NOT FOR DISSEMINATION IN THE UNITED STATES OR TO UNITED STATES NEWSWIRE SERVICES
BAAR, Switzerland, March 26, 2019 (GLOBE NEWSWIRE) -- On March 22, 2019, Glencore AG (“Glencore”), a wholly-owned subsidiary of Glencore plc, and PolyMet Mining Corp. (“PolyMet”) entered into an extension agreement (the “Extension Agreement”) pursuant to which Glencore agreed to extend the maturity date of certain convertible debentures (the “Convertible Debentures”) in the principal amount of USD 25,000,000 (with accrued interest thereon of USD 33,076,858.77) and certain non-convertible debentures (the “Non-Convertible Debentures”, together with the Convertible Debentures, the “Debentures”) in the principal amount of USD 140,000,000 (with accrued interest thereon of USD 44,697,894.25), in each case as at March 31, 2019, issued pursuant to a purchase agreement made as of October 31, 2008 (as amended from time to time to the date hereof, the “Purchase Agreement”) between Poly Met Mining Inc. (a wholly-owned subsidiary of PolyMet) (the “Debtor”), PolyMet and Glencore. The parties agreed to extend the maturity date of the Debentures to the earlier of:
(i) Glencore’s election following the occurrence of a triggering event which includes:
- The Company and/or the Debtor defaulting in the payment of certain amounts payable to Glencore;
- The Company and/or the Debtor failing to perform in any material manner the terms, covenants, conditions or obligations in its material agreements with Glencore; and
- The failure to meet certain milestones and deadlines set out in the Extension Agreement, including the filing and approval of a rights offering (the “Rights Offering”) prospectus by May 10, 2019;
(ii) and May 10, 2019.
The maturity date of the Debentures may be further extended to June 30, 2019 provided that certain conditions are satisfied including: (a) a final prospectus for the Rights Offering (as defined below) having been approved by applicable securities regulators; and (b) the Standby Purchase Agreement (as defined below) having been entered into.
The Extension Agreement provides that PolyMet is required to effect the Rights Offering subject to the terms and conditions of such agreement. Such material terms and conditions include that:
- the number of Common Shares equal to the quotient obtained by dividing: (a) the sum of the PolyMet’s indebtedness (the “Closing Date Indebtedness”) to Glencore on the closing date of the Rights Offering plus USD 6 million plus the Standby Fee (as defined below); by (b) the subscription price under the Rights Offering;
- Glencore and PolyMet shall enter into a standby purchase agreement (the “Standby Purchase Agreement”) which shall record the terms and conditions on which Glencore will participate in the Rights Offering including:
- the proceeds of the Rights Offering shall be applied towards: (x) the repayment of the Closing Date Indebtedness in full; (u) the payment of the Standby Fee in full; and (z) payment of expenses of the Rights Offering, which expenses shall be no greater than USD 6 million;
- the commitment (the “Standby Commitment”) by Glencore to act as standby purchaser for all Common Shares that are not otherwise subscribed for under the Rights Offering’s basic subscription privilege and additional subscription privilege;
- the payment to Glencore of a standby fee (the “Standby Fee”) equal to 3% of the total funds committed by Glencore pursuant to the Standby Commitment (that is, for the avoidance doubt, the Closing Date Indebtedness plus USD 6 million plus the Standby Fee calculated based on the amount of the Closing Date Indebtedness plus USD 6 million). The Standby Fee will be payable in cash or by set-off (at the option of Glencore) upon closing of the Rights Offering; and
- The restrictions set out in Section 3(b) in the corporate governance agreement (the “Corporate Governance Agreement”) between Glencore and the Company to the effect that notwithstanding anything in such Corporate Governance Agreement, Glencore shall not be entitled to nominate greater than 49% (rounding down) of the directors to the board of directors of the Company shall be terminated.
- the proceeds of the Rights Offering shall be applied towards: (x) the repayment of the Closing Date Indebtedness in full; (u) the payment of the Standby Fee in full; and (z) payment of expenses of the Rights Offering, which expenses shall be no greater than USD 6 million;
Completion of the Rights offering shall be subject to obtaining any approvals, to the extent required, in accordance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Competition Act (Canada), Investment Canada Act and any other applicable regulatory approvals.
