Midwest Vanadium agrees to $29.7 million facility, forbearance deal

By Caroline Salls

Pittsburgh, March 10 - Atlantic Ltd. wholly owned subsidiary Midwest Vanadium Pty Ltd. signed a new $29.7 million funding facility with Atlantic's largest shareholder, Droxford International Ltd., according to a news release.

In addition to the new funding facility, Midwest Vanadium agreed to a standstill arrangement with a majority of the holders of its senior secured notes that provides forbearance and support.

Atlantic said it expects to receive the balance of the $16.7 million first progress payment on its insurance claim relating to the fire in Midwest Vanadium's beneficiation plant at Windimurra in the next few business days.

As previously reported, the company believes the combined material damage and business interruption components of its insurance claim could be in the order of $100 million.

To date, Atlantic said it has received $11.58 million of the total first progress payment of $16.7 million.

Together, Atlantic said the Droxford funding facility, the forbearance and support agreement and the insurance claim progress payment provide a sound funding basis to take the company's Windimurra project forward during the rebuild of the beneficiation plant and flexibility to negotiate a longer term restructuring of the company.

New facility

According to the release, the $29.7 million Droxford funding facility is new secured debt with a coupon of 17%, maturing on Aug. 15.

Atlantic said the size of the facility was reduced slightly from the previously proposed $32.6 million to reflect the earlier-than-expected first progress payment on the insurance claim.

Among other conditions, drawdown of the facility is subject to a consent solicitation process among Midwest Vanadium's senior secured notes to implement the proposed indenture and related document amendments.

The consent process will begin shortly and is expected to be completed within two to three weeks, the release said.

Under the new funding facility, Droxford will also become a new beneficiary under the security trust deed governing the security currently held over all of the assets of Midwest Vanadium by the senior secured notes.

Standstill details

Meanwhile, under the standstill arrangement, the notes group agreed to forbear Midwest Vanadium's default for failure to deposit $5 million in an interest reserve account (IRA) on Feb. 3, as well as its failure to pay the Feb. 15 interest payment on its senior secured notes.

Atlantic said the forbearance applies until Aug. 15 and is subject to there being no further events of default under Midwest Vanadium's indenture or the new funding facility during the term of the forbearance agreement.

The company said the notes group also agreed to vote in favor of the technical indenture and related document amendments to allow the new $29.7 million secured funding facility to be provided by Droxford.

Under the forbearance and support agreement, each holder in the notes group also agreed to use their good faith efforts to negotiate and execute a definitive agreement with Midwest Vanadium to complete a restructuring during the forbearance period.

The company said it requests that a voluntary suspension in the trading of its securities remain in place.

Midwest Vanadium is a Perth, Australia-based mining company.

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