Refinancing of Balance of Investor Loan

RNS Number : 1720K

Chaarat Gold Holdings Ltd

30 December 2020

 

30 December 2020

Chaarat Gold Holdings Limited - (AIM:CGH)

("Chaarat" or the "Company")

Refinancing of Balance of Investor Loan

Chaarat (AIM:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia is pleased to announce that it has entered into an agreement to refinance the outstanding US$7 million principal of the investor loan originally made in November 2018 (the "Investor Loan") together with interest accrued of US$0.2 million (altogether, the "Refinancing").

Background to the Transaction

As announced on 6 October 2020, the Company refinanced US$13.5 million of the Investor Loan with Labro Investments Limited ("Labro") (the "Labro Term Loan").  The outstanding balance of US$7 million of the Investor Loan (the "Outstanding Investor Loan") had a maturity date of 8 January 2021 but Chaarat had the option to extend the maturity date to 31 December 2021 upon the following terms:

•	interest rate to increase from 13% to 14%;
•	principal repayment to increase from US$7.0 million to US$7.5 million; and
•	a fee payable of US$250,000.

The Refinancing

The Company and Labro have entered into an amendment to the agreement relating to the Labro Term Loan whereby the amount of the Labro Term Loan will be increased so as to enable the Company to repay the Outstanding Investor Loan (together with accrued interest).  The terms of the increased Labro Term Loan are the same as those applicable to the existing Labro Term Loan which are the following:

•	an interest rate of 9.5%;
•	maturity date of 31 December 2024; and
•	the ability, at Chaarat's option, to prepay the Labro Term Loan at any time without penalty.

Labro has also agreed not to take the full security package that it would otherwise have been entitled to take upon repayment of the Investor Loan.  Labro will therefore not be taking a pledge over shares in Chaarat Gold International Limited which owns the Kapan mine operating subsidiary.

As consideration for refinancing the Outstanding Investor Loan (together with accrued interest) and extending its maturity, the Company has agreed that the principal amount of the Labro Term Loan will increase by US$1.0 million which is comparable to the compensation that would have been paid to the provider of the Investor Loan had Chaarat exercised its option to extend the maturity date of that loan beyond 8 January 2021 to 31 December 2021. 

Labro has also agreed that the interest accrued on the Labro Term Loan since 5 October 2020 amounting to US$0.3 million will be added to the principal amount of the Labro Term Loan.

Therefore, the total principal amount of the Labro Term Loan upon completion of the Refinancing will be US$22.0 million.

The board believes that consolidation of the Investor Loan with the Labro Term Loan to create one single lower cost and longer duration loan with its largest shareholder is in the best interests of the Company.

Extension of maturity of amounts currently drawn under Labro working capital facility

As announced on 15 April 2020, Labro extended to 31 December 2020 the working capital facility that it had made available to the Company on 14 December 2018 (the "Labro Working Capital Facility").  There is currently US$0.8 million drawn under the Labro Working Capital Facility.  Labro has agreed that the date for repayment of the amount drawn together with accrued interest will be extended to 30 June 2021.  As the Labro Working Capital Facility expires on 31 December 2020, no further drawdowns are permissible under the Labro Working Capital Facility.

Related Party Transaction

The arrangements with Labro in relation to the Refinancing as well as the extension of the maturity of the amounts currently drawn under the Labro Working Capital Facility constitute related party transactions under AIM Rule 13 of the AIM Rules for Companies as Labro is a substantial shareholder of the Company and Martin Andersson (the executive chairman of Chaarat) is indirectly beneficially interested in the majority of the shares in Labro.  The independent directors of the Company for the purposes of this transaction (being all of the Company's Directors save Martin Andersson) consider, having consulted with the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

Artem Volynets, Chief Executive Officer of Chaarat, said:

"We appreciate the continued strong support from our largest shareholder, Labro. The refinancing on more favourable terms and the four-year extension of the maturity of the balance of the Investor Loan affords the Company greater flexibility in terms of the timing of repayment of this financing.  We will continue to evaluate all financing options in order to optimise the Company's capital structure and reduce its overall cost of capital."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

Chaarat Gold Holdings Limited	[phone]
Artem Volynets (CEO)	[e-mail]
Canaccord Genuity Limited (NOMAD and Joint Broker)	+ 44 (0)20 7523 8000
Henry Fitzgerald-O'Connor
James Asensio
finnCap Limited (Joint Broker)	[phone]
Christopher Raggett
SP Angel Corporate Finance LLP (Joint Broker)	[phone]
Ewan Leggat

About Chaarat

Chaarat is a gold mining company which owns the Kapan operating mine in Armenia as well as Tulkubash and Kyzyltash Gold Projects in the Kyrgyz Republic. The Company has a clear strategy to build a leading emerging markets gold company with an initial focus on Central Asia and the FSU through organic growth and selective M&A.

Chaarat is engaged in active community engagement programmes to optimise the value of the Chaarat investment proposition.

Chaarat aims to create value for its shareholders, employees and communities from its high-quality gold and mineral deposits by building relationships based on trust and operating to the best environmental, social and employment standards. Further information is available at  www.chaarat.com

Appendix

Summary of the key terms of the increased Labro Term Loan

1.	Principal - US$22.0 million.
2.	Interest - 9.5% payable at maturity.
3.	Maturity date - 31 December 2024.
4.	Security package - includes the requirement that 100% of any new incremental debt incurred must be used to prepay the Labro Term Loan unless it relates to debt to fund project finance for Tulkubash.

 

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