms ('Heads of Terms') with Qatar Holding LLC ('Qatar Holding') for the provision of a US$600 million 7 year Senior Secured Loan Facility with Equity Participation (the 'Facility').Pursuant to the Heads of Terms, the Facility will be structured as a US$600 million 7 year loan at an interest margin of 7% above 6-month Libor per annum and will be repayable in 8 equal instalments commencing in 2015 (the 'Facility Agreement'). The loan will be secured over the Company's Greek assets, including a pledge of the shares of all intermediate holding companies, and will contain certain informational and financial covenants. The Equity Participation feature of the Facility will encompass the issuance to Qatar Holding of warrants (the 'Warrants') for the purchase of 40,444,913 shares in the Company at a strike price of C$9.08 per share (equivalent to the 5 day VWAP on the TSX).
The Facility will be used primarily for the development of the Company's Skouries and Olympias gold projects in Greece, for which the Environmental Permit was recently granted, as well as general corporate purposes.
The Company also proposes to offer unsecured loan notes with warrants for US$150 million (the 'Loan Notes') to be made available to existing shareholders on the same economic terms as the Facility. These Loan Notes will be listed on an international exchange and will include the normal terms and conditions for such an instrument. The aggregate proceeds of US$750 million from the Facility and the Loan Notes are expected to fully finance the Company's entire project portfolio.
The Company has also been advised that in two separate transactions, Qatar Holding has acquired from Aktor Construction International Limited ('Aktor') and Mr. Dimitrios Koutras collectively, an aggregate 18,202,687 shares at C$10 per share (representing 9.9% of the undiluted share capital of the Company) and has entered into a call option agreement allowing it to acquire a further 9,373,390 shares in the Company at a price of C$13 per share. As a result and prior to the exercise of the call option, Aktor now holds 22,447,246 shares (representing 12.2% of the undiluted share capital of the Company) and Mr. Koutras holds 5,521,387 shares (representing 3.0% of the undiluted share capital of the Company).
The Facility and related issuance of warrants are subject to exclusivity, definitive documentation and shareholder and regulatory approval.
Martyn Konig, Executive Chairman and President commented, 'This Facility from Qatar Holding represents not only a significant commitment to the Company, but also to Greece. In these very uncertain times, these financings will provide all of the development capital required to bring the group's entire project portfolio into production and allow us to accelerate the development of all our projects. As such, this marks another very significant milestone on our path towards becoming the largest gold producer in Europe. Furthermore, we are delighted to welcome Qatar Holding as a significant shareholder and key strategic partner, particularly as this is their first investment into the gold sector.
These transactions deliver a definitive solution to a number of key issues overhanging the Company: we have secured debt financing which, in terms of both size and coupon, is otherwise unavailable in today's challenging market conditions, thereby delivering a complete financing solution for our projects; the presence of Qatar Holding as a strategic partner further demonstrates great confidence in Greece as well as securing a liquidity event for our Greek partners Ellaktor, without direct market impact.'
Commenting on the transaction, Mr. Ahmad Mohamed Al-Sayed, Managing Director and Chief Executive Officer of Qatar Holding, said: 'This transaction reflects an outcome of the Memorandum of Understanding between the State of Qatar and the Hellenic Republic of Greece, signed in New York during 2010. Our latest investment helps to further diversify our investment portfolio in the commodities sector, with a specific position in gold resources and another long-term partner secured for the future. We see the transaction as one that will create a lot of value for all shareholders, and represents our positive view on Greece in general.'
Lazard & Co., Limited advised the Directors of the Company in respect of the transactions.
Liberum Capital and Evolution Securities provided the Company with financial advice in respect of the transactions.
Conference call details
European Goldfields will host a conference call to update investors and analysts on the contents of this release. The call will be held today at 8:00am EDT / 1:00pm London, UK time.
Participants may join the call by dialling the number below, approximately 5 minutes before the start of the call.
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|UK Free Call |0800 073 1806 |
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|UK Standard International| 44 (0) 1452 561 263|
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|USA Free Call |1866 223 0502 |
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|Conference ID |15796263 |
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Certain statements and information contained in this document, including any information as to the Company's future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute forward-looking information under provisions of Canadian provincial securities laws. When used in this document, the words 'anticipate', 'expect', 'will', 'intend', 'estimate', 'forecast', 'planned' and similar expressions are intended to identify forward-looking statements or information. Forward-looking statements include, but are not limited to, the estimation of mineral reserves and resources, the conversion of mineral resources to mineral reserves, the timing and amount of estimated future production, costs and timing of development of the Skouries, Olympias and Certej projects, completion of various financing options and permitting time lines. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
The Company cautions the reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Company to be materially different from its estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. These risks, uncertainties and other factors include, but are not limited to: changes in the price of gold, base metals or certain other commodities (such as fuel and electricity) and currencies; uncertainty of mineral reserves, resources, grades and recovery estimates; uncertainty of future production, capital expenditures and other costs; currency fluctuations; financing and additional capital requirements; the receipt in a timely fashion of any further permitting for the Company's projects; legislative, political, social or economic developments in the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or development activities; the speculative nature of gold and base metals exploration and development, including the risks of diminishing quantities or grades of reserves; the risks normally involved in the exploration, development and mining business; and risks associated with internal control over financial reporting. For a more detailed discussion of such risks and material factors or assumptions underlying these forward-looking statements, see the Company's Annual Information Form for the year ended 31 December 2010, filed on SEDAR at www.sedar.com. The Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
For further information please see the Company's website at www.egoldfields.com
European Goldfields Ltd.
CONTACT:
European Goldfields Liberum Capital Limited
Steve Sharpe, SVP Business Development Simon Atkinson
e-mail: info@egoldfields.com Michael Rawlinson
Tel: 44 (0)20 7408 9534
Tel: 44 (0)20 3100 2000
Brunswick
Carole Cable / Fiona Micallef-Eynaud
e-mail: egoldfields@brunswickgroup.com
Tel: 44 (0)20 7404 5959