Banro Corporation: Exhibit 99.2 - Filed by newsfilecorp.com
EXECUTION VERSION
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT,
dated as of December 22, 2017 (as amended, supplemented or otherwise
modified from time to time, the “Agreement”), is entered
into by and among:
| (a) |
Banro Corporation (“Banro”) and its undersigned
direct and indirect subsidiaries (each, including Banro, a “Company
Party” and collectively, the “Company”); |
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| (b) |
Baiyin International Investment Limited and affiliates
thereof within the direct or indirect control of Baiyin Nonferrous Group
Company, Limited (collectively, “Baiyin”); |
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| (c) |
Gramercy Funds Management LLC, as agent for and on behalf
of the funds and accounts for which it acts as investment manager or
advisor as identified on its signature page hereto (“Gramercy”);
and |
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| (d) |
each of the other parties hereto (together with Baiyin
and Gramercy, the “Consenting Parties” and each a “Consenting
Party”) by executing a consent agreement in the form of Schedule “B”(a
“Consent Agreement”). |
RECITALS
WHEREAS, the Consenting
Parties include, inter alia (i) holders of the Notes (ii) lenders under
the Gold Streams, (iii) purchasers under the Gold Forwards, (iv) the lender
under the Dore Loan, and/or (v) holders of common shares of Banro (the
“Common Shares”);
AND WHEREAS, the Company,
the Consenting Parties (together with the Company, each a “Party” and
collectively, the “Parties”) and their respective advisors have engaged
in good-faith negotiations regarding a comprehensive restructuring of certain
financial obligations of the Company (the “Recapitalization”), pursuant
to which, among other things, (i) the Notes, the Namoya II Forward and the Dore
Loan (the “Affected Parity Lien Debt” and the claims and other
obligations arising thereunder, the “Parity Lien Debt Claims”) would be
exchanged for new equity to be issued by Banro (the “New Common Shares”),
(ii) the terms of the Namoya Forward, the Twangiza Forward and the Twangiza 2017
Forward (the “Affected Priority Lien Debt” and the claims and other
obligations arising thereunder, the “Priority Lien Debt Claims”) would be
amended to provide for, among other things, extended delivery schedules, and
(iii) the terms of the Gold Streams would be amended, all as set forth in the
restructuring term sheet (the “Restructuring Term Sheet”) attached as
Schedule “C” hereto;
AND WHEREAS, the
Consenting Parties have entered into this Agreement in support of a transaction
involving the Company (the “Transaction”), which Transaction shall either
be (i) a transaction (an “Alternative Transaction”) identified pursuant
to a Sales and Investment Solicitation Process (the “SISP”) in the form
attached as Schedule “D” hereto, and to be conducted by the Company in
accordance with the terms thereof and hereof and the Restructuring Term Sheet,
that constitutes an Acceptable Alternative Transaction (as defined below), or
(ii) the Recapitalization;
AND WHEREAS, the Parties
intend to implement the Transaction through proceedings (the “CCAA
Proceedings”) commenced by the Company under the Companies’
Creditors Arrangement Act (the “CCAA”) in the
Ontario Superior Court of Justice (Commercial List) (the “Court”) in accordance with the terms and conditions set
forth in this Agreement and pursuant to, (i) with respect to the Acceptable
Alternative Transaction, Court-approval as part of proceedings or, (ii) with
respect to the Recapitalization, a plan of arrangement or compromise (as it may
be amended from time to time in accordance with its terms and this Agreement,
the “Plan”) to be filed in respect of the CCAA Proceedings;
EXECUTION VERSION
AND WHEREAS,
Baiyin and Gramercy have agreed to provide debtor-in-possession interim
financing to the Company pursuant to the Interim Financing Facility (as defined
below), on the terms and conditions described in the interim financing term
sheet (the “Interim Financing Term Sheet”) attached as an exhibit to the
Restructuring Term Sheet;
AND WHEREAS,
each Party and its respective counsel and other advisors have reviewed or have
had the opportunity to review the Restructuring Term Sheet, Interim Financing
Term Sheet and this Agreement and each Party has agreed to the terms and
conditions set forth in the Restructuring Term Sheet, Interim Financing Term
Sheet and this Agreement;
AND WHEREAS,
capitalized terms used but not otherwise defined in the main text of this
Agreement have the meanings ascribed to such terms in Schedule “A”.
NOW THEREFORE,
the Parties hereby agree as follows:
| 1. |
Terms of the
Recapitalization |
The terms of the Recapitalization
as agreed among the Parties and to be implemented in accordance with the terms
of this Agreement (the “Recapitalization Terms”) are set
forth in the Restructuring Term Sheet, which is incorporated herein and made
part of this Agreement. In the case of a conflict between the provisions
contained in the text of this Agreement, the Restructuring Term Sheet and
Interim Financing Term Sheet, the terms of this Agreement shall govern. In the
case of a conflict between the provisions contained in the text of this
Agreement and the Plan, the terms of the Plan shall govern.
The obligations of the Parties
under this Agreement shall be conditional upon Baiyin having received all
regulatory approvals by January 19, 2018, or such other day as may be agreed to
with the Company and the Requisite Consenting Parties, in connection with the
transactions contemplated by this Agreement that it requires from any
legislative, executive, judicial or administrative body, agency or person having
or purporting to have jurisdiction in the People’s Republic of China or
subdivision thereof (the “PRC Approvals”). Baiyin shall
provide notice to the Company and each of the other Consenting Parties promptly
upon obtaining the PRC Approvals.
