SOURCE: Gran Colombia Gold Corp.

Gran Colombia Gold Corp.

November 30, 2015 21:49 ET

Gran Colombia Gold Announces Further Changes to Restructuring Proposal for the Gold-Linked and Silver-Linked Notes and Release of Supplemental Materials

TORONTO, ON--(Marketwired - November 30, 2015) - Gran Colombia Gold Corp. (the "Company") (TSX: GCM) (OTC PINK: TPRFF) announced today that, further to the Company's press release dated November 25, 2015, it has made some additional changes to its comprehensive debt restructuring proposal after further discussion with its significant Gold and Silver Notes holders, including Lloyd I. Miller. The debt restructuring proposal that is to be implemented pursuant to a Plan of Arrangement (the "Revised Arrangement") under the Business Corporations Act (British Columbia) (the "BCA") now has the support of the Company's significant Gold and Silver Notes holders, including that of Mr. Miller, a significant Gold Notes holder who had previously indicated he was opposed the Company's initial proposal. The Company believes that this Revised Arrangement represents the best available solution to restructuring the Company's senior debt on consensual and advantageous terms, with the objective of addressing the Company's capital structure and liquidity requirements.

The Revised Arrangement will include:

  1. all accrued and unpaid interest on the 10% Secured Gold-Linked Notes due 2017 (the "Gold Notes") and 5.0% Senior Unsecured Silver-Linked Notes due 2018 (the "Silver Notes") will be added to the principal amount of each Gold Note and Silver Note;
  2. the aggregate principal amount of the Gold Notes will also include a restructuring fee in the amount of US$2 million (the "Restructuring Fee");
  3. the exchange of the principal amount of Gold Notes (including all accrued and unpaid interest plus the Restructuring Fee) for the same amount of PIK-Toggle Senior Secured Convertible Debentures due 2020 (the "2020 Debentures") (the "Gold Notes Exchange");
  4. the exchange of the principal amount of the Silver Notes for the same amount of PIK-Toggle Senior Unsecured Convertible Debentures due 2018 (the "2018 Debentures") (the "Silver Notes Exchange"); and
  5. the option for holders of each of the Gold and Silver Notes to convert up to 100% of their respective notes (including all accrued and unpaid interest and the Restructuring Fee for Gold Notes only) on the effective date of the Revised Arrangement into common shares of the Company at a conversion price of US$0.13 per common share, approximately equal to C$0.17, the volume weighted average price of the Company's common shares for the 20 consecutive trading days ended November 27, 2015, based on the closing Bank of Canada exchange rate on November 27, 2015 (the "Elected Common Shares") in lieu of debentures. The 2020 Debentures and 2018 Debentures have the option to convert at any time during their term at the higher conversion prices of US$0.20 per common share and US$0.25 per common, respectively, as further described herein.

If the Revised Arrangement becomes impractical under the BCA, the Company may instead complete a Plan of Arrangement or Compromise under the Canadian Companies' Creditors Arrangement Act.

Revised materials, including a supplemental management information circular (the "Supplemental Circular"), revised proxies and new letter of transmittal and election forms with respect to the Elected Common Shares, will be mailed to holders of the Gold Notes, Silver Notes and common shares. The Supplemental Circular and other materials will be available today on the Company's website at www.grancolombiagold.com and its profile on SEDAR at www.sedar.com.The special meetings of the holders of the Gold Notes, Silver Notes and common shareholders will be held on Tuesday, December 22, 2015 at the times indicated in the Supplemental Circular. The record date of October 26, 2015 for the meetings remains unchanged.

Key terms of the Gold Notes Exchange and 2020 Debentures under the Revised Arrangement include:

