CALGARY, ALBERTA--(Marketwired - Feb. 2, 2017) - Quattro Exploration and Production Ltd. (TSX VENTURE:QXP) ("Quattro" or the "Company") is pleased to announce that it has signed a binding term sheet with Advisco Capital Corp. ("Advisco"), a New York-based private finance company, for the provision by Advisco of a secured revolving credit facility and secured term loan in the aggregate amount of CDN$15,000,000 (the "Proposed Loan"). The Proposed Loan has been negotiated with Advisco for the purpose of satisfying all amounts outstanding to the Company's senior secured lender, The Business Development Bank of Canada (the "Lender" or "BDC").
The Loan consists of (a) Secured Revolving Credit Facility in an amount not to exceed eighty percent (80%) of the Company's eligible accounts receivable, and sixty percent (60%) of the orderly liquidation value of eligible inventory on hand, and (b) a Secured Equipment Term Loan in an amount not to exceed sixty-five percent (65%) of the orderly liquidation value machinery, equipment, and other tangible property. The Proposed Loan bears interest at the rate of 1% per month, plus a 2% fee on the aggregate amount of Proposed Loan, payable at Closing. The Proposed Loan is for a one (1) year term, with an option to renew for an additional one (1) year term, provided the Company is not in default, at a cost of one percent (1.0%) of the gross amount of the Proposed Loan then outstanding.
Management of Quattro believes that the Proposed Loan, along with other negotiated non-core asset transactions will allow the Company to submit an equitable plan to its creditors and exit from its current Companies' Creditors Arrangement Act ("CCAA") process.
The Company also provides the following report on its CCAA process, the activities to date in regards to Quattro's Court of Queen's Bench of Alberta approved proposed sale and investor solicitation process ("SISP") that was initially launched on October 3rd 2016.
On January 5, 2017, the stay of proceedings under the CCAA for Quattro was extended to February 17, 2017. In connection with the stay, Quattro entered into a term sheet with its senior lender (the "Lender") whereby the Lender agreed to provide an additional $650,000 of debtor-in-possession financing to Quattro (the "Interim Financing"), bringing the total amount of debtor-in-possession financing under the CCAA to an aggregate $1,900,000 (the "Interim Financing Agreement"). The additional debtor-in-possession financing was approved by the Court pursuant to the CCAA process. The term of the additional loan was due to expire on March 20, 2017. $440,000 had been advanced by the Lender under the Interim Financing Agreement to date.
In the assessment of the Lender and the Monitor, the Proposed Loan and the additional efforts of the Company to satisfy the BDC debt did not meet the conditions of the Term Sheet and, in accordance with the terms of the Term Sheet, BDC was entitled to (a) reject the provision of the remaining Interim Financing and (b) make an application to the Court upon 24 hours' notice to Quattro and the Monitor, for the appointment of a Receiver. On January 31, 2017, Quattro was served such notice of an application by BDC to occur on February 2, 2017 at 9:30 a.m.
This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company's registered filings which are available at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.
Trading in the securities of Quattro Exploration and Production Ltd. should be considered highly speculative. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.