| 3. |
Representations and Warranties of the Consenting
Parties |
Each Consenting Party hereby
represents and warrants, severally and not jointly, to the Company and each
other Consenting Party (and acknowledges that the Company and each other
Consenting Party is relying upon such representations and warranties) that:
EXECUTION VERSION
| (a) |
It is, as at the date of this Agreement, the sole legal
and beneficial holder of (or has sole voting and investment discretion,
including discretionary authority to manage or administer funds and vote
or direct the voting with respect to) the principal amount(s) and/or
number, as applicable, of Parity Lien Debt Claims and Priority Lien Debt
Claims set forth on its signature page hereto (its “Relevant
Debt”); |
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| (b) |
It along with any related person, affiliate, related
group or person under common control with such Consenting Party together
do not own or control more than 50% of Banro’s voting Common
Shares; |
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| (c) |
This Agreement has been duly executed and delivered by
it, and, assuming the due authorization, execution and delivery by the
other Parties, this Agreement constitutes a legal, valid and binding
obligation of such Consenting Party, enforceable against such Consenting
Party in accordance with its terms, subject to laws of general application
and bankruptcy, insolvency and other similar laws affecting creditors’
rights generally and general principles of equity; |
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| (d) |
It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has
all necessary power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and consummate the transactions
contemplated hereby; |
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| (e) |
It is a sophisticated party with sufficient knowledge and
experience to properly evaluate the terms and conditions of this
Agreement; it has conducted its own analysis and made its own decision to
enter in this Agreement and has obtained such independent advice in this
regard as it deemed appropriate; and it has not relied on the analysis or
decision of any Person other than its own independent advisors; |
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| (f) |
The execution and delivery of this Agreement by it and
the completion by it of its obligations hereunder and the consummation of
the transactions contemplated herein do not and will not violate or
conflict with any judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to the Consenting Party or any of
its properties or assets (subject to obtaining all requisite approvals
contemplated by this Agreement); |
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| (g) |
Except as contemplated by this Agreement, it has not
deposited any of its Relevant Debt into a voting trust, or granted (or
permitted to be granted) any proxies or powers of attorney or attorney in
fact, or entered into a voting agreement, understanding or arrangement, or
granted (or permitted to be granted) any right or privilege (whether by
law, pre-emptive or contractual) capable of becoming a voting trust or
other agreement, with respect to the voting of its Relevant Debt where
such trust, grant, agreement, understanding, arrangement, right or
privilege would in any manner restrict the ability of the Consenting Party
to comply with its obligations under this Agreement, or the ability of any
holder of the Relevant Debt to exercise all ownership rights thereto;
and |
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| (h) |
To the best of its knowledge, there is not now pending or
threatened against it or any of its properties, nor has it received notice
in respect of, any claim, potential claim, litigation, action, suit,
arbitration, investigation or other proceeding before any Governmental
Entity that, individually or in the aggregate, would reasonably
be expected to materially impede its ability to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement. |
EXECUTION VERSION
| 4. |
Representations and Warranties of the
Company |
Each Company Party hereby jointly
and severally represents and warrants to each Consenting Party, (and each
Company Party acknowledges that each Consenting Party is relying upon such
representations and warranties) that:
| (a) |
To the best of its knowledge and based on the
Recapitalization Terms, no stakeholder, regulatory or Court approvals,
consents, waivers or filings are required to be obtained by any Company
Party in respect of the Recapitalization other than (i) Court approval of
the Plan, (ii) requisite approval of the creditors of the Plan at the
Creditors’ Meeting (as defined below), (iii) any approvals required in
connection with Banro’s application to cease to be a reporting issuer in
Canada or to be delisted from any applicable stock exchange, or (iv) any
approvals required in connection with the continuance of Banro from Canada
and its domestication in the Cayman Islands or such other jurisdiction
acceptable to the Requisite Consenting Parties; |
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| (b) |
This Agreement has been duly executed and delivered by
it, and, assuming the due authorization, execution and delivery by each of
the other Parties, this Agreement constitutes a legal, valid and binding
obligation of it, enforceable against it in accordance with its terms,
subject to laws of general application and bankruptcy, insolvency and
other similar laws affecting creditors’ rights generally and general
principles of equity; |
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| (c) |
It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has
all necessary corporate power and authority to conduct its business as
currently being conducted, and to execute and deliver this Agreement and
to perform its obligations hereunder and consummate the transactions
contemplated hereby and no steps or proceedings have been taken by any
Person, voluntary or otherwise, requiring or authorizing its dissolution
or winding up; |
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| (d) |
The execution and delivery of this Agreement by it and
the completion by it of its obligations hereunder and the consummation of
the transactions contemplated hereby do not and will not violate or
conflict with (i) any judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to it or any of its properties or
assets, (ii) its articles, bylaws and constating documents, or (iii)
subject to any default that may be stayed by the Court in the CCAA
Proceedings, any Material Contract to which it is a party except where
such violation or conflict would not reasonably be expected to cause a
Material Adverse Change; |
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| (e) |
It attorns to the jurisdiction of the Court with respect
to all matters relating to the Transaction, the CCAA Proceedings and this
Agreement; |
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| (f) |
Except as disclosed in the Information or as otherwise
disclosed in the Disclosure Letter, there is no proceeding, claim or
investigation pending or threatened against it or any
of its properties or assets, nor has it received notice in respect
of, any claim, potential claim, litigation, action, suit, arbitration,
investigation or other proceeding before any Governmental Entity that,
individually or in the aggregate, would reasonably be expected to cause a
Material Adverse Change; |
EXECUTION VERSION
| (g) |
Except as disclosed in the Information or as otherwise
disclosed in the Disclosure Letter, it does not have any Material
Liabilities as of the date of this Agreement except (i) Liabilities which
are reflected and properly reserved against in the Financial Statements or
(ii) Liabilities incurred in the ordinary course of business and
consistent with past practice since June 30, 2017; |
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| (h) |
Except as disclosed in the Information or as otherwise
disclosed in the Disclosure Letter or contemplated by this Agreement and
the transactions contemplated hereby, there has not been since June 30,
2017, (i) any Material Adverse Change, (ii) any Material transaction to
which the Company is a party outside the ordinary course of business, or
(iii) any Material change in the capital or outstanding Liabilities of the
Company; |
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| (i) |
Other than the other Company Parties and as disclosed in
the Disclosure Letter, Banro has no direct or indirect affiliates or
subsidiaries nor any investment in any Person or any agreement, option or
commitment to acquire any such investment. All of the issued and
outstanding common shares in the capital of each such subsidiary have been
duly authorized and validly issued, are fully paid and are, except as set
forth in the Disclosure Letter, directly or indirectly beneficially owned
by Banro, free and clear of any liens or other encumbrances (other than
under the Amended and Restated Collateral Trust Agreement). None of the
outstanding shares of the capital stock of any such subsidiary was issued
in violation of the pre-emptive or similar rights of any security holder
of such subsidiary. There exist no options, warrants, purchase rights, or
other contracts or commitments that could require Banro to sell, transfer
or otherwise dispose of any capital stock of any subsidiary; |
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| (j) |
Except as disclosed in the Information, other than the
cease trade order dated November 20, 2017 or the delisting review letter
received from the TSX dated November 27, 2017, no order halting or
suspending trading in securities of Banro or prohibiting the sale of such
securities has been issued to and is outstanding against Banro, and to the
knowledge of Banro and the directors and officers of Banro, as applicable,
and except as may be related to matters disclosed in the Information or as
otherwise disclosed in the Disclosure Letter, no investigations or
proceedings for such purpose are pending or threatened as of the date of
this Agreement; |
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| (k) |
Its Material assets and property have been operated,
prior to the date of this Agreement, in a manner consistent with customary
industry practices in the jurisdictions in which they are located, except
as otherwise disclosed in the Disclosure Letter; |
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| (l) |
Except as disclosed in the Information, it has conducted
its business in substantial compliance with all Laws and it has not
received any notice to the effect that, nor has it otherwise been advised
that, it is not in substantial compliance with such Laws, except where
such non-compliance would not reasonably be expected to result in a
Material Adverse Change; |
EXECUTION VERSION
| (m) |
Except as disclosed in the Information, it has obtained
all permits, licenses and other authorizations which are required under
all Environmental Laws and, as of the date of this Agreement, it is in
substantial compliance with all Environmental Laws and all terms and
conditions of all such permits, licenses and authorizations, except where
absence of such permits, licenses or other authorizations or such
non-compliance would not reasonably be expected to result in a Material
Adverse Change; |
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| (n) |
It has filed all tax returns which were required to be
filed as of the date hereof, has paid or made provision for payment (in
accordance with GAAP) of all Taxes which are due and payable as of the
date hereof, and has provided adequate reserves (in accordance with GAAP)
for the payment of any Tax, the payment of which is being contested as of
the date hereof, except to the extent that any failure to make any such
filing, payment, provision or reserves would not reasonably be expected to
result in a Material Adverse Change. Adequate provision has been made in
the Financial Statements issued by Banro on or after June 30, 2017, for
all Taxes for any period for which Tax returns are not yet required to be
filed by a Company Party or for which Taxes are not yet due and payable.
