"2.4 Commitment fee
In consideration of the Lender making the Loan available, the Borrower agrees that the Lender will have earned a make whole fee (the “Prepayment Fee”) (representing a genuine estimate of the loss of profit of the Lenders arising from such repayment or in the case of an Event of Default, accelerated or delayed payment, and not as a penalty) payable upon any voluntary loan repayment pursuant to Section 3.5 and as
otherwise set forth herein (representing a genuine estimate of the loss of profit of the Lenders arising from such repayment or in the case of an Event of Default, accelerated or delayed payment, and not as a penalty) equal to the product of (x) the amount being prepaid multiplied by (y) the interest rate exigeable pursuant to section 3.1 multiplied by (z) a fraction, the numerator of which is the number of days from (but excluding) the date of the related payment to and including the Maturity Date, and the denominator of which is 365. "
"3.5 Voluntary Prepayment
3.5.1 The Borrower may, at its option, prepay the Principal Amount, in whole or in part, together with accrued and unpaid interest on the Principal Amount being prepaid, on any Business Day, without premium or penalty but subject to payment in cash of the Exit Fee stipulated in Section 3.9 and the Prepayment Fee stipulated in Section 2.4."
In clear, if PAL(or a buyer) wants to repay in full the loan today it will have to pay 130M plus EXIT FEES (5% or about 6,5M) and Commitment fees (130M * 15% * 3,5Y/1Y or about 68M) or a total of 202,5M plus escrow fees. Lucky BAM is not adding penalty fees...;-)
Then PAL cannot get ride of BAM and I wonder if any partnership or buy out can be possible?
This is why BAM will loan more money to PAL to be able to have a mine running smoothly with a shaft 100% functional at 4,000 TPD.
The likelywood of default down the road 2014 has increased many folds but PAL can still survive somehow?...they said the shaft can hoist 8,000 TPD isn't it?
Bigblue, i've read this 3 times and still can't believe it. Too bad you didn't post this 6 months ago. Did someone have a gun to their head when this agreement was made?
This sounds fishy to me. The word "unconcionable" comes to mind.
"Did someone have a gun to their head when this agreement was made?"
Essentially yes. They were maybe weeks from BK.
They are in a similar situation now. BAM is the lender of last resort at who knows what price. I can;t see anyone else being a subordinate lender or buying equity or any white knight. BAM de facto owns PAL now, not the stockholders.