TORONTO, ONTARIO--(Marketwired - Nov 21, 2013) - MagIndustries Corp. (MAA.TO) (the "Company" or "MagIndustries") announced today that it has received a Letter of Commitment (the "LOC") from the China Development Bank ("CDB") related to the majority of the funding required to complete the construction of its proposed 1.2 million tonnes per annum Mengo Potash Project in the Republic of Congo (the "Project"). The LOC is a conditional commitment by CDB in favour of the borrower of record, MagMinerals Potash Corp. (the "Borrower"), a wholly owned subsidiary of the Company, to arrange a syndication loan (the "Loan") for an amount up to US$740 million with a term of 12 years in connection with the Project, in which CDB will provide up to US$370 million as the lead arranger.
In addition to the terms in the LOC itself, the LOC is subject to the completion of a definitive loan agreement between CDB and the Borrower and to various conditions, principally:
- Completion of all required and relevant approvals for the Project;
- Compliance with all local and international law applicable to the Project;
- Engaging legal counsel and consultants by CDB at the cost of the Borrower (principally for satisfaction of items (i) and (ii) above, any other legal opinions required by CDB
- Reimbursement of CDB's reasonable out of pocket expenses and deduction of taxes, fees, or governmental charges associated with the loan
The LOC is outstanding for 12 months from today's date unless terminated by mutual agreement or at CDB's sole discretion for failure of the Borrower to meet the above conditions. The detailed terms of the Loan will be disclosed by the Company if and when the definitive loan agreement is executed.
Mr Longbo CHEN, CEO of MagIndustries stated that "We are very pleased to have received the LOC from CDB. It has taken a year and half of dedicated effort by our financial and legal team with support from our controlling shareholder Evergreen Holding Group. This is a major step forward for the funding of the Mengo Project and we anticipate being able to complete the negotiation of the definitive documentation in respect of the Loan within the first half of 2014. In the meantime with the support of our contractors we remain largely on track with our time line for the Project, with construction now underway.
As recently published in the Updated 43-101 Technical Report on the Mengo Project (see the Company's press release of November 14, 2013), the estimated capital investment required to build the Project is approximately US1.3 billion. The Company is currently progressing well in negotiations to shift capital cost for new port facilities, included in the US$1.3 billion, into a separate Build Own Transfer agreement. Of the remaining capital requirement, we anticipate that US$740 will be funded by the Loan, the balance has been largely funded by MagIndustries historic investment in the Project, subject to review by CDB, which may result in an unfunded equity gap, for which the Company has identified several potential strategic partners.
About MagIndustries Corp.
MagIndustries is a Canadian company whose common shares are listed on the TSX and trade in Canadian currency under the symbol "MAA". The Company has 755,942,674 common shares outstanding. MagIndustries is focused on the development of its potash assets in the Republic of Congo. More information on the Company is available on its website, www.magindustries.com.
Except for historical information, this press release contains forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, country policy and political risks, currency exchange risk, changing market conditions, force majeure events, and other risks detailed from time-to-time in the Company's ongoing filings. Specifically with respect to this press release, a project finance loan is necessary for the Project to proceed and there is a risk the Company and its prospective lender may not agree on final terms and conditions in the definitive loan documentation. Additionally, approval for a project finance facility, when or if finalized, may not be in a timeframe that allows the Project to proceed on the expected schedule. In the event of a failure to meet the conditions of the LOC, significant changes in the Project or material adverse events as determined by CDB at its sole discretion which would negatively impact the Borrower's ability to service its loan obligations, CDB has the right to terminate the LOC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under the Company's continuous disclosure obligations. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not occur.
Cusip: 55917T 102
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