Parties to the facility include Itafos, as the borrower, its wholly-owned subsidiaries, Itafos Brazil Holdings, Itafos International Holdings Cooperatie UA, Itafos Ltd, Itafos II LP and Itafos Conda Holdings, as the guarantors, CL Fertilizers Holding LLC (formerly known as Zaff LLC) (CLF), funds managed by BlackRock Financial Management Inc. and its affiliates, and a syndicate of other lenders, as the lenders, and Cortland Capital Market Services LLC, as the administrative agent (the agreement).
Upon closing, certain outstanding unsecured promissory notes of Itafos in the aggregate principal amount of US$89 961 951, together with all interest accrued thereon, were deemed to have been converted into loans constituting part of the agreement and/or prepaid, in whole or in part. Itafos claims that the net proceeds of the US$165 million secured term loan facility (after deduction of applicable fees and other transaction costs) will fund working capital and other cash requirements of Itafos Conda and Itafos Arraias, continued implementation of the company’s business development initiatives (including, but not limited to Itafos Paris Hills and Itafos Farim) and other general corporate purposes. Itafos claims that the key terms of the agreement are as follows:
Term of four years commencing on the closing with a bullet repayment schedule subject to certain prepayment rights and requirements and applicable prepayment penalties.
Interest at a yearly rate of 10% commencing on the closing until 18 months following the closing with 50% payable in cash and 50% payable in kind and 12% thereafter with 75% payable in cash and 25% payable in kind.
Secured by Itafos’ direct and indirect interest in the guarantors and other assets of Itafos and the guarantors.
Issuance of bonus shares to the lenders in an aggregate amount of 2 750 000 (the bonus shares) on closing.
Other terms, fees and cost reimbursements standard and customary for similar agreements.
The bonus shares will reportedly be subject to resale restrictions pursuant to a ‘distribution compliance period’ (as defined in Regulation S under the United States Securities Act of 1933, as amended) of one year from the date the shares were issued. In addition to this, the bonus shares are also subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable Canadian securities legislation and TSXV requirements, which hold period will run concurrently with the above referenced one year restricted period under US securities legislation.
Upon issuance of the bonus shares, Itafos claims that it shall have 142 070 301 shares outstanding, of which CLF would beneficially own, or control or direct, 81 980 064, representing approximately 57.7% of the issued and outstanding shares (on an undiluted basis).