Each Company Party has withheld or collected any Taxes that are required
by applicable Law to be withheld or collected and has paid or remitted, on
a timely basis, the full amount of any Taxes that have been withheld or
collected, and are due, to the applicable Governmental Entities; |
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| (o) |
Except as disclosed in the Information or as otherwise
disclosed in the Disclosure Letter, from June 30, 2017, there has not been
any resignation or termination of any of its officers or directors, or any
increase in the rate of compensation payable or to become payable by it to
any of its officers or directors (other than standard increases in
connection with general, regularly-scheduled reviews consistent with past
practice), including the making of any loan to, or the payment, grant or
accrual of any Bonus Payment to, any such Person; |
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| (p) |
Except as disclosed in the Information or as otherwise
disclosed in the Disclosure Letter, there have been no Material changes to
the compensation for the top five highest paid employees of the Company
from their compensation as disclosed in the Information and the Company
has not agreed to any key employee retention plans in respect to such
employees, or agreed to, or become obligated to pay any, Bonus Payments to
such employees, except in accordance with the terms of existing bonus,
incentive or retention plans or arrangements; |
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| (q) |
Except as disclosed in the Information or as otherwise
disclosed in the Disclosure Letter, since January 1, 2017, Banro has
complied with its public reporting obligations under Securities Laws, and
all documents filed with the relevant securities regulators by Banro, at
the time filed, (i) complied with all applicable Securities Laws and (ii)
did not contain any untrue statement of a Material fact or omit to state a
Material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; |
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| (r) |
Except as a result of the execution of this Agreement and
the Transaction, there is no material change, as defined in applicable
Securities Laws, relating to the Company, or any change in any material
fact, as defined in applicable Securities Laws, relating to
the Company, which has not been fully disclosed in accordance with
the requirements of Applicable Securities Laws and the rules and regulations of
applicable stock exchanges. The Company has not filed any material change
reports on a confidential basis which remain confidential; |
EXECUTION VERSION
| (s) |
The Financial Statements issued by Banro on or after
January 1, 2017 fairly reflect in all material respects as of the dates
thereof, the consolidated financial condition of the Company and the
results of its operations for the periods covered thereby and have been
prepared in accordance with GAAP and, since January 1, 2017, except as set
forth in the Information or as otherwise disclosed in the Disclosure
Letter, there has been no Material Adverse Change in the consolidated
financial condition of the Company or its properties, assets, condition or
undertakings; |
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| (t) |
All of the Material Contracts entered into prior to the
date hereof are valid, binding and enforceable in accordance with their
terms against it, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors or general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity); and except as disclosed in the Information or as
otherwise disclosed in the Disclosure Letter, there is no existing (or
threatened in writing) breach, default or dispute with respect to, nor has
any event or circumstance occurred as of the date hereof which, but for
the passage of time or the giving of notice, or both, would constitute a
breach or default by the Company under, any of the Material Contracts that
would reasonably be expected to result in a Material Adverse
Change; |
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| (u) |
As of the date of this Agreement there are no Material
undisclosed potential secured, unsecured, contingent or other claims
against the Company except as disclosed in the Information or as otherwise
disclosed in the Disclosure Letter; |
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| (v) |
Except as set forth in the Information or in the
Disclosure Letter, it does not have any Indebtedness and has not directly
or indirectly created, incurred, assumed, permitted or suffered to exist
any Security Interest, royalty or other encumbrance against of its assets;
and |
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| (w) |
Other than in the ordinary course of business, it has not
approved, entered into any agreement in respect of, and has no knowledge
of the purchase of any Material property or any interest therein or the
sale, transfer or other disposition of any Material property or any
interest therein currently owned, directly or indirectly, by the Company,
whether by asset sale, transfer of shares, or
otherwise. |
| 5. |
Acknowledgments, Covenants and Agreements of the
Consenting Parties |
Subject to, and in consideration
of, the matters set forth in Section 6 below, each Consenting Party hereby
acknowledges, covenants and agrees on a several, and not joint or joint and
several basis, to the Company and to each other Consenting Party:
| (a) |
to take all commercially reasonable actions that are
reasonably necessary or appropriate to consummate the Transaction in
accordance with the terms and conditions set forth
in this Agreement and the SISP, and in respect of the
Recapitalization, this Agreement, the Restructuring Term Sheet and the SISP; |
EXECUTION VERSION
| (b) |
to not acquire and to ensure any related person,
affiliate, related group or person under common control together do not
acquire ownership or control of more than 50% of Banro’s voting Common
Shares; |
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| (c) |
to tender or vote (or cause to be tendered or voted) all
of its Relevant Debt to accept the Plan, if applicable, by taking such
actions as are necessary to accept the Plan on a timely basis following
the commencement of any solicitation in accordance with this Agreement and
the CCAA and its actual receipt of solicitation materials that have been
approved by the Court; |
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| (d) |
to support the approval of the Acceptable Alternative
Transaction, and if no such transaction is identified pursuant to the
SISP, the approval of the Plan by the Court on terms consistent with this
Agreement, as promptly as practicable, through its legal advisors or
otherwise; |
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| (e) |
not to take any action, or omit to take any action, that
would have the effect of delaying, challenging, frustrating or hindering
the approval or consummation of the Transaction; |
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| (f) |
provided that the Company is performing all of its
material obligations under and in accordance with this Agreement, not to
(i) seek the removal of any director of Banro pursuant to section 11.5(1)
of the CCAA or otherwise, (ii) bring any motion which, if granted, would
suspend or narrow the powers of any director of Banro (provided that
nothing herein shall restrict the right of the Consenting Parties to bring
a motion for the expansion of powers of the CCAA monitor or the
appointment of a chief restructuring officer, should the circumstances
reasonably require any such action), and (iii) support any other person in
taking any of the actions described above; |
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| (g) |
not to, directly or indirectly, sell, assign, lend,
pledge, hypothecate (except with respect to security generally applying to
its investments which does not adversely affect such Consenting
Party’s ability to perform its obligations under this Agreement)
or otherwise transfer any of its Relevant Debt or any interest therein (or
permit any of the foregoing with respect to any of its Relevant Debt), or
relinquish or restrict the Consenting Party’s right to vote any
of its Relevant Debt (including without limitation by way of a voting
trust or grant of proxy or power of attorney or other appointment of an
attorney or attorney-in-fact), or enter into any agreement, arrangement or
understanding in connection therewith, except that: the Consenting Party
may transfer some or all of its Relevant Debt to (A) any other fund
managed by the Consenting Party for which the Consenting Party has sole
voting and investment discretion, including sole discretionary authority
to manage or administer funds and continues to exercise sole investment
and voting authority with respect to the transferred Relevant Debt (other
than Persons referred to in Section 18(a)(i)), (B) any other Consenting
Party, or (C) any other Person provided such Person agrees to be bound by
the terms of this Agreement with respect to the transferred Relevant Debt
that is subject to such transfer and any other Relevant Debt held by it
and, contemporaneously with the transfer, delivers an executed Consent
Agreement. Each Consenting Party hereby agrees to provide the Company with
written notice and, if applicable, a fully executed copy of the Consent
Agreement, within five Business Days following any transfer to a transferee
described in (B) or (C) of this Section 5(g); |
EXECUTION VERSION
| (h) |
to execute any and all documents and perform (or cause
its agents and advisors to perform) any and all commercially reasonable
acts required by this Agreement (it being understood and agreed that the
Recapitalization Terms are deemed to be commercially reasonably for the
purposes of this Agreement) in order to satisfy its obligations hereunder
and in respect of the Transaction; |
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| (i) |
subject at all times to Section 9,to the existence and
factual details of this Agreement being set out in any public disclosure,
including, without limitation, press releases and court materials,
produced by the Company at the discretion of the Company in connection
with the Transaction, the CCAA Proceedings and the Plan (subject in each
case to prior approval thereof by the Requisite Consenting Parties, acting
reasonably, and to the extent required in accordance with the provisions
of this Agreement); and |
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| (j) |
not to accelerate or enforce, or take any action or
initiate any proceeding to accelerate or enforce, the payment or repayment
of any of its Relevant Debt, and not to support any other holder of any of
