Corsa Capital Ltd. Completion Of $69.4 Million Private Placement And US$5 Million Bridge Financing
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN
September 30, 2010 Toronto, Ontario – Corsa Capital Ltd. (TSXV: CSO) (“Corsa” or the “Corporation”) is pleased to announce the successful completion of the previously announced private placement (the “Private Placement”) of 154,319,800 subscription receipts at a price of $0.45 per Subscription Receipt (the “Issue Price”) for gross proceeds of $69,443,910, including Subscription Receipts issued pursuant to the exercise of an over-allotment option granted to the syndicate of agents.
The syndicate of agents was led by Cormark Securities Inc. and GMP Securities L.P. and included Canaccord Genuity Corp. and Haywood Securities Inc. (collectively, the “Agents”).
Each Subscription Receipt is convertible into one common share (“Common Share”) in the capital of the Corporation, upon the satisfaction of the release conditions specified in the Subscription Receipt Indenture referred to below (“Release Conditions”), including satisfaction of conditions to the completion of the previously announced merger (the “Acquisition Transaction”) between a wholly-owned subsidiary of the Corporation and Wilson Creek Energy, LLC (“Wilson Creek”).
The Agents have received in connection with the Private Placement 6,338,206 common share purchase warrants (the “Broker Warrants”). Each Broker Warrant entitles the holder to purchase one Common Share for a period of 24 months from the date of completion of the Acquisition Transaction at a price of $0.50 per Common Share. The Agents will also receive, upon satisfaction of the Release Conditions, a cash commission equal to 5% of the gross proceeds of the Private Placement (the “Agency Fee”), subject to a reduction in respect of a specified subscriber. In addition, Cormark Securities Inc. will receive an advisory fee in connection with the Acquisition Transaction of $450,000, which will be satisfied by the issuance of 1,000,000 Common Shares, or failing receipt of all necessary regulatory approvals, in cash.
The Subscription Receipts were issued pursuant to the terms of a subscription receipt indenture (the “Subscription Receipt Indenture ”) entered into between the Corporation, Cormark Securities Inc. and GMP Securities L.P., as co-lead Agents, and Computershare Trust Company of Canada as escrow agent (the “Escrow Agent”). The gross proceeds from the sale of Subscription Receipts have been deposited with the Escrow Agent pursuant to the terms of the Subscription Receipt Indenture. The Subscription Receipt Indenture provides, among other things, that upon the satisfaction of the Release Conditions, the Agency Fee (and interest earned thereon) and the expenses of the Agents will be paid to the Agents and the remainder of the gross proceeds (and interest earned thereon) will be released from escrow and delivered to the Corporation.
The net proceeds of the Private Placement will be advanced by the Corporation to its wholly owned subsidiary to be used to satisfy the cash portion of the purchase price (as may be adjusted) in respect of the Acquisition Transaction; to fund the construction costs of a coal cleaning plant (including repayment of the Debenture referred to below); to fund the purchase price of a property in respect of which Wilson Creek has an option to acquire; to fund development expenses in respects of Wilson Creek’s properties and for general working capital purposes.
In the event that the Release Conditions are not satisfied within 120 days of the closing of the Private Placement, the gross proceeds from the sale of the Subscription Receipts shall be returned to their subscribers.
Bridge Financing for Wilson Creek Wash Plant Construction
The Corporation is also pleased to announce that it has entered into a previously announced loan arrangement pursuant to which two investors (Zebra Holdings and Investments s.a.r.l. and Lorito Holdings s.a.r.l.) have agreed to lend to the Corporation an aggregate principal amount of US$5 million, evidenced by a debenture (the “Debenture”). The funds are to be advanced in two equal tranches. The first advance occurred on September 24, 2010, and the second advance is expected to occur on or about October 15, 2010. The Debenture is repayable in full on the closing of the Acquisition Transaction. The proceeds of the Debenture will be used by the Corporation to lend funds to Wilson Creek (by way of loan secured by the assets of Wilson Creek) to fund certain payments for the construction of the Wilson Creek Wash Plant, which is proceeding on schedule and on budget.
