American Bonanza Gold Corp ABGFF

NEW OUT

[herry]

Kerr Mines to merge with American Bonanza 2014-01-23 13:05 ET - News Release See News Release (C-KER) Kerr Mines Inc Mr. Greg Gibson of Kerr reports KERR MINES INC. ENTERS INTO LETTER AGREEMENT WITH AMERICAN BONANZA GOLD CORP. Kerr Mines Inc. has entered into a letter agreement with American Bonanza Gold Corp. pursuant to which Kerr Mines and American Bonanza will merge their respective businesses pursuant to an amalgamation or plan of arrangement. Under the terms of the letter agreement, each American Bonanza shareholder will be entitled to receive approximately 0.53 of a common share of Kerr Mines for every one common share of American Bonanza held by such American Bonanza shareholder, subject to adjustment. Currently, Kerr Mines has approximately 392 million Kerr Mines shares outstanding and American Bonanza has approximately 234 million American Bonanza shares outstanding. In addition, American Bonanza may issue up to an additional 337 million American Bonanza shares prior to closing of the transaction to settle certain outstanding unsecured indebtedness. Immediately following the transaction, the board of Kerr Mines will be reconstituted to consist of five nominees of Kerr Mines, and two nominees of American Bonanza. In addition, each holder of the outstanding stock options and common share purchase warrants of American Bonanza will receive such number of replacement options or warrants of Kerr Mines equal to the product of the number of American Bonanza shares based upon the exchange ratio. Upon execution and subject to the terms of the letter of intent, Kerr Mines has advanced $1-million to American Bonanza at an annual interest rate equal to the prime rate established by Royal Bank of Canada plus 1 per cent, to satisfy certain amounts and payables amounts owing by American Bonanza. The loan and a break fee of $500,000 are payable by American Bonanza in the event of termination of the transaction in certain circumstances. Completion of the transaction will be subject to certain standard conditions including, without limitation: (a) execution of a definitive agreement by Feb. 15, 2014; (b) satisfactory due diligence; (c) receipt of all necessary consents, waivers, permits, exemptions, orders and approvals, including court approval of the plan of arrangement and the approval of the Toronto Stock Exchange; (d) receipt of a fairness opinion concerning the transaction by American Bonanza; and (e) if required, receipt of shareholder approval of the transaction by the American Bonanza and Kerr Mines shareholders, as applicable. We seek Safe Harbor.