the Affected Parity Lien Debt in taking any of the actions described
above. |
| 6. |
Acknowledgements, Agreements, Covenants and
Consents of the Company |
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| (a)
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Subject to the terms and conditions hereof, each and
every Company Party consents and agrees to the terms of, and the
transactions contemplated by, this Agreement and the Plan. |
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| (b)
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Upon execution of this Agreement, Banro will, in a timely
manner, cause to be issued a press release in the form attached as
Schedule "E" hereto and file a copy of this Agreement
(provided that the signature pages of the Consenting Parties shall be
redacted, and subject to the other redactions as may be required by
Section 9of this Agreement) with the System for Electronic Document
Analysis and Retrieval. |
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| (c) |
The Company shall provide the Requisite Consenting Party
Advisors and the Requisite Consenting Parties with reasonable access to
the books and records of the Company and reasonable access to the
respective management and advisors of the Company Parties, in each case
for the purposes of evaluating the Company’s business plans and
participating in the plan process with respect to the
Transaction. |
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| (d)
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Except as may be otherwise permitted under this
Agreement, the Company shall take all actions reasonably necessary or
appropriate to consummate the Transaction in accordance with the SISP. In
the event that an Acceptable Alternative Transaction has not been
identified pursuant to the SISP, the Company agrees that it shall proceed
with the implementation of the Recapitalization pursuant to the Plan as
contemplated by the SISP. |
EXECUTION VERSION
| (e) |
The Company Parties shall not take any action, or omit to
take any action, with the intent of, or which could reasonably be expected
to have the effect of, delaying, challenging, frustrating or hindering the
consummation of the Transaction. |
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| (f) |
The Company shall provide draft copies of all motions,
applications and other documents with respect to the Transaction and the
CCAA Proceedings that the Company intends to file with the Court to the
Requisite Consenting Party Advisors at least two Business Days prior to
the date when the Company intends to file or otherwise disseminate such
documents (or, where circumstances make it impracticable to allow for two
Business Days’ review, with as much opportunity for review and comment as
is practically possible in the circumstances), and all such filings shall
be acceptable to the Requisite Consenting Parties, acting reasonably and
in a manner consistent with the terms of this Agreement. For greater
certainty, the Initial Order, the Order approving the SISP, any further
orders approving the Interim Financing Facility and related Court- ordered
charge, any order approving an Acceptable Alternative Transaction, as
applicable, the Meeting Order and/or any other order of the Court
concerning or related to the Transaction shall be submitted to the Court
in a form mutually agreed by the Company and the Requisite Consenting
Parties, acting reasonably and in a manner consistent with the terms of
this Agreement, and each such document shall be subject to any amendments
that are required by the Court, provided that any such amendments are
acceptable to the Company and the Requisite Consenting Parties, acting
reasonably and in a manner consistent with the terms of this
Agreement. |
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| (g) |
The Company’s application for any final approval or
sanction order in respect of the Transaction (the “Transaction
Approval Order”) shall include a request for a provision in the
Transaction Approval Order under the CCAA providing for the release of
each Consenting Party, CCAA Applicants and their respective present and
former shareholders, members, partners, officers, directors, employees,
auditors, financial advisors, legal counsel and agents from any and all
demands, claims, liabilities, causes of action, debts, accounts,
covenants, damages, executions and other recoveries based in whole or in
part on any act or omission, transaction, dealing or other occurrence
existing or taking place on or prior to the Effective Time, relating to,
arising out of or in connection with the Notes, the Common Shares, the
Transaction, the commencement of the CCAA Proceedings, the Plan, the
Interim Financing and Interim Financing Term Sheet, each as applicable,
and this Agreement; provided that nothing herein or in any such release
shall release or discharge any of the CCAA Applicants or the Consenting
Parties if it is adjudged by the express terms of a judgment rendered on a
final determination on the merits to have committed gross negligence,
fraud or wilful misconduct. |
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| (h) |
Each of the Company Parties covenants and agrees to be
liable to and to indemnify and save harmless each of the Consenting
Parties, together with their respective subsidiaries and affiliates and
their respective present and former shareholders, members, partners,
officers, directors, employees, auditors, financial advisors, legal
counsel and agents (each an “Indemnified Party” and,
collectively, the “Indemnified Parties”) from and
against any and all liabilities, claims, actions, proceedings, losses,
costs, damages and expenses of any kind, including, without limitation,
the reasonable costs of defending against any of the foregoing, to which
any Indemnified Party may become subject or may suffer or incur in any way in relation to or arising from
the Recapitalization or this Agreement, regardless of whether or not any such
claim is ultimately successful, and in respect of any good faith judgment or
settlement which is made in respect of any such claim in accordance with the
terms hereof, provided however that the Company Parties shall not be liable to
or obligated to indemnify an Indemnified Party if the claim against the
Indemnified Party is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from the negligence or wilful misconduct
of the Indemnified Party. If any matter or thing contemplated in the preceding
sentence (any such matter or thing being a “Claim”) is
asserted against any Indemnified Party or if any potential Claim contemplated
hereby comes to the knowledge of any Indemnified Party, the Indemnified Party
shall notify the Company as soon as reasonably possible of the nature and
particulars of such Claim (provided that any failure to so notify the Company
shall not affect the Company’s liability hereunder except to the extent that the
Company is prejudiced thereby and then only to the extent of any such prejudice)
and the Company shall, subject as hereinafter provided, be entitled (but not
required) to assume at its expense the defence of any suit brought to enforce
such Claim; provided that the defence of such Claim shall be conducted through
legal counsel reasonably acceptable to the Indemnified Party and that no
admission of liability or settlement in respect of any such Claim may be made by
the Company (other than a settlement that (i) includes a full and unconditional
release of the Indemnified Party without any admission or attribution of fault
or liability on their part and (ii) does not require any Indemnified Party to
pay any amount or agree to any ongoing covenants) or the Indemnified Party
without, in each case, the prior written consent of the other, such consent not
to be unreasonably withheld. In respect of any Claim, the Indemnified Party
shall have the right to retain separate or additional counsel to act on its
behalf in the defence thereof, provided that the fees and disbursements of such
counsel shall be paid by the Indemnified Party unless (i) the Company fails to
assume and diligently and actively prosecute the defence of the Claim on behalf
of the Indemnified Party within ten Business Days after the Company has received
notice of the Claim, (ii) the Company and the Indemnified Party shall have
mutually agreed to the retention of the separate or additional counsel, or (iii)
the named parties to the Claim (including any added third or impleaded party)
include both the Indemnified Party and the Company, and the Indemnified Party
shall have been advised by its counsel that representation of both parties by
the same counsel would be inappropriate due to the actual or potential differing
interests between them, in which case the Company shall not have the right to
assume the exclusive defence of the Claim and the Company shall be liable to pay
the reasonable fees and expenses of the separate or additional counsel for the
Indemnified Party. |
EXECUTION VERSION
| (i) |
The Company shall not, without the prior consent of the
Requisite Consenting Parties, amend, modify, replace, terminate,
repudiate, disclaim or waive any rights under or in respect of its
Material Contracts. |
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| (j) |
The Company shall provide draft copies of all press
releases, disclosure documents, definitive agreements and Meeting
Materials with respect to the Transaction and the CCAA Proceedings to the
Requisite Consenting Party Advisors for review and comment, and all such
documents shall be acceptable to the Requisite Consenting Parties, acting
reasonably and in a manner consistent with the terms of this
Agreement. |
EXECUTION VERSION
| (k) |
Subject to Court approval of the Interim Financing Term
Sheet and related budget and the advance of funds under the Interim
Financing Facility, the Company shall reimburse the Requisite Consenting
Parties in their capacities as significant pre-filing creditors up to and
including the date of the Initial Order (as defined below) for all fees,
disbursements and out-of-pocket expenses incurred by the each of the
Requisite Consenting Parties in connection with the negotiation and
development of the Transaction and the CCAA Proceedings, including,
without limitation, the reasonable and documented fees and expenses of the
Requisite Consenting Party Advisors, in each case within seven days of
receipt by the Company of an invoice in respect of such fees and expenses,
in each case pursuant and in accordance with the terms of the Interim
Financing Term Sheet. |
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| (l) |
The Company shall not pay, and shall not enter into an
agreement or arrangement with any party that contemplates paying, a
success fee or transaction fee in connection with the Transaction without
