TORONTO, Nov. 26, 2015 (GLOBE NEWSWIRE) -- Victory Nickel Inc. ("Victory Nickel" or the "Company") (TSX:NI, www.victorynickel.ca) today that it has entered into a debt restructuring agreement (the "Restructuring") with its secured lender (the "Secured Lender"), to restructure and extend the Company's US$5.15 million senior secured 14.8% notes (the "SPA Loan"), dated as of April 24, 2014 and amended June 3, 2015 plus accrued interest to September 30, 2015. In connection with this transaction, the Company is restructuring outstanding debt obligations to its unsecured lenders and certain of its trade creditors.

Victory Nickel and the Secured Lender have been in discussion with respect to the Restructuring of the SPA Loan since the Company was unable to repay its SPA Loan on the maturity date of July 30, 2015, approximately US$2 million of unsecured Promissory Convertible Notes due November 12, 2015, and interest payments due June 30, 2015 and September 30, 2015.
"The objective of the restructuring is to allow time for the oil and gas markets to stabilize and provide an environment for the Company to generate cash flow from its investment in its frac sand processing facilities in Seven Persons Alberta," said Rene Galipeau, Vice-Chairman & Chief Executive Officer of Victory Nickel Inc. "We are pleased that our secured lender recognizes the potential of these assets in a normalized market and is prepared to wait for repayment of its loan."

Completion of the Restructuring with the Secured Lender, unsecured lenders and trade creditors is subject to normal regulatory approvals and final documentation. As previously announced, the Company has been placed under remedial delisting review by the TSX. No assurance can be provided as to the outcome of that review and therefore continued qualification for listing on the TSX.

Details of the debt restructuring are as follows:

Secured Loan Agreement

Victory Nickel has entered into a binding term sheet with its Secured Lender to amend the SPA Loan (the "New SPA Loan"). Under terms of the agreement the Secured Lender has agreed to extend the maturity date of the SPA Loan by 30 months to January 31, 2018 (the "Maturity Date"). The facility amount under the New SPA Loan has been increased to US$5,500,000, to be used to repay the principal of $5,150,000 and accrued interest to September 30, 2015.

The interest rate on the New SPA Loan will remain unchanged at 14.8% with interest payable in arrears. The New SPA Loan will be due in full on the Maturity Date, subject to a cash sweep of 75 % of free cash flow ("Free Cash Flow") payable within 45 days following the end of each fiscal quarter. Free Cash Flow will be calculated based on the Company's quarterly unaudited and annual audited consolidated statements of cash flows, and be calculated as net cash from operating activities, plus net cash from investing activities, plus interest and lease payments as shown in cash flows from financing activities. Allowable investing activities must be approved by the Secured Lender in advance.

For each $1,000,000 advanced under the New SPA Loan, the Lender shall receive warrants entitling the Lender to purchase 500,000 Victory Nickel shares exercisable at CDN$0.25 per share for a period of two years from the closing date of the transaction (the "Warrants"). Any warrants previously issued under the SPA Loan will be cancelled and replaced with Warrants.
The Lender will receive a fee in shares equal to 4% of the outstanding shares prior to the Restructuring. In addition, the Company must agree to not make any payments to settle past debts of unsecured debt holders prior to repayment of the secured debt without the Secured Lender's approval.

Unsecured Lenders

The Company has issued two-year unsecured promissory convertible notes aggregating approximately US$6,000,000 (the "Promissory Convertible Notes") with an interest rate of 14.8% per annum and convertible at the option of the holder into the Company's common shares at C$1.00. One Promissory Convertible Note in the amount of $2,000,000 is in default as it was due on November 11, 2015, three Promissory Convertible Notes aggregating $750,000 are due in February 2016, four Promissory Convertible Notes aggregating to C$265,000 are due at various times between January and March, 2016 and one Promissory Convertible Note in the amount of $3,000,000 is due in July, 2016. The Company was not able to make the interest payment due on June 30, 2015 and September 30, 2015.

The following terms have been presented to the holders of the Promissory Convertible Notes:

• 50% of the amount of the Promissory Convertible Notes will be converted to common shares of Victory Nickel valued at a price of C$0.25 per share.
• The remaining Promissory Convertible Notes will be replaced with new promissory convertible notes (the "New Promissory Convertible Notes") with the following terms:

1) A maturity date of July 31, 2018.