Timminco Limited
TSX : TIM

Timminco Limited

November 18, 2009 08:05 ET

Timminco Announces $10.6 Million in Financings to Support Its Turnaround Plan

TORONTO, ONTARIO--(Marketwire - Nov. 18, 2009) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Timminco Limited ("Timminco") (TSX:TIM) announced that AMG Advanced Metallurgical Group N.V. ("AMG") has agreed to loan US$5.0 million to Timminco's wholly-owned subsidiary, Bécancour Silicon Inc. ("Bécancour", and, collectively with Timminco, the "Company"), in exchange for a convertible senior subordinated promissory note (the "Convertible Note"). In addition, AMG has agreed to purchase by way of a private placement approximately 3.8 million common shares of Timminco (the "Common Shares"), representing approximately 2.6% of Timminco's outstanding share capital, at a price of $1.38 per share, for proceeds of approximately $5.3 million (US$5.0 million). The private placement of the Common Shares and the issuance of the Convertible Note are scheduled to close on or about November 23, 2009 and December 11, 2009, respectively, resulting in aggregate gross proceeds of approximately $10.6 million.

The proceeds from these financings will support the Company's turnaround plan, which is focused on generating positive cash flow through full production of silicon metal, as well as on repositioning its solar grade silicon activities in response to current market conditions. As a result of recent commitments for silicon metal deliveries in 2009 and 2010 from traditional customers, the Company has returned to full production of silicon metal. The Company continues to execute its plan to reduce operating costs through headcount reductions, raw material procurement programs and product mix decisions, to manage working capital requirements through reduction of inventory, and to conserve cash through limiting capital expenditures. On the closing of each financing, the proceeds will be paid to the Company's senior secured lender to reduce the outstanding balance, and thereby increase the availability, under the revolving credit facility. Such increased availability will be used for general corporate purposes, including additional working capital required to support full production of silicon metal and further development of the solar grade silicon product line.

The price per Common Share under the private placement is equal to the market value of a Timminco common share, as determined pursuant the Toronto Stock Exchange ("TSX") definitions, namely, the volume weighted average trading price of such shares on the last five trading days up to and including November 17, 2009, less a discount of 18%.

The Convertible Note will be a direct, unsecured obligation of Bécancour, subordinated to existing secured indebtedness of Bécancour but senior to all other unsecured obligations, and guaranteed by Timminco. The maturity date will be January 3, 2011 and the outstanding principal amount of the Convertible Note will bear interest at 12%, payable quarterly in arrears starting December 31, 2009. Up to the full principal amount will be convertible into common shares of Timminco, at AMG's option at any time, at a conversion price of $1.58 per share, subject to customary anti-dilution adjustments, with the US dollar amount converted into Canadian dollars at the Bank of Canada noon exchange rate on the date of notice of conversion. The conversion price of the Convertible Note is equal to the closing trading price of a common share on the TSX on November 17, 2009. The Convertible Note will also contain financial reporting covenants, a negative debt covenant, certain capital expenditure approval requirements and a cross-default provision in respect of existing secured indebtedness.

The pricing and other terms of the financings have been reviewed and approved by the designated independent members of the boards of directors of each of Timminco and AMG.

Following completion of the private placement of the Common Shares, AMG will own approximately 67.8 million common shares, representing approximately 46.0% of Timminco's outstanding share capital. Based on the current foreign exchange rate, the principal amount of the Convertible Note will be convertible by AMG into approximately 3.4 million common shares, representing approximately 2.2% of Timminco's outstanding share capital (following the private placement of the Common Shares). Assuming the full conversion of the Convertible Note on this basis, AMG would own approximately 71.1 million common shares, representing approximately 47.2% of Timminco's outstanding share capital.

Completion of each financing is subject to certain conditions, including receipt of all necessary regulatory approvals, including the approval of the TSX in respect of each financing, and execution of definitive documentation and approval of Timminco's senior secured lender in respect of the Convertible Note. All common shares issued to AMG pursuant to these financings will be subject to a four-month hold period, effective from the date of issuance of the Common Shares and the date of issuance of the Convertible Note.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the Common Shares or the Convertible Note in the United States. Neither the Common Shares nor the Convertible Note has been, nor will be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any other state securities laws and may not be offered or sold in the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Timminco

Timminco produces silicon metal for the chemical (silicones), aluminum and electronic / solar industries. Timminco also produces solar grade silicon, using its proprietary technology for purifying silicon metal, for the solar photovoltaic energy industry.

Cautionary Notes

This news release contains "forward-looking information", as such term is defined in applicable Canadian securities legislation, concerning the Company's future financial or operating performance and other statements that express management's expectations or estimates of future developments, circumstances or results. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "believes", "anticipates", "budget", "scheduled", "estimates", "forecasts", "intends", "plans" and variations of such words and phrases, or by statements that certain actions, events or results "may", "will", "could", "would" or "might" "be taken", "occur" or "be achieved". In this news release, such information includes statements regarding: the timing of closing of financings, the terms of the Convertible Note, the amount and use of proceeds of the financings, the Company's turnaround program, the production of silicon metal, the development of the solar grade silicon product line, the common shares issuable upon conversion of the Convertible Note, AMG's share ownership in Timminco. Forward-looking information is based on a number of assumptions and estimates that, while considered reasonable by management based on the business and markets in which the Company operates, are inherently subject to significant operational, economic and competitive uncertainties and contingencies. Timminco cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to: liquidity risk; global economic uncertainty; credit risk; pricing and availability of raw materials; silicon metal selling prices; customer concentration; power supply and electricity prices; production interruptions; transportation disruptions; limited history with solar grade silicon; solar grade silicon selling prices; customer commitments for solar grade silicon; solar grade silicon production costs; quality of solar grade silicon; producing ingots with the Company's solar grade silicon; protection of intellectual property rights; expansion of solar grade silicon production capacity; class action lawsuits; closure of former magnesium facilities; foreign exchange; investment in Applied Magnesium; interest rate risk; financing for capital expenditures; environmental liabilities; relationships with AMG; dependence upon key executives and employees; completion and integration of potential acquisitions, partnerships or joint ventures; risks with foreign operations and suppliers; environmental, health and safety laws and liabilities; intellectual property infringement claims; new regulatory requirements; labour disputes; and changes in tax laws. These factors are discussed in greater detail in Timminco's Annual Information Form for the year ended December 31, 2008, and in Timminco's most recent Management's Discussion and Analysis, each of which is available via the SEDAR website at www.sedar.com. Although Timminco has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this news release is made as of the date of this news release and Timminco disclaims any intention or obligation to update or revise such information, except as required by applicable law.

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Contact Information

  • Timminco Limited
    Robert Dietrich
    Executive Vice President - Finance and CFO
    (416) 364-5171
    (416) 364-3451 (FAX)
    Email: rdietrich@timminco.com
    or
    The Equicom Group Inc.
    Lawrence Chamberlain
    (416) 815-0700 ext. 257
    (416) 815-0080 (FAX)
    Email: lchamberlain@equicomgroup.com