the consent of the Requisite Consenting Parties. |
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| (m) |
The Company shall not materially increase compensation or
severance entitlements or other benefits payable to directors, officers or
employees, enter into any key employee retention plans subsequent to the
date hereof or make any Bonus Payments whatsoever without the prior
written consent of the Requisite Consenting Parties. |
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| (n) |
Except with the consent of the Requisite Consenting
Parties and/or in connection with a Court-approved Transaction, or as
contemplated by this Agreement, the Company shall not transfer, lease,
license or otherwise dispose of all or any part of its property, assets or
undertakings outside the ordinary course. |
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| (o) |
Except with the consent of the Requisite Consenting
Parties and/or in connection with a Court-approved Transaction, or as
contemplated by this Agreement and the transactions contemplated hereby,
none of the Company Parties shall amalgamate, consolidate with or merge
into, or sell all or substantially all of its assets to, another entity,
or change the nature of its business or its corporate or capital
structure, or issue any Common Shares or other securities. |
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| (p) |
Banro shall, on its own behalf and on behalf of the other
Company Parties, promptly (and in any event within one Business Day)
notify the Requisite Consenting Parties if there have been any changes,
events or circumstances which could adversely affect the business,
operations or condition (financial or otherwise) of the Company or any of
its affiliates or subsidiaries such that the Company may not be able to
perform its material obligations in accordance with the terms of this
Agreement. |
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| (q) |
Except with the consent of the Requisite Consenting
Parties, as contemplated by this Agreement and the transactions
contemplated hereby, or as provided for in the Initial Order or further
order of the Court, the Company shall not: (i) prepay, redeem prior to
maturity, defease, repurchase or make other prepayments in respect of any
non- revolving indebtedness; (ii) make any other payments or pay any fees
of any kind in respect of any non-revolving indebtedness for borrowed
money including, without limitation, any consent, waiver or default fee;
(iii) directly or indirectly, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect
to any indebtedness of any kind whatsoever (except for
indebtedness that is incurred in the ordinary course of business and that is not
Material); or (iv) create, incur, assume or otherwise cause or suffer to exist
or become effective any new lien, charge, mortgage, hypothec or security
interest of any kind whatsoever on, over or against any of its assets or
property (except for any lien, charge, hypothec or security interest incurred in
the ordinary course of business and that is not Material). |
EXECUTION VERSION
| (r) |
Except with the consent of the Requisite Consenting
Parties, as contemplated by this Agreement and the transactions
contemplated hereby, or on further order of the Court, the Company shall
not: (i) amend its articles, notice of articles, charter or by-laws or
other comparable organizational documents; (ii) split, combine or
reclassify any shares in the capital of a Company Party, or declare, set
aside or pay any dividend or other distribution or payment (whether in
cash, securities or property or any combination thereof) in respect of a
Company Party’s securities owned by any person or the securities of any
subsidiary other than, in the case of any subsidiary wholly-owned by
Banro, any dividends payable to the Company; (iii) issue, grant, deliver,
sell or pledge, or agree to issue, grant, deliver, sell or pledge, any
shares or securities of a Company Party, or any options, warrants,
securities or similar rights convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, shares or
other securities of a Company Party; (iv) redeem, purchase or otherwise
acquire, or offer to redeem, purchase or otherwise acquire, any
outstanding securities of a Company Party; (v) amend the terms of any of
its securities; (vi) adopt a plan of liquidation or resolution providing
for the liquidation or dissolution of a Company Party; or (vii) amend its
accounting policies or adopt new accounting policies, in each case except
as required in accordance with GAAP. |
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| (s) |
The Company shall maintain and shall continue to maintain
appropriate insurance coverage in amounts and on terms that are customary
in the industry of the Company and in accordance with past
practices. |
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| (t) |
Banro shall ensure that the materials (the
“Meeting Materials”) to be distributed in connection
with the approval of the Plan at the meeting of the Company’s creditors
(the “Creditors’ Meeting”), if applicable, provide
the creditors with information in sufficient detail to permit them to form
a reasoned judgment concerning the matters to be placed before them at the
Creditors’ Meeting. |
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| (u) |
Except as contemplated by this Agreement and the
transactions contemplated hereby, each of the Company Parties shall
operate its business in the ordinary course of business, having regard to
the Company’s financial condition. |
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| (v) |
The Company has not violated and will not violate, and
has not taken and will not take any act in furtherance of violating,
directly or indirectly, any provision of the U.S. Foreign Corrupt
Practices Act of 1977 (as amended) or any other anti-corruption or anti-
bribery laws or regulations applicable to the
Company. |
EXECUTION VERSION
| 7. |
Negotiation of Documents |
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| (a) |
The Company Parties and the Consenting Parties shall
independently cooperate with each other and shall independently coordinate
their activities (to the extent practicable and reasonable) in respect of
(i) the timely satisfaction of conditions with respect to the
effectiveness of the Transaction, (ii) all matters concerning the
implementation of the Transaction, and (iii) the pursuit and support of
the Transaction and the satisfaction of each Party’s own obligations
hereunder. Furthermore, subject to the terms hereof, the Company and each
of the Consenting Parties shall take such commercially reasonable actions
as may be necessary to carry out the purposes and intent of this
Agreement, including making and filing any required regulatory filings
(provided that, subject to Court approval of the Interim Financing Term
Sheet and related budget and the advance of funds under the Interim
Financing Facility, the Company shall reimburse the Requisite Consenting
Parties for fees, disbursements and out-of-pocket expenses (including
legal and professional fees and expenses on a full indemnity basis)
incurred by each of the Requisite Consenting Parties in connection with
the negotiation and development of the Transaction and these CCAA
Proceedings, in each case whether before or after the date of this
Agreement and irrespective of whether or not the Transaction is
implemented) in each case pursuant to and in accordance with the terms of
the Interim Financing Term Sheet. |
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| (b) |
Each of the Company and each of the Consenting Parties
hereby covenants and agrees (i) to use its commercially reasonable efforts
to negotiate the Definitive Documents, and (ii) subject to any applicable
Court approvals, to execute (to the extent it is a party thereto) and
otherwise perform its obligations under such documents. |
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| 8. |
Conditions to the Transaction |
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| (a) |
The Transaction shall be subject to the satisfaction of
the following conditions prior to or at the time the Transaction is
implemented (the “Effective Time”), each of which is for the mutual
benefit of the Company, on the one hand, and the Consenting Parties, on
the other hand, and may be waived, in whole or in part, jointly by the
Company and the Requisite Consenting Parties (provided that such
conditions shall not be enforceable by the Company or the Consenting
Parties, as the case may be, if any failure to satisfy such conditions
results from an action, error or omission by or within the control of the
Party seeking enforcement (or, in the case where the party seeking
enforcement is one or more of the Consenting Parties, an action, error or
omission by or within the control of the Consenting Party seeking
enforcement)): |
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(i) |
the Transaction Approval Order shall have been granted by
the Court and shall be in full force and effect; |
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(ii) |
the Implementation Date shall have occurred no later than
the Outside Date; |
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(iii) |
in the event the Recapitalization is to be implemented
pursuant to the Plan, the Plan shall have been approved by the
Court; |
EXECUTION VERSION
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(iv) |
each of the Definitive Documents shall contain terms and
conditions consistent in all respects with this Agreement and shall
otherwise be acceptable to the Company and the Requisite Consenting
Parties, each acting reasonably; |
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(v) |
all required stakeholder, regulatory and Court approvals,
consents, waivers and filings shall have been obtained or made, as
applicable, on terms satisfactory to the Requisite Consenting Parties and
the Company, each acting reasonably, and copies of any and all such
approvals, consents and/or waivers shall have been provided to the
Requisite Consenting Party Advisors; |
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(vi) |
all filings under applicable Laws shall have been made
and any regulatory consents or approvals that are required in connection
with the Transaction shall have been obtained and, in the case of waiting
or suspensory periods, such waiting or suspensory periods shall have
expired or been terminated; and |
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(vii) |
there shall not be in effect any preliminary or final
decision, order or decree by a Governmental Entity, no application shall
have been made to any Governmental Entity, and no action or investigation
shall have been announced, threatened or commenced by any Governmental
