MBAC FERTILIZER CORP.

TSX : MBC
OTCQX : MBCFF


MBAC FERTILIZER CORP.

August 26, 2014 17:01 ET

MBAC Receives Final Approval for Senior Debt Extension and Executes US$18.2 Million Working Capital Facility

TORONTO, ONTARIO--(Marketwired - Aug. 26, 2014) - MBAC Fertilizer Corp. ("MBAC" or the "Company") (TSX:MBC)(OTCQX:MBCFF) today announced that it has executed the previously announced R$40 million (approximately US$18.2 million) working capital facility with Banco Santander Brasil S.A. (the "Working Capital Facility") and has received final approval for a 24 month debt extension from all of its senior lenders (the "Senior Debt Re-Profiling"). In addition, the Company has received access to debt service reserve accounts in the amount of approximately US$1.1 million and a waiver from having to replenish these accounts until March 2016.

Under the terms of the final approval for the Senior Debt Re-Profiling, the Company will be permitted to defer the repayment of principal and interest until September 15, 2016 and the current maturity dates of the various loans will be extended as follows:

Principal Amounts Amended Maturity Original Maturity
New Tranche 1 - Project Finance US$149.2 million Nov 15, 2020 Between Nov 2019 - Mar 2022
New Tranche 2 - Project Finance US$20.7 million Mar 15, 2018 Sep 15, 2016
Working capital loans US$20.0 million July 15, 2018 Between Oct 2014 - Mar 2015

Interest rates under the debt facilities will remain the same except for certain sub credits under the Itaú Loans and Votorantim Loans, which rates increased by 20 basis points. The Senior Debt Re-Profiling also includes an extension of the current maturity dates of the existing working capital facilities previously provided by the senior lenders by up to four years. In connection with the Senior Debt Re-Profiling, the security package on the senior debt will be amended to add a first lien on the shares and mineral rights of MBAC Fertilizantes Ltda. (the subsidiary company that holds the Santana Phosphate Project in the State of Pará, Brazil), which is in addition to the assets of the Itafós' Arraias SSP Operations ("Itafos") that currently secure the senior debt. The Company expects to execute definitive documentation to formalize the Senior Debt Re-Profiling, which shall be subject to certain conditions, within the next 30 days.

Concurrent with the final approval of the Senior Debt Re-Profiling, MBAC entered into the Working Capital Facility of R$40 million (approximately US$18.2 million) with Banco Santander Brasil S.A. The Working Capital Facility has an interest rate of LIBOR+3.473% per annum and is secured by a second lien on the mineral rights and assets of Itafós and by a first lien on the shares and mineral rights of Araxá Mineração e Metalurgia Ltda. (the subsidiary company that holds the Company's Rare Earths/Phosphate Araxá Project in the State of Minas Gerais, Brazil).

"These two accomplishments represent major steps toward addressing our liquidity challenges, the main objective of the strategic action plan we unveiled earlier this year," said Mr. Cristiano Melcher. "Our primary focus will be on continuing to evaluate all strategic options, including pursuing additional financing options, ramping up production, streamlining costs and positioning MBAC as the phosphate supplier of choice in Brazil's agricultural heartland."

About MBAC

MBAC is focused on becoming a significant integrated producer of phosphate and potash fertilizers and related products in the Brazilian market. MBAC has an experienced team with significant experience in the business of fertilizer operations, management, marketing and finance within Brazil. In October 2008, MBAC acquired Itafós Mineração Ltda., which consisted of a phosphate mine, a mill and plant and related infrastructure, all located in central Brazil. Since late 2012, such operations have been phased out as the Company completed the construction of the Itafós Arraias SSP Project. The Santana Phosphate project is a high grade phosphate deposit located in close proximity to the largest fertilizer market of Mato Grosso State and animal feed market of Pará State. Further information on MBAC can be found on the Company's website at www.mbacfert.com and on SEDAR at www.sedar.com.

FORWARD LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements related to activities, events or developments that the Company expects or anticipates will or may occur in the future, including, without limitation, statements related to the Company's business strategy, objectives and goals; the expectation of Itafós becoming a significant integrated producer of phosphate and potash fertilizers and related products in the Brazilian and Latin American markets; the expectation that the definitive documentation in connection with the Senior Debt Re-profiling will be executed within the next 30 days; the Company evaluating all strategic options including pursuing additional financing options; the expectation that it will ramp up operations and reach commercial production of 25,000 tonnes of SSP per month by the end of the current fiscal year; that costs will be streamlined and that MBAC will be positioned as the phosphate supplier of choice in the Brazil's agricultural heartland . Forward-looking statements are often identified by the use of words such as "plans", "planning", "planned", "expects" or "looking forward", "does not expect", "continues", "scheduled", "estimates", "forecasts", "intends", "potential", "anticipates", "does not anticipate", or "belief", or describes a "goal", or variation 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 are based on a number of factors and assumptions made by management and considered reasonable at the time such statements are made, and forward-looking statements involve known and unknown risks, uncertainties and other factors may cause the actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such risk factors include, among others, the Company not being successful at becoming a significant integrated producer of phosphate and potash fertilizers and related products in the Brazilian and Latin American markets; the risk that definitive documentation in connection with the Senior Debt Re-profiling will not be executed within the next 30
days; the risk that that the Working Capital Facility may not be fully disbursed; the risk that the Company may not be successful in securing additional financing; the risk of not completing the ramp up of operations and reaching commercial production of 25,000 tonnes of SSP per month by the end of the current fiscal year; the risk that costs may not be streamlined and that MBAC may not be positioned as the phosphate supplier of choice in the Brazil's agricultural heartland, as well as those factors disclosed in the Company's current Annual Information Form and Management's Discussion and Analysis, as well as other public disclosure documents, available on SEDAR at www.sedar.com. Although MBAC has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate. The forward-looking statements contained herein are presented for the purposes of assisting investors in understanding the Company's plan, objectives and goals and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking statements.

Shares Outstanding: 181,607,492

Fully Diluted: 230,015,572

Contact Information