  1. The maximum aggregate principal amount of the 2020 Debentures shall be the sum of US$100 million plus the accrued and unpaid interest on the Gold Notes that is added to the principal amount of Gold Notes under the Revised Arrangement, plus the Restructuring Fee, all as rounded down to the nearest whole US$1.00. The ultimate aggregate principal of the 2020 Debentures will depend on the number of Elected Common Shares issued in exchange for Gold Notes pursuant to the Revised Arrangement.
  2. Holders will have the option to convert some or all of their Gold Notes to Elected Common Shares on the effective date of the Revised Arrangement at a conversion price of US$0.13 per Elected Common Share, representing approximately 7,692 common shares for each US$1,000 Gold Note.
  3. The 2020 Debentures will be issuable only in denominations of US$1.00 and integral multiples thereof.
  4. The 2020 Debentures, at the option of the Company, will bear either (a) cash interest at a rate of 6.00% per annum, or (b) pay-in-kind (PIK) interest at a rate of 9.00% per annum, in either case payable monthly in arrears on the last business day of each month, commencing in the first full calendar month following the Exchange Date. The first payment will include interest payable from the Exchange Date. For further certainty, the Company will make a cash interest payment unless it elects to make a PIK interest payment in respect of any monthly payment.
  5. The maturity date of the 2020 Debentures will be January 2, 2020.
  6. The 2020 Debentures will be convertible, at the option of the holder at any time prior to the close of business on the earlier of the maturity date and the last business day immediately preceding the date fixed for redemption (the "Conversion Date"), at a conversion price of US$0.20 per common share (the "2020 Conversion Price") (before giving effect to any PIK interest or payment of interest in shares, this represents a conversion rate of 5,000 common shares per US$1,000 principal amount of 2020 Debentures). The 2020 Conversion Price shall be subject to standard provisions providing for adjustments upon the occurrence of certain corporate events.
  7. The 2020 Debentures may be redeemed for cash in whole or in part from time to time at the option of the Company on not more than 60 days and not less than 30 days prior notice, at a price equal to their principal amount (including any PIK 2020 Debentures issued) plus accrued and unpaid interest.
  8. On maturity, the repayment obligations will be settled in cash as set out in the amended and restated Gold Notes indenture.
  9. The 2020 Debentures will be senior secured indebtedness of the Company. The ranking of, and security for, the 2020 Debentures are as set out in the Gold Notes indenture. The covenants and events of default are also as set out in the Gold Notes indenture.
  10. In addition to the right of the Company to redeem the 2020 Debentures, as set out above, the Company will also have the right at any time to purchase the 2020 Debentures in the market, by tender, or by private contract, at any price, which, for greater certainty, may be below par.

In addition to the above, the Company covenants that a minimum of 75% of its Excess Cash Flow, as defined below, will be paid into a sinking fund, which will be applied towards repayment, repurchase (in the market, by tender, or by private contract, at any price, which, for greater certainty, may be below par) or other redemption, as the Company elects, of the 2020 Debentures. "Excess Cash Flow" means with respect to any fiscal quarter of the Company, consolidated EBITDA for such fiscal quarter less capital, development and exploration expenditures, cash payments of principal and interest on debt, changes in non-cash working capital items and payment of taxes and certain other existing financial obligations of the Company.

Key terms of the Silver Notes Exchange and 2018 Debentures under the Revised Arrangement include:

  1. The maximum aggregate principal amount of the 2018 Debentures shall be the sum of US$78,632,000 plus the accrued and unpaid interest on the Silver Notes that is added to the principal amount of Silver Notes under the Revised Arrangement, rounded down to the nearest whole US$1.00. The ultimate aggregate principal of the 2018 Debentures will depend on the number of Elected Common Shares issued in exchange for Silver Notes pursuant to the Revised Arrangement.
  2. Holders will have the option to convert some or all of their Silver Notes to Elected Common Shares on the effective date of the Revised Arrangement at a conversion price of US$0.13 per Elected Common Share, representing approximately 7,692 common shares for each US$1,000 Silver Note.
  3. The 2018 Debentures will be issuable only in denominations of US$1.00 and integral multiples thereof.
  4. The 2018 Debentures, at the option of the Company, will bear either (a) cash interest at a rate of 1.00% per annum, or (b) PIK interest at a rate of 2.00% per annum, in either case payable monthly in arrears on the last business day of each month, commencing in the first full calendar month following the Exchange Date. The first payment will include interest payable from the Exchange Date. For further certainty, the Company will make a cash interest payment unless it elects to make a PIK interest payment in respect of any monthly payment.
  5. The maturity date of the 2018 Debentures will be August 11, 2018.
  6. The 2018 Debentures will be convertible, at the option of the holder at any time prior to the close of business on the earlier of the maturity date and the Conversion Date, at a conversion price of US$0.25 per common share (the "2018 Conversion Price") (before giving effect to any PIK interest or payment of interest in shares, this represents a conversion rate of 4,000 common shares per US$1,000 principal amount of 2018 Debentures). The 2018 Conversion Price shall be subject to standard provisions providing for adjustments upon the occurrence of certain corporate events.
  7. The 2018 Debentures may be redeemed for cash in whole or in part from time to time at the option of the Company on not more than 60 days and not less than 30 days prior notice, at a price equal to their principal amount (including any PIK 2018 Debentures issued) plus accrued and unpaid interest.
  8. On maturity, provided that no event of default shall have occurred and be continuing, the Company may, at its option, on not less than 30 days prior notice and subject to regulatory approval, elect to satisfy its obligation to repay principal (including any PIK 2018 Debentures issued) plus accrued and unpaid interest amounts of the 2018 Debentures by issuing and delivering that number of common shares obtained by dividing the principal plus accrued and unpaid interest amounts of the outstanding 2018 Debentures by 95% of the volume weighted average trading price of the common shares on the TSX for the 20 consecutive trading days ending five trading days preceding the maturity date.
  9. The 2018 Debentures will be unsecured indebtedness of the Company. The covenants and events of default are also as set out in the Silver Notes indenture.
  10. In addition to the right of the Company to redeem the 2018 Debentures, as set out above, the Company will also have the right at any time to purchase the 2018 Debentures in the market, by tender, or by private contract, at any price, which, for greater certainty, may be below par.