Entity, in consequence of or in connection with the Transaction that
restrains, impedes or prohibits (or if granted would reasonably be
expected to restrain, impede or inhibit), the Transaction or any part
thereof or requires or purports to require a variation of the
Transaction. |
| (b) |
The obligations of the Consenting Parties to complete the
Recapitalization is subject to the satisfaction of the following
conditions prior to or at the Effective Time, each of which is for the
exclusive benefit of the Consenting Parties and may be waived, in whole or
in part, by the Requisite Consenting Parties (provided that such
conditions shall not be enforceable by the Consenting Parties if any
failure to satisfy such conditions results from an action, error or
omission by or within the control of the Consenting Party seeking
enforcement): |
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(i) |
there shall not have occurred any Material Adverse
Change; |
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(ii) |
all of the following shall have been acceptable to the
Requisite Consenting Parties, acting reasonably and in a manner consistent
with the terms of this Agreement, at the time of their filing or issuance:
(i) all materials filed by the Company with the Court or any other court
of competent jurisdiction in Canada or any other jurisdiction that relate
to the Recapitalization; and (ii) the Definitive Documents; |
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(iii) |
each other Requisite Consenting Party shall have
performed all of its material obligations under and in accordance with
this Agreement; |
EXECUTION VERSION
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(iv) |
the Company shall have performed all of its material
obligations under and in accordance with this Agreement and Banro, on its
own behalf and on behalf of the other Company Parties, shall have
confirmed as of the Implementation Date in writing (which may be through
counsel) to the Requisite Consenting Parties that it believes it has
performed its material obligations hereunder; |
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(v) |
the representations and warranties of the Company set
forth in this Agreement shall continue to be true and correct in all
material respects (except to the extent such representations and
warranties are by their terms given as of a specified date, in which case,
such representations and warranties shall be true and correct in all
respects as of such date), except as such representations and warranties
may be affected by the occurrence of events or transactions contemplated
and permitted by this Agreement and the Company shall have confirmed as of
the Implementation Date in writing (which may be through counsel) to the
Requisite Consenting Parties that it believes the representations and
warranties remain true; |
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(vi) |
the leases and the executory contracts and other
contractual obligations of the CCAA Applicants and other unsecured claims
against the CCAA Applicants shall be dealt with in a manner acceptable to
the Company and Requisite Consenting Parties; and |
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(vii) |
on the Implementation Date, the Requisite Consenting
Parties shall have been reimbursed the reasonable fees and expenses, in
accordance with the terms of this Agreement, incurred in connection with
the Recapitalization, including, without limitation the reasonable fees
and expenses of the Requisite Consenting Party Advisors (including an
estimate of any fees and expenses expected to be incurred up to and
following completion of the Transaction), provided the Requisite
Consenting Parties shall have advised the Company of those expenses at
least five Business Days prior to the Implementation
Date. |
| (c) |
The obligations of the Company to complete the
Transaction is subject to the satisfaction of the following conditions
prior to or at the Effective Time, each of which is for the exclusive
benefit of the Company and may be waived, in whole or in part, by the
Company (provided that such conditions shall not be enforceable by the
Company if any failure to satisfy such conditions results from an action,
error or omission by or within the control of the
Company): |
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(i) |
the Consenting Parties shall have complied in all
material respects with each of their covenants in this Agreement and
performed all of their material obligations under and in accordance with
this Agreement and each of the Requisite Consenting Parties shall have
confirmed as of the Implementation Date in writing (which may be through
counsel and may include e-mail) to Banro that it believes it has performed
its material obligations hereunder that are to be performed on or before
the Implementation Date; |
EXECUTION VERSION
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(ii) |
the representations and warranties of the Consenting
Parties set forth in this Agreement shall be true and correct in all
material respects as of the Implementation Date with the same force and
effect as if made at and as of such time, except that representations and
warranties that are given as of a specified date shall be true and correct
as of such date and except as such representations and warranties may be
affected by the occurrence of events or transactions contemplated and
permitted by this Agreement; |
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(iii) |
the leases and executory contracts and other contractual
obligations of the CCAA Applicants and other unsecured claims against the
CCAA Applicants shall be dealt with in a manner consistent with the
Restructuring Term Sheet; |
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(iv) |
on the Implementation Date, Cassels shall have been
reimbursed its reasonable fees and expenses, incurred in connection with
the Transaction (including an estimate of any fees and expenses expected
to be incurred up to and following completion of the Transaction),
provided Cassels shall have advised the Company of those expenses at least
five Business Days prior to the Implementation Date; and |
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(v) |
on the Implementation Date, all accrued, unpaid and
reasonable fees and expenses of the directors of the Company shall have
been paid in full. |
| (a) |
No press release or other public disclosure concerning
the Transaction contemplated herein shall be made by the Company without
previously consulting with the Requisite Consenting Party Advisors, except
as, and only to the extent that, the disclosure is required (as determined
by the Company on the basis of the advice of its outside legal counsel) by
applicable Law, in connection with the CCAA Proceedings or by the rules of
any stock exchange on which the Company’s securities are listed or traded,
by any other regulatory authority having jurisdiction over the Company, or
by any court of competent jurisdiction; provided, however, that the
Company shall, to the extent legally permitted, provide the Requisite
Consenting Parties (through the Requisite Consenting Party Advisors) with
a copy of such disclosure in advance of any release and, to the extent
practicable under the circumstances, an opportunity to consult with the
Company as to the contents thereof and to provide comments
thereon. |
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| (b) |
Notwithstanding the foregoing, no information with
respect to the principal amount or number of, as applicable, Relevant Debt
held or managed by any individual Consenting Party shall be disclosed by
the Company and no information with respect to the identity of a
Consenting Party shall be disclosed by the Company, except as may be
required by applicable Law or by the rules of any stock exchange on which
any of the Company’s securities are listed or traded, by any other
regulatory authority having jurisdiction over the Company, or by any court
of competent jurisdiction; provided however, that the aggregate amount of
any class of Relevant Debt held by the Consenting Parties collectively may
be disclosed. |
EXECUTION VERSION
| (c) |
Each Consenting Party agrees that prior to making any
public announcement or statement or issuing any press release or any other
public disclosure with respect to this Agreement, the Transaction, the
Plan or any negotiations, terms or other facts with respect thereto, it
shall, to the extent practicable under the circumstances, provide the
other Parties with a copy of such disclosure in advance of any release and
an opportunity to consult as to the contents thereof and to provide
comments thereon. |
Each Party shall do all such
things in its control, take all such actions as are commercially reasonable,
deliver to the other Parties such further information and documents and execute
and deliver to the other Parties such further instruments and agreements as
another Party shall reasonably request to consummate or confirm the transactions
provided for in this Agreement, to accomplish the purpose of this Agreement or
to assure the other Party the benefits of this Agreement.
| 11. |
Approval, Consent, Waiver, Amendment of or by
Consenting Parties and the Company |
Except as may be otherwise
specifically provided for under this Agreement, where this Agreement provides
that a matter shall have been approved, agreed to, consented to, waived or
amended by the Requisite Consenting Parties, or that a matter must be
satisfactory or acceptable to the Requisite Consenting Parties, such approval,
agreement, consent, waiver, amendment, satisfaction, acceptance or other action
shall be effective or shall have been obtained or satisfied, as the case may be,
for the purposes of this Agreement where each of the Requisite Consenting
Parties, shall have confirmed their approval, consent, waiver, amendment,
satisfaction or acceptance, as the case may be, to the Company or to their
respective Requisite Consenting Party Advisor, in which case such Requisite
Consenting Party Advisor shall communicate any such approval, agreement,
consent, waiver, amendment, satisfaction, acceptance, or other action to the
Company for purposes of this Agreement and the terms and conditions hereof. The
Company shall be entitled to rely on any such confirmation of approval,
agreement, consent, waiver, amendment, satisfaction, acceptance, or other action
communicated to the Company by such Requisite Consenting Party Advisor without
any obligation to inquire into Requisite Consenting Party Advisor’s authority to
do so on behalf of the Requisite Consenting Parties and such communication shall
be effective for all purposes of this Agreement and the terms and conditions
hereof.
