-- () -- -- ("MBAC" or the "Company")(TSX: MBC)(OTCQX: MBCFF) today announced that it has signed final agreements with its senior lenders to extend the maturity of its loans and defer related interest and principal repayments for a period of up to two years. The loans were originally incurred to build the Company's Itafós operations in and begin production of Single Super Phosphate ("SSP").
"Signing final agreements in connection with our debt extension with our senior lenders is important on a number of levels," said , President and CEO of MBAC. "We believe it demonstrates a strong level of support within the financial community for agriculture fundamentals as well as for our prospects for becoming a significant fertilizer producer. In addition, it enables management to focus more attention and effort on strategic initiatives that will help accelerate our production ramp up, optimize operations and identify strategic partners."
Consistent with terms disclosed in its press release of , MBAC will be permitted to defer the repayment of principal and interest amounts until under the final senior debt extension agreement. The senior debt extension also includes an extension of the current maturity dates of the existing working capital facilities previously provided by the senior lenders by up to four years. In addition, current maturity dates of the various loans have been extended as follows:
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Principal Amounts |
Amended Maturity |
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Original Maturity |
| New Tranche 1 - Project Finance |
US$142.4 million |
Nov 15, 2020 |
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Between Nov 2019 - Mar 2022 |
| New Tranche 2 - Project Finance |
US$19.2 million |
Mar 15, 2018 |
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Sep 15, 2016 |
| New Tranche 1 - Working capital loans |
US$19.1 million |
July 15, 2018 |
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Between Oct 2014 - Mar 2015 |
| New Tranche 2 - Working capital loans |
US$2.9 million |
Sep 15, 2016 |
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Jan 12, 2015 |
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Interest rates under the debt facilities will remain the same except for certain sub credits under the Itaú Loans and Votorantim Loans, which rates increased by 20 basis points. The Company currently has sufficient funds required to be maintained in the debt service reserve accounts, which will not be required to be replenished until 2016. In connection with the senior debt extension, the security package on the senior debt will be amended to add a first lien on the shares and mineral rights of MBAC Fertilizantes Ltda. (the subsidiary company that holds the in the State of Pará, ), which is in addition to the assets of the Itafós Operations that currently secure the senior debt.
MBAC continues to explore and implement initiatives to address its near-term liquidity requirements. In connection with the execution of the debt extension, the Company has received indications from its senior lenders for a commitment for additional working capital facilities totaling approximately (). These funds will be used primarily to purchase supplies, spare parts and phosphate rock (concentrate) from third parties. From this total, approximately have already been disbursed in October.
"The initiative to purchase third-party concentrate provides a number of short-term benefits," added Mr. Melcher. "In a period of intense ramp up, third-party concentrate allows us to optimize our industrial facilities, lower the consumption of certain consumables and take advantage of the advanced stage of the ramp-up of certain of our plants. We expect to be able to produce more granulated SSP immediately, improving our cash flow generation."
MBAC and its senior lenders continue to work in a cooperative manner to explore additional financing arrangements that will enable the Company to continue and accelerate the ramp-up at Itafós. In addition to the abovementioned working capital facilities, these financing arrangements include the sale of non-core assets as well as potential merger opportunities.
As part of the debt extension, the senior lenders have asked the Company to appoint at least one independent Director that is a Brazilian national with expertise in the mining and fertilizer markets in and to continue strengthening its corporate governance practices. This individual would also join the audit committee.
About MBAC
MBAC is focused on becoming a significant integrated producer of phosphate fertilizers and related products in the Brazilian market. MBAC has an experienced team with significant experience in the business of fertilizer operations, management, marketing and finance within . In , MBAC acquired Itafós Mineração Ltda., which consisted of a phosphate mine, a mill and plant and related infrastructure, all located in central . Since late 2012, such operations have been phased out as the Company completed the construction of the Itafós . The Santana Phosphate project is a high grade phosphate deposit located in close proximity to the largest fertilizer market of Mato Grosso State and animal feed market of Pará State. Further information on MBAC can be found on the Company's website at www.mbacfert.com and on SEDAR at www.sedar.com.