Glencore and PolyMet also entered into a warrant amending agreement (the “Warrant Amending Agreement”) pursuant to which PolyMet agreed to (i) extend the expiry date of the exchange warrant granted to Glencore pursuant to the Purchase Agreement to the earlier of (A) March 31, 2020, and (B) the date on which the convertible debt owed to Glencore is fully repaid and (ii) use its commercially reasonable best efforts to reduce the exercise price of such exchange warrant to the lowest price permitted by the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange American Exchange (the “NYSE American”), subject to obtaining any necessary approvals from the TSX and the NYSE American.
Pursuant to the Warrant Amending Agreement, PolyMet has also agreed to issue an aggregate of 6,458,001 warrants (the “New Purchase Warrants”) to purchase common shares (“Common Shares”) of PolyMet, with each such New Purchase Warrant entitling Glencore to acquire one Common Share with an expiry date of March 31, 2024 and an exercise price equal to the TSX Company Manual “market price” of the Common Shares as of March 22, 2019. 6,458,001 existing purchase warrants of PolyMet will expire on March 31, 2019.
Glencore currently holds 92,836,072 Common Shares, representing approximately 28.82% of the issued and outstanding Common Shares. In addition, pursuant to the provisions of the exchange warrant issuable upon conversion of the convertible debentures, the number of Common Shares issuable to Glencore under the exchange warrant are 45,744,217 as at March 31, 2019, and which, if exercised, would result in Glencore holding 138,580,289 Common Shares representing approximately 37.67% of the outstanding Common Shares (assuming no other shares committed under existing compensation arrangements were issued by PolyMet).
Pursuant to the transaction described above, Glencore will acquire an aggregate of 6,458,001 New Purchase Warrants. Glencore currently holds 6,458,001 purchase warrants which will expire on March 31, 2019. Glencore holds an additional 7,680,626 warrants to purchase Common Shares, which will result in a total of 14,138,627 Common Shares being issuable to Glencore upon exercise of outstanding warrants (assuming expiry of 6,458,001 purchase warrants on March 31, 2019). Assuming exercise of all such purchase warrants and the exchange warrant, but excluding issuance of shares committed under existing compensation arrangements, Glencore would hold a total of 152,718,916 Common Shares (assuming expiry of 6,458,001 purchase warrants on March 31, 2019) representing approximately 39.97% of the Common Shares on a partially diluted basis (again assuming no other shares committed under existing compensation arrangements were issued by PolyMet).
Glencore’s decision to enter into the transactions described above was made in the context of its overall investment purposes. Glencore will continue to review its investment alternatives from time to time and may determine to increase or decrease its equity ownership in PolyMet through the acquisition or sale of additional outstanding Common Shares or other securities of PolyMet through open market or privately negotiated transactions in accordance with applicable securities laws.
The head office of PolyMet is located at 100 King Street West, Suite 5700, Toronto, Ontario, M5X 1C7.
The head office of Glencore is located at Baarermattstrasse 3, CH-6340 Baar, Switzerland.
This news release is being issued pursuant to National Instrument 62-103 and persons who wish to obtain a copy of the early warning report to be filed by Glencore in connection with this transaction may obtain a copy of such report from www.sedar.com or by contacting the persons named below.
For further information, please contact:
Investors
Martin Fewings
t: +41 41 709 2880
m: +41 79 737 5642
martin.fewings@glencore.com
Ash Lazenby
t: +41 41 709 2714
m: +41 79 543 3804
ash.lazenby@glencore.com
Media
Charles Watenphul
t: +41 41 709 24 62
m: +41 79 904 33 20
charles.watenphul@glencore.com
Notes for Editors
Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities. The Group's operations comprise around 150 mining and metallurgical sites, oil production assets and agricultural facilities.
With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.
Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, oil and food processing sectors. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 146,000 people, including contractors.
Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.