Harte Gold Announces Execution of Subscription Agreement and Loan Agreement and Files Claim Under the Companies’ Creditors Arrangement Act | 2021-12-07 | Press Releases
TORONTO, December 7, 2021 /CNW/ – HARTE GOLD CORP. (“Harte Gold“or the”Society“) (TSX: HRT) (OTC: HRTFF) (Frankfurt: H4O) announces that it will today file a motion in the Ontario Superior Court of Justice (Commercial List) (the “To research“) for an Initial Order under the Companies’ Creditors Arrangement Act (the “CCAA“).
Concurrent with the commencement of proceedings under the CCAA, Harte Gold entered into a Subscription Agreement (the “Subscription contract“) with 1000025833 Ontario Inc. (the “Investor“), an indirect wholly-owned subsidiary of Silver Lake Resources Limited (“Silver Lake“) (ASX: SLR), under which the Investor, if successful at the end of the SISP (defined below) and approved by the Court, would become the sole shareholder of the Company in an operation which provides for the continuation of its business and operations as a going concern.
Harte Gold and the Investor have also entered into a loan agreement pursuant to which the Investor has agreed, subject to the terms and conditions contained therein, including Court approval, to loan up to $10.8 million (the “DIP financing agreement“) to the Company, to fund operations and proceedings under the CCAA. The DIP financing agreement, if approved by the Court, will provide Harte Gold with the cash needed to continue operations of the Sugar Mine Zone until the closing of a transaction.Together, the Subscription Agreement and the DIP Funding Agreement demonstrate silver lake strong support for the Sugar Zone mine and the restructuring process.
The Investor is the lender to Harte Gold under the Amended and Restated Credit Agreement dated August 28, 2020 with BNP Paribas (as amended to date, the “credit agreement“). The Subscription Agreement is an “offer of credit” which provides for (1) payment in full of all claims having priority over, or past bet with, the sums due under the credit agreement; (2) payment in full of the duly perfected and secured obligations due to AHG (Jersey) Limited under the facility agreement dated August 28, 2020 (the “Installing Appian“); and (3) the assumption of up to $7.5 million in accounts payable. The subscription agreement does not provide for any recovery for other stakeholders subordinate to the Appian facility, including holders of existing equity interests in the company.
If the court grants the initial order, Harte Gold will seek approval of a sale and investment solicitation process (“SISP“) and the power to use the Subscription Agreement as a “parade horse” in the SISP to provide interested parties with the opportunity to submit superior proposals and to allow Harte Gold to determine the highest transaction and best available for the company and its stakeholders Unless the offer selected at the end of the SISP provides for a value significantly higher than that of the Subscription Agreement, there will be no recovery for the holders of existing interests in the Company .
The signing of the Subscription Agreement and the DIP Financing Agreement is the culmination of the Strategic Review Process undertaken by the Company over several months. After careful consideration of all available alternatives and stakeholder interests, Harte Gold’s Board of Directors has determined that it is in the best interests of the Company and its stakeholders to execute the Subscription Agreement and the DIP financing agreement and to commence CCAA proceedings and undertake the SISP.
Harte Gold Securities Trading
Trading of common shares of Harte Gold on the Toronto Stock Exchange (“TSX“) is expected to be discontinued. The Company currently anticipates that its common shares will be delisted in due course.
A further update will be provided following the Court hearing of the CCAA application.
About Harte Gold Corp.
Harte Gold holds a 100% interest in the Sugar Zone mine located in White River, Canada. The Sugar Zone mine entered commercial production in 2019. The Company has additional potential through exploration on the Sugar Zone property, which comprises 81,287 hectares covering a significant greenstone belt. Harte Gold trades on the Toronto Stock Exchange under the symbol “HRT”, on the Frankfurt Stock Exchange under the symbol “HRTFF” and on the Frankfurt Stock Exchange under the symbol “H4O”.
Caution Regarding Forward-Looking Information:
This press release contains “forward-looking statements”, within the meaning of applicable securities laws, which are based on the opinions and estimates of management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “budget”, “plan”, “continue”, “estimate”, “expect”, “anticipate”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “could”, “should”, “believe ” and similar words suggesting future results or statements about a prospect. Specific forward-looking statements contained in this press release include, but are not limited to, the company’s filing with the court for an initial order under the CCAA; the Investor, if it is the successful bidder at the end of the SISP and is approved by the Court, becomes the sole shareholder of the Company in a transaction which provides for the continuation of its activity and operations as business in operation; the Investor providing the DIP Funding to the Company to fund the CCAA Transactions and Proceedings; the DIP financing agreement, if approved by the Court, providing Harte Gold with the necessary liquidity to continue operations of the Sugar Zone mine until the closing of a transaction; Harte Gold seeking approval of a SISP and permission to use the Subscription Agreement as a “walking horse” in the SISP; that there is no recovery for the holders of existing interests in the Company unless the offer selected at the end of the SISP provides for a value significantly higher than the Subscription Agreement; trading in the common shares of Harte Gold on the TSX is expected to be halted; the Company currently anticipates that its ordinary shares will be delisted in due course; and the Company having additional potential through exploration on the Sugar Zone property. Forward-looking statements are necessarily based on a number of estimates and assumptions, including significant estimates and assumptions relating to the factors set forth below which, although believed to be reasonable by the Company as of the date of this press in light of management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements, and undue reliance should not be placed on such statements and information. These risks and uncertainties include, but are not limited to, the strategic review process not resulting in a transaction that brings value to the Company’s stakeholders; the Company’s inability to obtain sufficient funding to complete the strategic review process; the Company being unable to continue its activity; the risk that the Company does not have adequate sources of financing to finance the operations of the Company in the near future; the risk that the Company may not be able to obtain sufficient financing for working capital, capital expenditures, debt service requirements and general corporate or other purposes; the risk that the Company does not have sufficient assets to meet its commitments or satisfy its creditors;the Company’s ability to attract and retain qualified candidates to join the Company’s management team and board of directors, risks associated with the mining industry, including operational risks related to the exploration, development and production; delays or changes in plans for exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections regarding production, costs and expenses; the uncertainty surrounding the Company’s ability to obtain all permits, agreements, consents or authorizations necessary for its operations and activities; and health, safety and environmental risks, the risk of fluctuating commodity prices and exchange rates, Harte Gold’s ability to fund capital and operating expenditures necessary to achieve business objectives of Harte Gold, the uncertainty associated with business negotiations and dealing with contractors and other parties and the risks associated with international business activities, as well as other risks and uncertainties which are more fully described in the Company’s Annual Information Form dated March 30, 2021and in other documents filed by the Company with securities and regulatory authorities which are available on SEDAR at www.sedar.com. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in the Company’s securities should not place undue reliance on such forward-looking statements. Readers are cautioned that the foregoing list of risks, uncertainties and other factors is not exhaustive. The forward-looking statements contained in this press release are made as of the date hereof, and the Company undertakes no obligation to publicly update or revise the forward-looking statements or in any other documents filed with the Canadian securities authorities, whether whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. Forward-looking statements are expressly qualified by this cautionary statement. The Toronto Stock Exchange has not reviewed and accepts no responsibility for the adequacy or accuracy of this press release.
SOURCE Harte Gold Corp.
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