The Debenture will not bear interest for the first 120 days after the date of the first advance. Thereafter, the Debenture will bear interest at a rate of 12% per annum payable semi-annually. The Debenture may be prepaid by the Corporation on 5 days’ notice. If the Acquisition Transaction is not closed prior to December 31, 2010, the Debenture is thereafter repayable on demand. The Debenture is secured by an assignment of a security interest in the assets of Wilson Creek. In connection with the issuance of the Debenture, the Corporation will issue to the holders of the Debenture an aggregate of 2,000,000 Common Shares, of which 1,000,000 Common Shares were issued on September 24, 2010. The remaining 1,000,000 Common Shares will be issued in respect of the second advance on or about October 15, 2010.
Technical Report
The Corporation has filed on sedar.com a technical report in respect of Wilson Creek’s material properties prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects and entitled “Technical Report for Corsa Capital Ltd., Coal Reserves and Resources; Wilson Creek Energy, LLC; Somerset, Cambria and Washington Counties, Pennsylvania and Garrett County, Maryland, USA, September 17, 2010”.
Other
As a result of the acquisition of the Subscription Receipts described below and of the Common Shares of the Corporation issued and issuable in respect of the acquisition of the Debenture by Zebra Holdings and Investments s.a.r.l. and Lorito Holdings s.a.r.l., each owns the following number of common shares and Subscription Receipts, representing the security holding percentage set out below (calculated after giving effect to the Acquisition Transaction):
|
|
Common Shares |
Subscription Receipts |
%(1) |
|
Zebra Holdings and Investments s.a.r.l.: |
500,000 |
18,889,000 |
8.8 |
|
Lorito Holdings s.a.r.l.: |
500,000 |
18,889,000 |
8.8 |
___
(1) After giving effect to the issue of an additional 500,000 Common Shares to each of Zebra Holdings and Investments s.a.r.l. and Lorito Holdings s.a.r.l. concurrent with the second advance under the Debenture.
In addition, each of Zebra Holdings and Investments s.a.r.l. and Lorito Holdings s.a.r.l. will receive an additional 500,000 Common Shares concurrently with the second advance under the terms of the Debenture.
Zebra Holdings and Investments s.a.r.l. and Lorito Holdings s.a.r.l. are two companies wholly owned by a Lundin family trust that acquired the securities of the Corporation for investment purposes.
For further information please contact:
Corsa Capital Ltd.:
Contact:
Jim Paterson
Corsa Capital Ltd.
604-646-4521
communication@corsacapital.com
www.corsacapital.com
About the Corporation
The Corporation is a Vancouver, BC based mineral resources company. The Corporation’s management team, board of directors, and advisory board, have significant experience in mineral resource property acquisition, finance, and operations. The Corporation’s team has specific experience in developing and mining coal deposits.
Cautionary Note
As noted above, completion of the Acquisition Transaction is subject to a number of conditions, including but not limited to, acceptance by the TSXV, approval of the shareholders of the Corporation. The Acquisition Transaction will only close once the required approvals noted in this press release have been obtained. There can be no assurance that the Acquisition Transaction will be completed.
Investors are cautioned that, except as disclosed in the Filing Statement to be prepared in connection with the Acquisition Transaction, any information released or received with respect to the Acquisition Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of the Corporation should be considered highly speculative.
Forward-Looking Statements
Certain information set forth in this press release contains “forward-looking statements”, and “forward-looking information” under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management’s assessment of Wilson Creek’s future plans and operations and are based on Wilson Creek’s current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as “expects” “anticipates”, “believes”, “projects”, “plans”, and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Wilson Creek’s and the Corporation’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the risks that regulatory and shareholder approvals will not be obtained on a basis satisfactory to the Corporation; the risk that the Acquisition Transaction will not be completed by the date specified in the Agreement and Plan of Merger dated August 16, 2010; the liabilities inherent in coal mine development and production; geological, mining and processing technical problems; Wilson Creek’s inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and coal processing operations; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; changes in the regulations in respect to the use of coal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labor stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; and management’s ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking statements.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The securities described in this press release have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person absent an available exemption from the registration requirements of such Act.