NorZinc Ltd NORZF

RE:RE:Thought Question

[JohnnyBurnette]

What to expect:

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Good morning Mr. Burnette.
 
In response to your questions:
 

1. No, RCF cannot seize the property through default. As outlined in NorZinc’s September 30^th press release, the company currently has $6.14 million including capitalized interest in debt which is outstanding. As is typical for companies at NorZinc’s stage of development, the debt is subject to conditions and covenants. NorZinc has been trying to satisfy certain of these covenants without success and believes there is a risk of failure. Failure to satisfy the debt covenants would give rise to an event of default and trigger an obligation to repay the facility. The company expects that it would be unable to satisfy such an obligation and that it could be exposed to creditor enforcement proceedings that may deprive, shareholders of any value of their investment.
2. Canadian corporations exposed to creditor enforcement proceedings generally file for creditor protection under Companies Creditors Arrangement Act (CCAA), afederal act that allows financially troubled corporations the opportunity to restructure their affairs. By allowing the company to restructure its financial affairs, through a formal plan of arrangement, the CCAA presents an opportunity for the company to avoid bankruptcy and allows the creditors to receive some form of payment for amounts owing to them by the company.
3. If a company decides to start CCAA proceedings, it typically begins negotiating with its creditors and stakeholders about how it intends to deal with the financial issues facing the company. In doing so, the company may sell assets, negotiate new credit terms, change its corporate structure and take other steps to allow it to move towards a viable business model, under the supervision of a court.

 
Please note that answers 2 and 3 are general responses to your questions rather than specific to NorZinc. The company will issue its management information circular with respect to the proposed transaction with RCF in the next few days which will provide more detail about the proposed transaction and the options available to NorZinc if the proposed plan of arrangement with RCF is not approved.
 
Best regards,
 
Foday
 
Foday Kanu
Director, Operations
Tel [phone] | Cell [phone]

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