RE:RE:Risk/Rewardsnowshoedb,
but they won't make the debt payment with cash flow.
Could you please explain to me how TMAC will not be able to meet the debt payments ?
According to the Q3 2019 Financial statements noted below, TMAC has to start repayment of the principal owing on the debt facility with US$2.5 million on a quarterly basis .
Perhaps I'm missing something else, or unless the covenants of minimum working capital balamce and unrestricted cash are violated, please show me where the problem is ?
Thanx in advance.
https://s1.q4cdn.com/893791552/files/doc_financials/2019/q3/TMAC-Financial-Statements-Q3-2019-_Filing-Copy.pdf Note 8. Deb Facility
TMAC entered into a credit agreement on July 23, 2015 with Sprott Private Resource Lending (Collector), LP and associated lenders (the “Lenders”) that was revised and amended during 2017 and again on April 30, 2019 (the “Credit Agreement”), providing TMAC with its debt facility, which has an outstanding principal balance of US$117.0 million and accrued interest of US$2.6 million at September 30, 2019 (the “Debt Facility”). The Debt Facility has a maturity date of December 31, 2020 and TMAC has the option to extend the term for six months to June 30, 2021 for a 1% extension fee payable on the then outstanding principal balance. Principal payments of US$2.5 million per quarter will commence on April 1, 2020 and continue during the extended term, if applicable.
A 2% repayment fee is payable on the repayment of any part of the principal balance as allowed under the amended terms, including the final principal payment on maturity but excluding scheduled quarterly principal payments.
The repayment fee is payable on the portion of the Debt Facility that is prepaid at the time of the repayment. On April 30, 2019, TMAC agreed to reprice the 1,900,000 warrants held by the Lenders that were issued during 2017 as compensation for deferring principal payments for the remainder of 2019 and for the first quarter of 2020. The warrants were repriced to $4.70 per share, a 25% premium on the five-day volume weighted share price ending April 30, 2019. The repriced warrants were determined to have an incremental fair value in excess of the original warrants of $1.4 million which was credited to the Statement of Changes in Shareholders’ Equity. Cash transaction costs, totalling $0.2 million, were incurred and capitalized to the Debt Facility.
The Debt Facility is secured by a first ranking charge over all of the Company’s present and subsequently acquired PP&E, and consumables and supplies subject to certain limited exceptions. The Credit Agreement does not require TMAC to complete any gold or foreign exchange hedging but permits a limited amount of hedging should TMAC determine it to be desirable to do so. The Credit Agreement has certain financial covenants including maintaining a $20.0 million minimum working capital balance, as defined, and a $10.0 million minimum unrestricted cash balance.
The Credit Agreement has certain other non-financial covenants including a requirement to, except under specified circumstances, maintain production throughput rates of 75% of the processing plant’s nominal capacity after January 31, 2018. As at September 30, 2019, the Company was in compliance with all financial and non-financial covenants of the Credit Agreement.
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