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Dear Karolina Domenech,
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January 20, 2009
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SULPHIDE PROJECT
UPDATE:
TVI
PACIFIC SIGNS US$29.9 MILLION TERM LOAN FACILITY
TVI Pacific Inc. (TSX: "TVI" or the "Company")
announced today that the Company and its Philippine affiliate, TVI
Resource Development (Phils.) Inc. ("TVIRD"), have signed an
Omnibus Loan and Security Agreement ("OLSA") with LIM Asia
Multi-Strategy Fund Inc. (formerly LIM Asia Arbitrage Fund Inc). and LIM
Asia Special Situations Master Fund Limited (collectively, the
"Lenders") providing for a US$29,926,801 principal amount Term
Loan Facility (the "Facility").
The purpose of the Facility is to convert to a term loan the
bridge loans previously made to TVIRD by the Lenders (in the aggregate
amount of approximately US$25.2 million) and accrued interest and fees
(in the aggregate amount of approximately US$1,731,801); and to provide
TVIRD with additional working capital funding to further advance
commissioning and construction activities and to support mining and
processing activities at the Canatuan mine site, located on the Zamboanga
Peninsula in the southern Philippines.
"We are pleased to conclude these financing discussions with
the LIM Group", stated Clifford M. James, President and CEO of
TVI. "By converting the previous bridge loan funds into a
longer term facility, together with the new funds provided by the
facility, management of the Company believes that it now has sufficient
funds to establish commercial production from the Sulphide Project at
Canatuan."
The OLSA provides that immediately on fulfilment of a number of
conditions precedent, including the receipt of satisfactory due diligence
reports of TVIRD and related companies, all outstanding amounts payable
to the Lenders under the previous bridge financing facility will be
converted to an initial advance under the Facility.. Subsequent advances
will be available for a period of three months. Background
information regarding the previous bridge financing facility is set out
in news releases disseminated by the Company on March 13, October 14,
November 10, and December 12, 2008, copies of which are available at
www.tvipacific.com.
The Term of the Facility is five years ending January 20,
2014. After an initial 180 day period from the date of the initial
advance, the Company is required to begin repaying principal and interest
amounts outstanding. The Facility is subject to a fixed arrangement
fee in the amount of US$195,000 and funds borrowed under the Facility
bear interest at the rate of 10% per year calculated on the original
principal balance, irrespective of the actual outstanding balance of the
loans payable, until the outstanding principal balance of the Facility is
paid in full. In connection with the execution and delivery of the
OLSA, the Company has agreed to issue to the Lenders share purchase
warrants entitling them to purchase up to 71,689,734 common shares in the
capital of TVI at any time and from time to time until January 20, 2014,
at a purchase price of CDN$0.016 per share.
The Facility is secured by a charge on all of the present and
after acquired assets of TVIRD. The Company has guaranteed the
obligations of TVIRD under the OSLA, has granted a security interest in
its intercompany receivables, and caused its indirectly wholly owned
subsidiary, TVI International Marketing Limited, to grant a security
interest to the Lenders in all of the outstanding shares of TVIRD. As
contemplated by the OLSA, all of the intercompany loans made by the
Company or its subsidiary, TVI Minerals Processing Inc., to TVIRD are
subordinated and postponed to the Facility.
Under the OLSA the Lenders, collectively, have the right to
nominate a person for election as a director of each of TVIRD and TVI
Pacific and TVIRD and TVI Pacific have each agreed to use reasonable
efforts to cause the election of the director nominees designated by the
Lenders.
The Company has also entered into an Advisory Agreement with a
third party (the "Advisor"). The Advisor will be entitled
to a fee equal to 10% per year of the Facility as defined in the OLSA,
payable on the last business day of each quarter. In addition, commencing
December 31, 2010, the Advisor will be entitled to profit participation
of 40% of any cash surplus in TVIRD.
In connection with
the execution and delivery of the OLSA, TVI has entered into a debt
conversion agreement (the "Debt Conversion Agreement") with
Clifford M. James and each of Seajay Management Enterprises Ltd.
("Seajay") and Regent Parkway Management Ltd.
("Regent") (both corporations controlled by Clifford M. James),
pursuant to which Seajay and Regent have agreed to convert indebtedness
owing to them by TVI into common shares of TVI, subject to the receipt of
all necessary regulatory and other approvals, including the approval of
the Toronto Stock Exchange. As at the date hereof, an aggregate of
approximately $2 million is owing by TVI to Seajay and Regent.
Those amounts have been advanced to TVI from time to time to support
ongoing operations and for working capital purposes. Additional
information relating to such indebtedness is set out in the notes to the
unaudited interim consolidated financial statements of TVI as at and for
the three and nine month periods ended September 30, 2008 (copies of
which have been filed with various securities regulatory authorities in
Canada and which are available through the SEDAR website at
www.SEDAR.com). Under the Debt Conversion Agreement, the price at
which the indebtedness of TVI to Seajay and Regent is to be converted
will be equal to the market price of the Company's common shares at the
time of conversion, being the weighted average trading price of such
shares on the Toronto Stock Exchange for the 10 trading day period
immediately preceding the date of conversion. The Debt Conversion
Agreement contemplates that the indebtedness of TVI to Seajay and Regent
will be converted over time, in a manner intended to ensure that the
ownership of TVI common shares by Clifford M. James and his associates
and affiliates does not exceed certain thresholds. The execution and
delivery of the Debt Conversion Agreement was a condition to the signing
of the OLSA by the Lenders. Discussion of this condition arose late in
negotiations relating to the OLSA and the terms of the Debt Conversion
Agreement were only finalized on Monday, January 19, 2009. Accordingly,
public disclosure of the terms of the Debt Conversion Agreement at an
earlier time was not feasible.
About TVI Pacific Inc.
(TSX: TVI)
TVI Pacific Inc. is a
publicly traded Canadian mining company focused on exploring for and
producing precious and base metals within district scale systems in the
Philippines. The Company's interest in the Canatuan Mine and its other
Philippine assets are held through its affiliate, TVI Resource
Development (Phils.) Inc.
Further
Information: Investor Relations - 403-265-4356 or
tvi-info@tvipacific.com
The Toronto Stock Exchange has neither approved
nor disapproved of the information contained herein.
2000, 736 - 6 Avenue S.W. Calgary, Alberta
T2P 3T7
Tel: (403) 265-4356 Fax: (403) 264-7028
Website: http://www.tvipacific.com
E-mail: tvi-info@tvipacific.com
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