Cline Mining Corporation

Cline Mining Corporation

December 03, 2014 12:49 ET

Cline Announces Recapitalization Transaction

TORONTO, ONTARIO--(Marketwired - Dec. 3, 2014) - Cline Mining Corporation ("Cline" or the "Company") announced today a proposed recapitalization transaction (the "Recapitalization") with the following key elements:

  • A reduction of over $55 million in secured debt issued by Cline.
  • The compromise or arrangement of certain unsecured debts of Cline.
  • A change of control of the equity of Cline.

The terms of the Recapitalization have been negotiated with Marret Asset Management Inc., which has investment discretion in respect of all of the secured notes issued by the Company. The secured notes represent in excess of 95% of the outstanding debt of Cline and its subsidiaries. The Recapitalization comes after an extended period of forbearance by Cline's secured noteholders, whose debts matured on June 15, 2014 and remain unpaid.

"The recapitalization transaction is a positive development for Cline as we seek to further streamline our projects and capital structure to better withstand prolonged commodity price weakness," said Matt Goldfarb, Chief Restructuring Officer and acting Chief Executive Officer of Cline. "It will allow us to stabilize our financial situation while continuing to pursue opportunities to optimize the Company and work toward resuming full-scale operations at our New Elk coal mine pending improvements in the seaborne coking coal market."

Cline will seek to implement the Recapitalization through a court-supervised process. To that end, Cline and its wholly-owned subsidiaries, New Elk Coal Company LLC ("New Elk") and North Central Energy Company ("North Central" and together with Cline and New Elk, the "Cline Group"), have obtained an Order from the Ontario Superior Court of Justice (Commercial List) (the "Court") initiating proceedings under the Companies' Creditors Arrangement Act (the "CCAA").

FTI Consulting Canada Inc. has been appointed by the Court as the CCAA monitor (the "Monitor") and foreign representative with respect to the Cline Group in the CCAA proceedings. It is anticipated that the Monitor will file a petition under Chapter 15, Title 11 of the United States Code to obtain a stay of proceedings and recognition of the CCAA proceedings and the Recapitalization in the United States.

If implemented, the Recapitalization will result in the cancellation of the existing common shares of Cline and the issuance of new common shares to the holders of the secured notes issued by Cline. Cline intends to apply to cease to be a reporting issuer upon completion of the Recapitalization.

The Cline Group is seeking to complete the Recapitalization within 60 to 90 days. This process is not expected to affect the Cline Group's day-to-day business. The Cline Group has access to the funding necessary to continue without disruption while the Recapitalization is being pursued. The Cline Group intends to continue to pay employees for services rendered during the CCAA proceedings and intends to pay its suppliers for goods and services purchased by the Cline Group following the CCAA filing.

The Cline Group expects to hold meetings for its creditors on a date to be set by the Court for purposes of voting on a CCAA plan of compromise and arrangement that, if approved and implemented, will give effect to the Recapitalization. Details of the Recapitalization and the Plan will be provided in an information statement to be distributed to affected creditors.

The implementation of the Recapitalization is conditional upon, among other things, receiving the requisite creditor approvals under the CCAA, Court approval in the CCAA proceedings and recognition in the Chapter 15 proceedings. The hearing for the approval of the Plan will occur on a date to be set by the Court.

For further information about the Recapitalization, please refer to the Monitor's website at the following web address: http://cfcanada.fticonsulting.com/cline.

About Cline

Cline is a Canadian mining company headquartered in Toronto, Ontario with resource development interests in Canada, the United States and Madagascar. For further details on Cline, please refer to Cline's web site (www.clinemining.com) and Cline's Canadian regulatory filings on SEDAR at www.sedar.com.

Forward-Looking Information

This press release contains forward-looking statements (including "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995) relating to, among other things, the proposed Recapitalization and the Company's future financial condition. Generally, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Such statements are based on assumptions, estimates, forecasts and projections made in light of the trends, conditions and expected developments that are considered to be relevant and reasonable in the circumstances at the date that such statements are made. Forward-looking statements are not guarantees of future performance and such information is inherently subject to known and unknown risks, uncertainties and other factors that are difficult to predict and may be beyond the control of the Company. A number of factors and assumptions may cause actual results, level of activity, performance or outcomes of the Company to be materially different from those expressed or implied by such forward-looking statements including, without limitation, obtaining necessary creditor approvals and court approvals of the Recapitalization and otherwise satisfying the conditions precedent to the implementation of the Recapitalization. There can be no guarantee the Company will complete the Recapitalization. Consequently, undue reliance should not be placed on such forward-looking statements. In addition, all forward-looking statements in this press release are given as of the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, save and except as may be required by applicable securities laws.

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