Cline Mining Corporation (CMK.TO) has entered into an agreement
with Marret Asset Management Inc. on behalf of certain funds
advised by it, providing for a financial restructuring of the
Company. Under the terms of the Restructuring, adjustments will be
made to the terms of the Company's outstanding 10% senior secured
bonds and, subject to TSX approval, the exercise price of the
company's outstanding share purchase warrants will be changed and
additional securities of the Company will be issued as described
The Bonds were issued under a trust indenture dated as of
December 13, 2011 between Cline, Computershare Trust Company of
Canada and Marret. In connection with the execution of the Trust
Indenture and the issuance of the Bonds, the Company issued 10
million warrants (the Existing Warrants) to certain bondholders.
Each Existing Warrant currently entitles the holder to purchase one
common share of the Company at a price of C$1.15 until May 14,
Ken Bates, the President and Chief Executive Officer of the
Company, commented: "This restructuring is an important step in the
Company's efforts in developing a long-term financial solution to
address the uncertainty regarding the magnitude and extent of the
downturn in the coal markets."
As previously announced on December 18, 2012, the Company was
unable to make the semi-annual payment of interest on the Bonds in
the amount of US$2,500,000 that was due on December 17, 2012. The
principal reason for Cline's present financial difficulties was the
suspension of operations at Cline's New Elk metallurgical coal mine
in Los Animas County, Colorado (announced by Cline on July 11,
Due to economic and recessionary pressures, demand for
production from the mine, which was the only revenue generating
mining asset of Cline, had dropped to such an extent that a
temporary suspension of production was necessary in order to manage
costs. The suspension is still in effect pending improved market
CMK is up half a cent to 8.5 cents late morning.
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