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TheStreet Open House

Prospect Global Resources And Apollo Sign Commitment For $100 Million Investment

DENVER, Nov. 29, 2012 /PRNewswire/ -- Prospect Global Resources, Inc. (NASDAQ: PGRX) ("Prospect Global") and certain affiliates of Apollo Global Management, LLC (NYSE: APO) (collectively, "Apollo") today announced that funds managed by Apollo have signed a definitive commitment to make a $100-million investment in Prospect Global.

Prospect Global and Apollo also announced that Jim Dietz, a 42-year veteran of the chemical and fertilizer industry and the former Chief Operating Officer of Potash Corporation of Saskatchewan, the world's largest potash producer, will be joining the board of directors of Prospect Global as Apollo's designee. Mr. Dietz has spent 27 years of his career in the fertilizer industry, including the last 17 with Potash Corporation of Saskatchewan. For the 10 years prior to his retirement in June 2010, he served as Chief Operating Officer of Potash Corporation, where he was responsible for all operations in the three manufacturing divisions (potash, phosphate and nitrogen) and for the execution of Potash Corporation's capital development program, including potash greenfield and brownfield projects. Mr. Dietz has been serving as a project advisor to Apollo for the past six months and intends to make a direct personal investment in Prospect Global.

Mr. Dietz commented: "I am pleased that Apollo asked me to advise them on their investment in Prospect Global and look forward to joining Prospect Global's board. Pat Avery has assembled a solid management team and Prospect Global has been working with a world class group of experienced contractors and consultants. I am excited to have the opportunity to work with Prospect Global and to help Prospect Global achieve its objectives."

Mr. Avery, Chief Executive Officer of Prospect Global, said: "It's incredibly gratifying that a high-caliber executive like Jim Dietz is joining our board. Jim will help strengthen Prospect Global given his significant potash mining experience and global network of contacts and relationships. Apollo also brings a worldwide network of potential customers, corporate partners, financial sources and experienced operating partners. Such strong ties within the mining industry will prove especially valuable after the transaction closes and three more Apollo designees join the board."

Mr. Avery added: "Prospect Global has a very attractive undeveloped underground potash mining deposit in the United States. We have solid geology, a detailed plan for permitting, great infrastructure and a strategic location for domestic and international potash markets. Our next task is completing the final stages of our Definitive Feasibility Study, which we expect to occur in the second quarter of 2013. Apollo's commitment as a long term cornerstone investor, which is being made following the completion of extensive due diligence by its investment team, its technical advisors at SRK Consulting and commercial advisors at McKinsey & Company, demonstrates confidence that Prospect Global will reach this next milestone as well as confidence in the overall project. With respect to the debt financing required to complete the project, Prospect Global has already had discussions with a number of leading sources of international mining financing who have indicated a strong interest in providing the required project finance debt, which we expect will be around $1 billion."

Gareth Turner, Senior Partner of Apollo, said: "Apollo is one of the leading private equity investors in the mining industry and one of the largest alternative investment management firms in the world. We believe American West Potash is a world-class project and are impressed with Prospect Global management's vision and capabilities. We look forward to the next phase of Prospect Global's development including the publication of the Definitive Feasibility Study and raising the remaining capital to complete the construction of the Holbrook mine."

Under the terms of the financing Apollo will purchase $100 million of seven year 10% Convertible Second Lien Notes following completion of the Definitive Feasibility Study that satisfies specified conditions, expected in the second quarter of 2013, as well as satisfaction of certain other closing conditions, including approval of the transaction by Prospect Global shareholders. Additionally, Apollo has an option to purchase approximately 26 million shares of Prospect Global common stock at an exercise price of $2.70 per share and approximately 22 million shares of Prospect Global common stock at an exercise price of $3.25 per share (exercisable any time through the six month anniversary of the purchase of the Notes).

The Notes will have an initial conversion price of $2.70 and an annual interest rate of 10%, of which 4% would be payable in cash and 6% payable in kind in additional Notes. The Notes will be convertible at any time by the holders and can be converted by Prospect Global upon completion of the Holbrook project and Prospect Global's common stock trading above two times the then-conversion price for a period of time. Apollo is currently entitled to designate one director to Prospect Global's board of directors and, upon closing of the transaction, will be entitled to designate three additional directors.

Certain Prospect Global shareholders, including members of the Prospect Global board, management and their affiliates, who collectively own approximately 22% of Prospect Global's voting stock, have agreed to vote to approve the transaction. Prospect Global will hold a shareholder meeting, expected to be early in 2013, to seek approval of the Apollo transactions.  Shareholders as of the record date for the meeting will receive proxy materials from Prospect Global and should review those materials in deciding whether to vote in favor of the transactions.

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