Where this Agreement provides
that a matter shall have been approved, agreed to, consented to, waived or
amended by the Company or Company Parties, or that a matter must be satisfactory
or acceptable to the Company or Company Parties, such approval, agreement,
consent, waiver, amendment, satisfaction, acceptance or other action shall be
determined by the Special Committee (as defined herein) and shall be effective
or shall have been obtained or satisfied, as the case may be, for the purposes
of this Agreement where the Special Committee, shall have confirmed its
approval, consent, waiver, amendment, satisfaction or acceptance, as the case
may be, through Cassels. The Consenting Parties shall be entitled to rely on any
such confirmation of approval, agreement, consent, waiver, amendment,
satisfaction, acceptance, or other action communicated by Cassels without any
obligation to inquire into Cassels’ authority to do so on behalf of the Company and Company Parties and such
communication shall be effective for all purposes of this Agreement and the
terms and conditions hereof.
EXECUTION VERSION
| 12. |
Consenting Party Termination
Events |
This Agreement may be terminated
with respect to the obligations of each Consenting Party by the delivery to the
Company of a written notice in accordance with Section 18(n) hereof by any such
Consenting Party in the exercise of its sole discretion, upon the occurrence
and, if applicable, continuation of any of the following events:
| (a) |
the Milestones set forth in the Interim Financing Term
Sheet have not been met or waived in accordance with the terms thereof, or
the Implementation Date has not occurred on or before the Outside
Date; |
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| (b) |
the occurrence of any Event of Default that has not been
waived under the Interim Financing Term Sheet as defined therein; |
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| (c) |
the occurrence of a Material Adverse Change; |
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| (d) |
any Company Party takes any action inconsistent with this
Agreement or fails to comply with, or defaults in the performance or
observance of, any material term, condition, covenant or agreement set
forth in this Agreement, which, if capable of being cured, is not cured
within ten (10) Business Days after the receipt of written notice of such
failure or default and provided that, for greater certainty, no cure
period shall apply with respect to any termination pursuant to Sections
12(a), (c), (h), and (l); |
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| (e) |
any representation, warranty or acknowledgement of any of
the Company Parties made in this Agreement shall prove untrue in any
material respect as of the date when made; |
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| (f) |
the issuance of any final decision, order or decree by a
Governmental Entity, in consequence of or in connection with the
Recapitalization, which restrains or impedes in any material respect or
prohibits the Recapitalization or any material part thereof or requires or
purports to require a material variation of the Recapitalization; |
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|
| (g) |
any Company Party takes any action inconsistent with this
Agreement or fails to comply with, or defaults in the performance or
observance of, any material term, condition, covenant or agreement set
forth in this Agreement, which, if capable of being cured, is not cured
within ten (10) Business Days after the receipt of written notice of such
failure or default; |
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|
| (h) |
the CCAA Proceedings are dismissed or a receiver, interim
receiver, receiver and manager, trustee in bankruptcy, liquidator or
administrator is appointed in respect of Banro, unless such event occurs
with the prior written consent of the Requisite Consenting Parties; |
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|
| (i) |
the Court denies approval of the Transaction Approval
Order or, if the Court enters the Transaction Approval Order, the
Transaction Approval Order is subsequently reversed, vacated or otherwise
materially modified in a manner inconsistent with this Agreement, the
Plan, the Restructuring Term Sheet and the Transaction, if such
modification is not acceptable to the Consenting Party, acting in a manner
consistent with the terms of this Agreement; |
EXECUTION VERSION
| (j) |
the amendment, modification or filing of a pleading by
the Company seeking to amend or modify the Recapitalization Terms or the
Plan, or any material document or order relating thereto, if such
amendment or modification is not acceptable to the Requisite Consenting
Parties, acting in a manner consistent with the terms of this
Agreement; |
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|
| (k) |
if this Agreement is amended, modified or supplemented or
any matter herein is approved, consented to or waived such that the
Outside Date is extended, or the effect of any such amendment materially
adversely changes the fundamental terms of the Transaction as they relate
to that Consenting Party, in each case without such Consenting Party’s
consent; or |
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|
| (l) |
the conditions set forth in Section 8 are not satisfied
or waived by the Outside Date or the Requisite Consenting Parties
determine that there is no reasonable prospect that the conditions set
forth in Section 8 will be satisfied or waived by the Outside
Date. |
| 13. |
Company Termination
Events |
This Agreement may be terminated
by the delivery to the Consenting Parties (with a copy to the Requisite
Consenting Party Advisors) of a written notice in accordance with Section 18(n)
by the Company, in the exercise of its sole discretion, upon the occurrence and
continuation of any of the following events:
| (a) |
the Milestones set forth in the Interim Financing Term
Sheet have not been met or waived, or the Implementation Date has not
occurred on or before the Outside Date, unless the failure to meet the
foregoing timelines is caused solely by the direct action or omission to
take any action by the Company; |
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|
| (b) |
any Consenting Party takes any action inconsistent with
this Agreement or fails to comply with, or defaults in the performance or
observance of, any material term, condition, covenant or agreement set
forth in this Agreement, which, if capable of being cured, is not cured
within ten (10) Business Days after the receipt of written notice of such
failure or default and provided that, for greater certainty, no cure
period shall apply with respect to any termination pursuant to Sections
12(a), or 12(h); |
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|
| (c) |
any representation, warranty or acknowledgement of any of
the Consenting Parties made in this Agreement shall prove untrue in any
material respect as of the date when made; |
| |
|
| (d) |
the issuance of any final decision, order or decree by a
Governmental Entity, in consequence of or in connection with the
Recapitalization, which restrains or impedes in any material respect or
prohibits the Recapitalization or any material part thereof or requires or
purports to require a material variation of the
Recapitalization; |
| |
|
| (e) |
the CCAA Proceedings are dismissed or a receiver, interim
receiver, receiver and manager, trustee in bankruptcy, liquidator or
administrator is appointed in respect of Banro, unless such event occurs
with the prior written consent of the Company and Requisite Consenting
Parties; |
EXECUTION VERSION
| (f) |
the Court denies approval of the Transaction Approval
Order or, if the Court enters the Transaction Approval Order, if the
Transaction Approval Order is subsequently reversed, vacated or otherwise
materially modified in a manner inconsistent with this Agreement, and to
the extent such orders relate to the implementation of the
Recapitalization, the Plan and the Restructuring Term Sheet if such
modification is not acceptable to the Company and the Consenting Parties,
acting in a manner consistent with the terms of this Agreement; |
| |
|
| (g) |
the amendment, modification or filing of a pleading by
the Requisite Consenting Parties seeking to amend or modify the
Recapitalization Terms or the Plan, or any material document or order
relating thereto, if such amendment or modification is not acceptable to
the Company, acting in a manner consistent with the terms of this
Agreement; |
| |
|
| (h) |
if this Agreement is amended, modified or supplemented or
any matter herein is approved, consented to or waived such that the
Outside Date is extended, or the effect of any such amendment materially
adversely changes the fundamental terms of the Transaction as they relate
to the Company, in each case without the Company’s consent; |
| |
|
| (i) |
if either (i) Baiyin does not obtain the regulatory
approvals required under item 18 of Section 7 of the Interim Financing
Term Sheet by January 19, 2018, or such other day as may be agreed to with
the Company and the Requisite Consenting Parties, or (ii) the Interim
Lenders breach their funding obligations under the Interim Financing
Facility in accordance with the terms of the Interim Financing Term Sheet;
or |
| |
|
| (j) |
the conditions set forth in Section 8 are not satisfied
or waived by the Outside Date. |
| 14. |
Mutual Termination, Partial
Termination |
| (a) |
This Agreement, and the obligations of all Parties
hereunder, may be terminated by mutual agreement between (a) the Company
and (b) the Requisite Consenting Parties. |
| |
|
| (b) |
This Agreement may be terminated as to a breaching
Consenting Party (the “Breaching Party”) only, by delivery to such
Breaching Party of a written notice in accordance with Section 18(n) by the
Company or a non-breaching Consenting Party, in exercise of its sole
discretion and provided that the Company or such non-breaching Consenting
Party is not in default hereunder, upon the occurrence and continuation of
any of the following events: |
| |
(i) |
failure by the Breaching Party to comply in all material
respects with, or default by the Breaching Party in the performance or
observance of, any material term, condition, covenant or agreement set
forth in this Agreement which is not cured within five Business Days after
the receipt of written notice of such failure or default; or |
| |
|
|
| |
(ii) |
if any representation, warranty or other statement of the
Breaching Party made or deemed to be made in this Agreement shall prove
untrue in any material respect as of the date when
made; |
EXECUTION VERSION
and the Breaching Party shall, in accordance with Section 15,
thereupon no longer be a Consenting Party.
