ey DIP document : set up of the PP financing we are already familiar with
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Welcome to the Crystallex HUB on AGORACOM
Crystallex International Corporation is a Canadian-based gold company with a successful record of developing and operating gold mines in Venezuela and elsewhere in South America
Message: ey document - no more than 49%?
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This document basically explains the rules of the upcoming bidding process.
My take after reading it is that this bidding process is setting up the terms, so that the deal that was already negotiated in the PP will most likely be the bid that is going to come forward.
So, that proposed deal in the private placement for $135 million at 20% interest per annum, and 49% CVR, is probably going to be the deal we end up with.
And of course, being that this is CCAA, the shareholders won't be able to complain (litigate) afterwards, because well, it was this, or zero. And the existing noteholders will have no choice but to vote in favour of the deal, because well, they are getting paid off, so they really have nothing to complain about.
The only part that has me a little confused is the part which reads:
D. Material Terms That Are Discouraged
on the outstanding principal under the Credit Facility;
(v) a paid-in-kind interest rate in excess of 10%( on the outstanding principal under the Credit Facility;
and (vi) compounding of interest on obligations outstanding under the Credit Facility. and the fine print:
5 While the Credit Facility may provide for either current-pay interest or interest paid-in-kind, or provide Crystallex an election right during the term of the Credit Facility between current-pay or paid-in-kind interest, in all cases subject to any limits otherwise provided herein, Crystallex will consider favorably a Qualified Bid that provides for paid-in-kind interest from closing until maturity.
6
If the bidder elects current-pay interest, Crystallex may not unfavorably view such provision if: (i) the principal of such Credit Facility is sufficiently sized to allow for current-pay interest during the initial twoyear period; and (ii) such Credit Facility allows for paid-in-kind interest until maturity for all intervals subsequent to the initial two-year period.
This makes me wonder if maybe the 20% p.a interest rate proposed in the original PP is still in play, or we may indeed get a lower annual interest rate? I think the fine print gives some leeway, and the fact that these practice of higher interest is "Discouraged".
And of course the company can say they "discouraged" the high interest rate, however, it was the only bid coming forward.
I think the only way we get a better deal than the original proposed Private placement, is if a new party come forward with a better bid. Otherwise, i believe all the participants in the original PP are on the same page and will "rig" the auction.
This will get done in a timely matter, and as per usual, lots of free money (fees) once again being handed out to all parties involved. I just look forward to ending this process and start valuing the company based on what i think the award will be, and what the terms of the finacing are. I think we'll be 'ok'.
Cheers,
FK.
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