LONDON, United Kingdom: Reference is made to the announcement of Crew Gold Corporation ("Crew" or "the Company") (TSX: CRU) (OSE: CRU) of August 17, 2009 regarding the initiatives taken by the Company to strengthen its balance sheet, including the proposed conversion into common shares of approximately US$148 million principal amount of bonds issued by Crew and a Rights Offering with proceeds ranging from NOK 65 million to NOK 90 million.

 

Due to the potential adverse consequences, should the Restructuring proposal not be approved, Crew has decided to make a public statement with the intent of clarifying certain issues related to the content of the Restructuring proposal and implications thereof.

 

Crew has incurred approximately US$330 million of bond debt over the past 5 years to partially fund acquisitions and capital expansion. The balance of funding has come from shareholders, operations and asset sales. After advice from Arctic Securities, the financial advisor, Crew decided to explore different alternatives to allow it to better execute its business plan. The objective has been to find a financially viable solution to preserve and protect stakeholder value. The proposed Restructuring is a result of negotiations between the largest bondholders and a committee of the Board of Directors. The bondholders referred to represent negative control of the largest bonds and were therefore a key determinant in seeking to find a mutually agreed Restructuring proposal.  The trustee, Norsk Tillitsmann, has also taken an active part in these negotiations and has provided frequent inputs from the initiation of the process, including but not limited to, reviewing and commenting on the transaction structure and proposed solutions. The Company is therefore of the opinion that the proposal represents a balanced and united solution from both a shareholder and bondholder perspective. 

 

Crew is in a critical stage of the operational ramp-up (reference is made to Crew's "Quarterly report ending June 30, 2009" for further details). In particular, the Company emphasizes the importance of the liquidity disclosures and going concern note in "Management's Discussion and Analysis of Financial Conditions and Results of Operations for the quarter and six months ended June 30, 2009" stating:

 

"The Company believes that the completion of the rectification program and the achievement of the anticipated 2009 production targets at LEFA will result in the operations generating sufficient cash flow to fund its working capital requirements and repay its obligations as they fall due during 2009, however, this cannot be assured as the cash flows are dependent on significant factors outside the control of management such as changes in the gold price, foreign exchange rates, political uncertainty and the increasing costs of inputs. Further, the Company will be required to renegotiate or refinance debt facilities coming due in 2010. There can be no assurance that the negotiations will be successful or that the Company will be able to raise the necessary financing to repay the debt as it comes due."

 

In order to address these challenges, a conversion of a portion of the Bonds into equity, in combination with securing additional sources of funds, is currently being contemplated under the proposal. Based on feedback from the financial advisor to date, it is evident that raising new equity capital on a standalone basis would be conditional upon a substantial restructuring of the Bonds. The liquidity and stability of the Company following the injection of proceeds from the proposed Rights Issue, as well as the Bondholders' influence on the Company through the new representatives on the Board of Directors, should be seen as positive factors to the Bondholders. In the opinion of the Company, the Restructuring proposal is expected to be a viable long term financial solution.

 

The Restructuring proposal is a result of negotiations with the major stakeholders to find a viable financial long term solution for all components of the capital structure. Crew therefore strongly recommends that Bondholders who are uncertain about the upcoming voting at the Bondholder meeting on 1 September 2009 and potential consequences thereof review the "Summons to Bondholders' Meetings", the Arranger's Assessment thereof and contact Arctic Securities ASA - Tom Hestnes or Kim Galtung D�svig at + 47 21 01 31 00 for further information or contact Bill LeClair at the Company at + 44 (0) 1932 268 526.

 

Certain statements contained herein that are not statements of historical fact may constitute forward-looking statements and are made pursuant to applicable and relevant national legislation (including the Safe-Harbour provisions of the United States Private Securities Litigation Reform Act of 1995) in countries where Crew is conducting business and/or investor relations. Forward-looking statements include, without limitation, those with respect to (1) the completion of the Restructuring, (2) the process, terms and timing of the Restructuring, (3) the intended use of the proceeds of the Rights Offering, (4) the expected actions of third parties named in this press release, (5) the expected impact of the Restructuring on Crew's capital structure and (6) the expected benefits of the Restructuring. The words "expect", "anticipate", "will", "believe" and "may", and other similar expressions, are often used to identify forward-looking statements. 

 

Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to be materially different from the events or results expressed or implied by such forward-looking statements. In evaluating these statements, prospective purchasers should specifically consider various factors that may cause actual events or results to be materially different from the events or results expressed or implied by such forward-looking statements. Risk factors that could impact the Restructuring or the expected benefits of the Restructuring include, without limitation, (1) the actual results of current exploration activities, (2) conclusions of economic evaluations, (3) changes in project parameters as plans continue to be refined, (4) possible variations in grade and ore densities or recovery rates, (5) failure of plant, equipment or processes to operate as anticipated, (6) accidents, labour disputes and other risks of the mining industry, (7) delays in obtaining government approvals or financing or in completion of development or construction activities and (8) risks and uncertainties existing in world capital markets generally. Although Crew has attempted to identify important factors that could cause actual events or results to differ from those described in forward-looking statements contained herein, there can be no assurance that the forward-looking statements will prove to be accurate as actual events or results could differ materially from those anticipated in such statements.

The material factors and assumptions used to develop forward-looking statements include, without limitation, (1) there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, damage to equipment or otherwise, (2) continued development, operation and production at LEFA and Maco consistent with our current expectations, (3) foreign exchange rates among the currencies that Crew does business in being approximately consistent with current levels, (4) certain price assumptions for gold, (5) prices for electricity, fuel oil and other key supplies remaining consistent with current levels, (6) production forecasts meeting expectations, (7) the accuracy of our current mineral reserve and mineral resource estimates and (8) materials and labour costs increasing on a basis consistent with our expectations.

Except as may be required by applicable law or stock exchange regulation, the Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.