SPOKANE, WASHINGTON -
February 17, 2009 - Minera Andes Inc.. (the "Corporation" or
"Minera Andes", TSX:MAI and US OTC:MNEAF) announced today that
it has agreed with Robert R. McEwen, a director and existing shareholder
of the Corporation, to amend the terms of the private placement with Mr.
McEwen, as first announced on February 9, 2009.
Mr. McEwen has agreed
to complete the private placement in a two step transaction designed to
alleviate the Corporation's immediate financial pressures. First, Mr.
McEwen will purchase 18,299,970 common shares of the Corporation at a
price of C$1.00 per share for proceeds to the Corporation of C$18,299,970
which will be used, as to $US11.3 million, to satisfy the cash call made
in respect of the Corporation's 49% interest in the San Jos� Project
("Step 1"). Second, Mr. McEwen will assume the bank loan owing
by the Corporation to Macquarie Bank Limited ("Macquarie") in
the aggregate principal amount of US$17.5 million ("Step 2"). The
subscription price of C$1.00 per share represents a 108% premium to the
closing price of Minera Andes' common shares on the TSX on February 13,
2009 of C$0.48 per share.
In order to initiate
the transfer of funds to Argentina for the cash call by February 20,
2009, Step 1 is to be completed by the close of business in Toronto on
February 18, 2009.
The Step 2 assignment
of the Corporation's bank loan from Macquarie to Mr. McEwen, is subject
to Mr. McEwen reaching agreement with Macquarie, and Macquarie has
already indicated its agreement to this. The security for the bank loan
also has to be transferred to Mr. McEwen, and Step 2 requires Hochschild
Mining plc ("Hochschild") consenting to the transfer of the
security in the San Jos� Project from Macquarie to Mr. McEwen. If
agreement is not reached with either or both of Macquarie and Hochschild
by the close of business (Toronto time) on February 25, 2009, Mr. McEwen
will purchase a total of 21,700,030 common shares of the Corporation at a
price of C$1.00 per share and the Corporation will use the proceeds
thereof to repay Macquarie directly.
The bank loan, once
assumed by Mr. McEwen, will be convertible at the option of Mr. McEwen
into common shares of the Corporation at a price of C$1.00 per share (for
a total of 21,700,030 common shares), at any time, subject to approval by
the shareholders of the Corporation. If such shareholder approval is not
obtained by 60 days after closing, the bank loan (as assumed by Mr.
McEwen) will be due and payable by the Corporation 15 business days after
the date of the shareholders' meeting.
In addition, if prior
to such shareholder approval being obtained there is a change of control
of the Corporation, involving a person other than Mr. McEwen or one his
affiliates, the bank loan (as assumed by Mr. McEwen) will be immediately
converted into common shares of the Corporation at a price of C$1.00 per
share (for a total of 21,700,030 common shares).
Step 1 and Step 2 of
the transaction with Mr. McEwen are subject to the approval of the TSX.
Mr. McEwen will not
demand repayment of any amounts under the bank loan (including the sum of
US$7.5 million which is currently due on or about March 7, 2009) prior to
the receipt of shareholders approval or, failing such approval, 15
business days after the date of the shareholders' meeting convened to
obtain such approval. In addition, Mr. McEwen has agreed to waive all
existing events of default under the Macquarie credit agreement.
Mr. McEwen has also
confirmed that the Corporation may complete an offering of common shares
on similar terms as the proposed transaction with Mr. McEwen for the
purpose of funding its exploration activities.
Step 1 and Step 2 are
intended to improve the Corporation's financial situation and provide
shareholders the opportunity to approve the issuance of shares to Mr.
McEwen, where time permits such approval to be sought, without a material
adverse effect on the financial condition of the Corporation.
On February 9, 2009,
the Company announced that it had entered into a letter agreement with
Mr. McEwen pursuant to which Mr. McEwen or his affiliates would purchase
121,212,121 common shares of the Corporation at a price of C$0.33 per
share (the closing price of the Company's common shares on the TSX on
February 4, 2009), for proceeds of C$40.0 million.
Subsequent to that
announcement, the Corporation received advice from Hochschild that it was
prepared to make a formal bid to acquire all of the issued and
outstanding shares of the Corporation at an exchange ratio of 0.24 ordinary
shares of Hochschild (which is listed on the London Stock Exchange) for
each common share of the Corporation. Based on the closing price of
Hochschild's shares and the Corporation's shares on February 15, 2009
this bid, if made would have an implied price of C$0.8658 per common
share of the Corporation. Hochschild is not currently listed on any
Canadian stock market so any bid if made, could not be made until at
least April 2009, at which time the requisite technical reports in
respect of Hochschild's material properties are scheduled to be
that it would (i) provide bridge financing to the San Jos� project so
that the payment of the outstanding cash call by MAI could be deferred
until expiry of the formal bid by Hochschild; and (ii) make a loan
available to the Corporation in the principal amount of US$17.5 million
so that the Corporation could repay its indebtedness to Macquarie and
that the maturity date of such loan would effectively be extended until
December 1, 2009, provided in each case, among other things, that the
Corporation would immediately express support for any such bid by
Hochschild and negotiate the terms of a definitive support agreement for
the making of any such bid (with a view to settling the terms of such
agreement by February 26, 2009). The proposal from Hochschild also
provides that any such financial assistance shall be immediately due and
payable upon the Corporation supporting an alternative transaction.
