Vancouver-based Core Gold closed a $15 million debt facility with Investa Bank and arranged a short term $1.6 million bridge loan with Credipresto. The facilities connect to Core Gold’s efforts to restore its Elipe subsidiary.
The debenture will have the following terms:
- Interest will accrue at a rate of 15% per annum, six months maturity (July 31, 2018)
- 25% principal and accrued interest due on April 30, 2018
- 25% principal and accrued interest due on May 31, 2018
- 25% principal and accrued interest due on June 30, 2018
- The remaining principal and accrued interest due on July 31, 2018
- Pledge of all of the issued and outstanding capital of Elipe, ranking behind the lien provided by the company in respect of the $1 million convertible notes issued to Vertex Managed Value Portfolio and Vertex Enhanced Income Fund and pari passu with the current lien in favor of Credipresto.
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The company intends to use the net proceeds from the debenture, which has been pre-funded, for working capital and general corporate purposes.
In connection with the facility, the company agreed to pay Credipresto a corporate finance fee of $32,000 in cash and 800,000 share purchase warrants.
As part of its commitment to normalize payables and stabilize operations, Core Gold has been in extensive negotiations with the local liability holder’s government-appointed representative at the company’s subsidiary Elipe since June. If the company was not able to rectify the situation in a timely manner, there was a risk that the representative could take legal action against Elipe, which could involve, among other things, dispositions of assets in order to fund outstanding liabilities. As part of Core Gold’s management commitment to resolving all the legacy financial liabilities it inherited, the representative agreed to a monthly payment plan. The company has honored all payments since.
As a direct result of the above developments, the representative agreed to restore Elipe into good corporate standing.
Once Elipe is back in good corporate standing, the company will no longer need to follow the payment plan contract. More importantly, the company can, upon restoration to good corporate standing, negotiate directly with all parties involved in order to settle legacy amounts owed at mutually beneficial terms.
The company is currently going through the necessary legal process to restore Elipe back into good corporate standing and expects to complete said process on or before March 31, 2018.