Voting Information for Securityholders

The Company is in the process of mailing its Supplemental Circular and other materials regarding the postponed meetings to holders of the Gold Notes, Silver Notes and common shares. The forms of proxies or voting instruction forms that were previously provided with the original circular for use at the postponed meetings remain valid. Securityholders who have voted on the Company's original debt restructuring proposal as set out in its October 27, 2015 management information circular will not need to take any further action in order to have their votes counted in the same manner indicated by such securityholder in respect of the Revised Arrangement. If a securityholder has already voted and wishes to change their vote, please refer to the the proxy revocation procedures set forth in the form of proxy and Supplemental Circular or simply submit a later-dated form of proxy or voting instruction form.

Holders of the Gold Notes, Silver Notes or common shares who have not yet voted or who voted against the Company's original debt restructuring proposal should refer to the supplemental materials once received, and are encouraged to vote as soon as practicable, and in any event, no later than the proxy cut off on Friday, December 18, 2015.

In connection with the Revised Arrangement, a new letter of transmittal and election form is being mailed together with this Supplemental Circular, to each person who was a registered noteholder on the record date. In order to receive any Elected Common Shares, registered noteholders must provide a properly completed letter of transmittal and election form to Equity Financial Trust Company (the depositary) prior to 5:00 p.m. (Toronto time) on January 13, 2016.

For further information or assistance on completing, submitting or revoking your proxy, please contact the Company's proxy advisory and solicitation agent, Kingsdale Shareholder Services, at 1-866-581-0508 or by email at contactus@kingsdaleshareholder.com.

The Revised Arrangement is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals including the receipt of approval by the Toronto Stock Exchange. Terms outlined herein may be amended as required to receive such approvals.

About Gran Colombia Gold Corp.

Gran Colombia is a Canadian-based gold and silver exploration, development and production company with its primary focus in Colombia. Gran Colombia is currently the largest underground gold and silver producer in Colombia with several underground mines in operation at its Segovia and Marmato Operations. Gran Colombia is currently advancing a project to develop a modern, large-scale, gold and silver mine at its Segovia operations.

Additional information on Gran Colombia can be found on its website at www.grancolombiagold.com and by reviewing its profile on SEDAR at www.sedar.com.

Cautionary Statement on Forward-Looking Information:

This news release contains "forward-looking information", which may include, but is not limited to, the proposed terms of the debt restructuring proposal, the Revised Arrangement and the expected timing for the meetings of the Gold Notes, the Silver Notes and the Company's common shares. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Gran Colombia to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those anticipated in these forward-looking statements are described under the caption "Risk Factors" in the Company's Annual Information Form dated as of March 31, 2015, which is available for view on SEDAR at www.sedar.com. Forward-looking statements contained herein are made as of the date of this press release and Gran Colombia disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

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