Buffalo Coal closes $4m bridge loan
TORONTO (miningweekly.com) – TSX- and JSE-listed miner Buffalo Coal has closed a $4-million loan facility with Resource Capital Fund (RCF), which the company plans to use to advance its continued restructuring efforts.
The company said that, despite the restructuring initiatives that had been implemented throughout 2013, 2014 and this year, the current market conditions and operational performance had required further restructuring and more capital over and above the funds already received from RCF.
The company, which held a 70% interest in Zinoju Coal, which, in turn, held the Magdalena bituminous mine and the Aviemore anthracite mine, in South Africa, had been hit hard by low coal prices over the past two years.
The additional funds would be used to improve operating efficiencies and support the group's working capital requirements during the restructuring period.
Under the terms of the latest loan, the $4-million would be advanced as a bridge loan and, subject to regulatory and shareholder approvals, would roll over into Buffalo's existing $25-million convertible loan with RCF under the same terms and conditions, except for proposed amendments to the interest rate and conversion price.
The existing convertible loan bore interest at a rate of 12% a year and was convertible into common shares at a price of C$0.14. Subject to receiving shareholder approval, the interest rate on the convertible loan would rise to 15% a year and the conversion price would be decreased to C$0.05, a 25% discount to the five-day volume-weighted average price as at January 30.
RCF owned 40.47-million Buffalo common shares, representing about 60.73% of the currently issued and outstanding stock. Its stake could increase to 95% if the principal and full-accrued interest was converted into stock.
Buffalo noted that no establishment fees would be charged on the bridge loan.
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