Committee, together with its advisors, considered the Hochschild proposal
for a bid some time after April 2009 and financial assistance and
concluded that the proposed transaction with Mr. McEwen is in the best
interests of shareholders. In reaching this conclusion, the Special Committee
considered, without limitation, the following factors:
o the implied price
of the proposed Hochschild bid, if made, is inferior to the price offered
by Mr. McEwen;
o the financial assistance offered by Hochschild is expressly conditional
upon the Corporation negotiating the terms of a support agreement (the
proposed material terms of which are unknown) and failing which the
proposed transaction with Mr. McEwen will have been withdrawn and the
Corporation will again be subject to untenable financial pressure;
o the proposed Hochschild bid, if made, will be based on an exchange
ratio determined today, however any bid made by Hochschild cannot be made
until April 2009 at the earliest;
o the possibility that financial assistance provided by Hochschild would
become immediately due and payable upon a competing proposal supported by
the Corporation is coercive and
o the proposed transaction with Mr. McEwen does not prevent a subsequent
transaction with Hochschild or any other third party and its effect on
the Corporation's financial condition should enable the Corporation to
vigorously negotiate the terms of any such proposal without the pressures
of financial hardship.
Mr. McEwen presently
owns, or exercises control or direction over, 46,057,143 common shares,
or 24.3% of the issued and outstanding common shares. The issuance of
18,299,970 common shares to Mr. McEwen under Step 1 will result in Mr.
McEwen owning or exercising control or direction over approximately 30.9%
of the then issued and outstanding common shares of the Corporation. The
issuance of 21,700,030 common shares under Step 2 will result in Mr.
McEwen owning or exercising control or direction over approximately 37.4%
of the then issued and outstanding common shares of the Corporation.
Under the TSX Company
Manual, shareholder approval would be required as a result of the fact
that together Step 1 and Step 2 will result in greater than 10% of the
outstanding common shares of the Corporation being issued to an insider
of the Corporation.
applied to the Toronto Stock Exchange (the "TSX") under the
provisions of Section 604(e) of the TSX Company Manual for an exemption
from securityholder approval requirements in respect of the issue of
40,000,000 common shares to Mr. McEwen at a price of C$1.00 per share on
the basis that the Corporation is in serious financial difficulty, in
each in the circumstances described above The members of the Special Committee
of the Corporation's Board of Directors, Allan Marter, Donald Quick and
Victor Lazarovici (each of whom is free from any interest in the
offering), authorized such application concluding, each time, that the
Corporation is in serious financial difficulty as a result of the cash
call for the San Jos� Project and the outstanding bank indebtedness, and
the transactions with Mr. McEwen are reasonable for the Corporation under
With its financial
condition improved, the Special Committee believes the Corporation will
be in a position to undertake a review of the options available to it for
the medium and longer-term. At present, the Special Committee believes
that the Corporation's ability to obtain maximum value for its
shareholders is limited and constrained by financial distress caused by
the cash call due imminently and the bank loan which may be called upon
seven days notice.
As a result of its
previous announcement concerning the private placement with Mr. McEwen,
the TSX has advised that it has initiated a de-listing review of the
Corporation as a consequence of relying on the financial hardship
exemption under Section 604(e). The Corporation believes that, upon
completion of the private placement, it will be in compliance with all of
the TSX listing requirements.
described above with Mr. McEwen will also be a related party transaction
for the purposes of Multilateral Instrument 61-101 Protection of Minority
Shareholders in Special Transactions. It is the intention of the
Corporation to avail itself of certain exemptions set out in such
Instrument from provisions that would otherwise require the Corporation
to obtain a formal valuation and the approval of its minority
shareholders in connection with the private placement.
Minera Andes is a
gold, silver and copper exploration company working in Argentina. The
Corporation holds approximately 304,000 acres of mineral exploration land
in Argentina. Minera Andes holds a 49% interest in the San Jos� Project,
an operating gold and silver mine. Minera Andes is also exploring the Los
Azules copper project in San Juan province, where an exploration program
has defined a resource and a preliminary assessment has been completed. Other
exploration properties, primarily silver and gold, are being evaluated in
southern Argentina. The Corporation presently has 190,158,851 shares
issued and outstanding.
This news release is
submitted by Allan J. Marter, a Director and the Chairman of the Special
Committee of the Board of Directors of Minera Andes Inc.
For further information, please contact: Art Johnson at the Spokane
office, or Krister A. Kottmeier, investor relations - Canada, at the
Vancouver office. Visit our Web site: www.minandes.com.
111 East Magnesium Rd.,
Spokane, WA 99208 USA
Phone: (509) 921-7322
Suite 911 - 470 Granville St,
Vancouver, BC. V6C 1V5
Phone: (604) 689-7017 / 877-689-7018
This press release contains certain forward-looking statement and
information. The forward-looking statements and information express, as
at the date of this press release, the Corporation's plans, estimates, forecasts,
projections, expectations or beliefs as to future events and results. Forward-looking
statements involve a number of risks and uncertainties, and there can be
no assurance that such statements will prove to be accurate. Therefore,
actual results and future events could differ materially from those
anticipated in such statements. In particular, there can be no assurance
that financing will be secured within the time required. Risks and
uncertainties that could cause results or future events to differ
materially from current expectations expressed or implied by the
forward-looking statements include, but are not limited to, factors
associated with fluctuations in the market price of precious metals,
mining industry risks, risks associated with foreign operations, the
state of the capital markets, environmental risks and hazards,
uncertainty as to calculation of mineral reserves and other risks.
THE TSX HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE
ADEQUACY OR ACCURACY OF THIS RELEASE.