News releasehttps://www.newswire.ca/en/releases/archive/September2010/28/c6072.html
Jilin Jien Nickel Industry Co., Ltd. Announces Funding Terms of its Subsidiary, Jien Canada Mining Ltd.
PANSHI CITY, China, Sept. 28 /CNW/ - Jilin Jien Nickel Industry Co., Ltd. ("JJ"), announces that the Board of Directors of its indirect subsidiary, Jien CanadaMining Ltd. ("JCML"), has approved the funding offer made by JJ'saffiliate, Jien International Investment Ltd. ("JIL"), for the 2010Program and Budget of JCML.
The offer comprised the issue of up to $122,347,000 of Units, comprising 154,983,544 Preference Shares and 494 Voting Common Shares at an issue price of
.79 for each whole Preferred Share and $1 for each whole Voting Common Share.
JIL has offered to Goldbrook Ventures Inc. ("Goldbrook") (GKB-V), theminority shareholder of JCML, a 30 day opportunity to participate in the2010 funding of JCML on the same economic terms to a maximum of $30,586,775 (structured as Class A Voting Shares and Class B Non Voting Shares) to maintain their 25% interest of Class A Voting Shares.
The economic rights of the shares of JCML are set forth in the JointBid, Shareholder and Operating Agreement (the "JS&O Agreement")dated August 6, 2010, which is a publicly filed "material document" by Goldbrook on August 10, 2009 on the Canadian Securities Administrators' disclosure site www.sedar.com.
The 2010 funding offer by JIL represents approximately 20% of theeconomic equity of JCML in return for approximately 39% of the fundinginto the company. JCML's Board of Directors approved the share issuanceby majority vote, as specified by section 4.5 of the JS&O Agreementand section (f) of Schedule 1 thereto. JCML's Board of Directorsreceived an opinion from one of the world's top four largest accountingand professional advisory firms that the funding offer was fair andreasonable, from a financial point of view, to JCML, and an opinion fromone of Canada's largest law firms regarding legal compliance with theJS&O Agreement.
Following completion of the 2010 funding, and assuming Goldbrook doesnot participate in the funding, the share structure of JCML will be asfollows:
Share Class JIL Holdings Goldbrook Holdings----------- ------------ ------------------Class A Voting Shares 569 shares, issued for 25 shares, issued for$569 (95.79% of issued) $25 (4.39% of issued)Preferred Shares 391,877,358 shares, Nil(non voting) issued for$309,831,112.99 (100%of issued)Class B Shares Nil 4,750,000 shares,(non voting) issued for $3,950,000(100% of issued)
JJ plans to fund the remainder of the capital for the construction ofthe Nunavik Nickel Project and other requirements of JCML through acombination of project finance, and equity on similar terms. Based oncurrent expectations, additional equity of approximately $50 million to $400 millioncould be required, depending on the final project costs and theavailability of project finance. The terms of the additional equityfinancing for Programs and Budgets of JCML will be subject to approvalof the Board of JCML.
Goldbrook has not indicated whether they would participate to maintaintheir pro rata interest. Goldbrook has informed JJ and publiclyannounced that it takes the position the share issuance under JIL'soffer is not permitted under the JS&O Agreement without its consent.Goldbrook asserts that all funding must be only through PreferredShares (which would provide Goldbrook a "free carry" throughconstruction), and that it intends to commence court and/or arbitrationproceedings against JJ and others which may include, without limitingthe foregoing, claims for breach of contract, oppression and bad faith.JIL is of the view there is no limit against issuance of Voting Class AShares (and as such no "free carry" of Goldbrook) after funding of thetake-over bid of Canadian Royalties Inc., under the JS&O Agreement.JIL believes Goldbrook's position is without merit and it intends tovigorously defend against any legal action by Goldbrook.
Forward-looking Statement
This news release contains certain forward-looking statements orforward-looking information. These forward-looking statements aresubject to a variety of risks and uncertainties beyond the JJ's abilityand control, which could cause actual events or results to differmaterially from those anticipated in such forward-looking statements.Accordingly, all of the forward-looking information contained in thispress release is qualified by this cautionary statement and there can beno assurance that actual results or developments anticipated by the JJ,as expressed or implied by the forward-looking information, will berealized or, even if substantially realized, that they will have theexpected consequences to or effects on JJ or its business operations.All forward-looking statements speak only as of the date of this newsrelease and JJ does not undertake any obligation to update or publiclydisclose any revisions to such forward-looking statements to reflectevents, circumstances or changes in expectations after the date hereof,except as required by applicable securities law. Accordingly, readersshould not place undue reliance on forward-looking statements.
For further information: Shu Wu, Chief Executive Officer, JilinJien Nickel Industry Co., Ltd., Panshi City, Jilin Province, P.R.,China, 132311, Tel: 86-432-5610629