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Marret Resource Corp. Announces Participation In Cline Mining Restructuring

Stocks in this article: MAR

Trading Symbol: MAR

TORONTO, Jan. 16, 2013 /CNW/ - Marret Resource Corp. (TSX: MAR) (the "Company") is pleased to announce that it is participating in the financial restructuring of Cline Mining Corporation ("Cline") (TSX: CMK) as announced by Cline on December 27, 2012 (the "Restructuring Announcement"). On January 11, 2013, as part of a bridge financing to allow for a comprehensive recapitalization of its balance sheet, Cline issued US$7,000,000 of 10% senior secured bonds (the "Bonds), to be added to the US$50,000,000 of Bonds already outstanding.

The Company held US$6,710,000 of the Bonds prior to the additional issue of Bonds on January 11, 2013. As set out in the Restructuring Announcement, Marret Asset Management Inc. ("Marret"), on behalf of Cline's bondholders, including the Company, agreed to provide additional funding to Cline and to participate in the recapitalization of Cline under a plan proposed by Marret (the "Marret Plan"). The following sets out the Company's participation in the proposed Cline restructuring and the Marret Plan:

  • The Company has received a forbearance and restructuring fee in the amount of US$335,000, which has been satisfied by Cline issuing additional Bonds;
  • The Company purchased US$2,000,000 of additional Bonds (the "New Bonds") on January 11, 2013; the Company has agreed to purchase an additional US$1,000,000 in Bonds subject to Cline meeting various conditions;
  • The Company has received a cash commitment fee in the amount of US$100,000 in respect of the purchase of the New Bonds;
  • As an additional commitment fee for the purchase of the New Bonds, the Company received 400,000 new warrants from Cline, which are exercisable at a price of CDN$0.09 per common share and expire on January 11, 2016;
  • The exercise price on Cline's existing warrants held by the Company was reduced to CDN$0.09 from CDN$1.15;
  • In exchange for participating in a standby underwriting commitment (the "Standby Commitment") for a CDN$35,000,000 rights offering to current common shareholders of Cline at a price of CDN$0.0205 per share (the "Rights Offering Price"), the Company has received a commitment fee of US$642,000, which  was satisfied by the issuance of Bonds. The Company will exchange such Bonds for common shares of Cline at the Rights Offering Price, should the Marret Plan be implemented;
  • The Standby Commitment may require the Company to subscribe for up to CDN$6,400,000 worth of common shares of Cline at the Rights Offering Price; and
  • Under the Marret Plan, up to 40% of the Bonds held by the Company will be exchanged for common shares of Cline at an effective exchange price of approximately US$0.012 per share.

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