Great Basin Gold To Obtain $35 Million Loan Consequent Upon CCAA Court Order
JOHANNESBURG, SA, Sept. 20, 2012 /PRNewswire/ - Great Basin Gold Ltd. ("Great Basin Gold"), (TSX: GBG; NYSE MKT: GBG; JSE: GBG) announces that it has agreed to a comprehensive term sheet from its existing bank lenders for a $35 million working capital loan which was approved as a debtor-in-possession ("DIP") loan by order of the British Columbia Supreme Court pursuant to a Companies Creditors Arrangement Act ("CCAA") filing made on September 19 th, 2012 (Vancouver Registry 126583) . The DIP Loan will be a post-commencement financing under the previously announced business rescue ("BR") provisions of the South African Companies Act which were commenced September 14, 2012. CCAA is a Canadian insolvency statute which will allow the Company a period of time to seek buyers and partners for its two gold mining projects and/or corporate level financiers in an effort to return Great Basin Gold to solvency.
The DIP Loan has a term of 6 months, extendable for up to 3 months, and is subject to certain fees, interest and costs. It contemplates that the Company will dispose or sell down its interest in its two gold projects or otherwise refinance or recapitalize over certain periods within the term of the DIP Loan. The DIP loan will be subject to a super-priority lien on the assets of Great Basin Gold, and will also have the benefit of liens and claims over the assets of its Nevada and South African subsidiaries. As part of their security package for the DIP loan, the DIP lenders will also receive from Great Basin Gold's U.S. holding company a guarantee of the obligations of its South African subsidiaries' obligations under an existing South African credit facility. The DIP Loan has received lenders' credit committee approval and it is now principally subject to negotiation and execution of definitive documentation and other customary closing conditions. The DIP Loan proceeds will be used, subject to the concurrence of a business rescue practitioner in South Africa and KPMG LLP, the CCAA-appointed monitor in Canada, to affect an orderly suspension of operations at Burnstone, ongoing care and maintenance of Burnstone assets, and for working capital at Hollister. Hollister is expected to continue profitably producing gold at the rate of 6,000-7,000 ounces per month for the foreseeable future and no insolvency filings are currently expected for the Nevada operations.
Lou van Vuuren, interim CEO, commented on the recent developments, " We believe the DIP loan will be in the best interest of our workforce and other key stakeholders, as its proceeds will be use to ensure the proper treatment of our Burnstone employees and the responsible care and maintenance of this valuable project while Hollister operations will be enhanced by some additional working capital. We are confident that given the industry interest we are seeing in these two assets we will see one or more realization or recapitalization transactions complete within the term of the DIP Loan."
Lou van Vuuren
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