| 15. |
Effect of
Termination |
| (a) |
Upon termination of this Agreement pursuant to Section
12, Section 13 or Section 14(a) hereof, this Agreement shall be of no
further force and effect and each Party shall automatically and
simultaneously released from its commitments, undertakings, and agreements
under or related to this Agreement, except for the rights, agreements,
commitments and obligations under Sections 6(h), 6(k), 9(b), 15, 17,
18(j), 18(l), 18(p), 18(r) and 18(s), all of which shall survive the
termination, and each Party shall have the rights and remedies that it
would have had it not entered into this Agreement and shall be entitled to
take all actions, whether with respect to the Transaction or otherwise,
that it would have been entitled to take had it not entered into this
Agreement. |
| |
|
| (b) |
Upon termination of this Agreement with respect to a
Breaching Party under Section 14(b), this Agreement shall be of no further
force or effect with respect to such Breaching Party and, subject to the
right of the Company and any Consenting Party other than the Breaching
Party to pursue any and all legal and equitable rights against Breaching
Party in respect of the circumstances that resulted in them becoming
Breaching Party, all rights, obligations, commitments, undertakings, and
agreements under or related to this Agreement of or in respect of such
Breaching Party shall be of further force or effect, except for the rights
and obligations under Sections 9(b), 15, 17, 18(j), 18(l), 18(p), 18(r)
and 18(s), all of which shall survive such termination. |
| |
|
| (c) |
Upon the occurrence of any termination of this Agreement,
any and all consents tendered prior to such termination by (i) the
Consenting Parties in the case termination pursuant to Section 12, Section
13 or Section 14(a) hereof, or (ii) the Breaching Party(s) in the case of
a termination pursuant to Section 14(b), shall deemed, for all purposes,
to be null and void from the first instance and shall not considered or
otherwise used in any manner by the Parties in connection with the
Transaction and this Agreement or otherwise. |
| 16. |
Termination Upon the Implementation
Date |
This Agreement shall terminate
automatically without any further required action or notice on the
Implementation Date (immediately following the Effective Time). For greater
certainty, the representations, warranties and covenants herein shall not
survive and shall be of no further force or effect from and after the
Implementation Date, provided that the rights, agreements, commitments and
obligations under Sections 6(h), 6(k), 9(b), 15, 17, 18(j), 18(l), 18(p), 18(r)
and 18(s), shall survive the Implementation Date.
Each of the Parties agrees to use
commercially reasonable efforts (which shall, in any event, be at least as great
as the efforts used by such Party to maintain the confidentiality of its own
confidential information) to maintain the confidentiality of the identity and
holdings of the Consenting Parties; provided, however, that such information may
be disclosed: (i) to the Parties respective directors, trustees, executives, officers, auditors,
employees, financial and legal advisors, investment managers (and their
affiliates) or other agents and legal advisors or other agents (collectively
referred to herein as the “Representatives” and individually as a
“Representative”), provided that each such Representative is
informed of and complies with this confidentiality provision; (ii) to the Court
or to a Governmental Entity in response to, and to the extent required by, any
subpoena or order of the court or any other compulsory legal proceedings; and
(iii) as may be required by applicable Law, the CCAA Proceedings or applicable
rules of the TSX or NYSE or as required for a Party to obtain approvals required
to be obtained by it in connection with the transactions contemplated by this
Agreement. If any of the Parties or their Representatives receive a subpoena or
other legal proceeding for such information, or determine, on the advice of
outside legal counsel, that disclosure of such information is required by
applicable Law or legal process, the Party shall where practical in the
circumstances, provide the applicable Consenting Parties with prompt written
notice and a copy of the subpoena or other applicable legal proceeding so that
the applicable Consenting Parties may seek a protective order or other
appropriate remedy or waiver of compliance with the provisions of this
Agreement. Notwithstanding the provisions of this Section 17, the Company may
disclose the existence of and nature of support evidenced by this Agreement in
any public disclosure (including, without limitation, press releases and court
materials) produced by the Company at the discretion of the Company, provided
that all such disclosures are (a) made in accordance with Section 9(b) in the
context of any such public disclosure, only the aggregate holdings of the
Consenting Parties, taken together, may be disclosed (but not their individual
holdings, provided that individual holdings may be disclosed to the TSX and/or
NYSE on a confidential basis if required under the respective applicable rules
of the TSX and/or NYSE), and (c) in the context of any public disclosure, the
identity of the Consenting Parties and/or their investment management entities
are not disclosed unless there is a binding legal and/or regulatory requirement
to such disclosure.
EXECUTION VERSION
| (a) |
Notwithstanding anything herein to the contrary, this
Agreement applies only to each Consenting Party’s Relevant Debt and its
legal and/or beneficial ownership of, or its investment and voting
discretion over, the Relevant Debt and, without limiting the generality of
the foregoing, shall not apply to: |
| |
(i) |
any securities, loans or other obligations that may be
held, acquired or sold by, or any activities, services or businesses
conducted or provided by, any group or business unit within or affiliate
of a Consenting Party (A) that has not been involved in the Transaction
discussions and is not acting at the direction of, or with knowledge of
the Company’s affairs provided by, any person involved in the Transaction
discussions and (B) is on the other side of an information firewall with
respect to the officers, partners and employees of such Consenting Party
who have been working on the Transaction and is not acting at the
direction of or with knowledge of the Company’s affairs provided by any
officers, partners and employees of such Consenting Party who have been
working on the Transaction; |
EXECUTION VERSION
| |
(ii) |
any securities, loans or other obligations that may be
beneficially owned by clients of a Consenting Party, including accounts or
funds managed by the Consenting Party, that are not Relevant Debt;
or |
| |
|
|
| |
(iii) |
any securities, loans or other obligations (including
Relevant Debt) that may be beneficially owned by clients of a Consenting
Party that are not managed or administered by the Consenting
Party. |
| (b) |
Subject to Section 18(a), nothing in this Agreement is
intended to preclude a Consenting Party from engaging in any securities
transactions, subject to the agreements set forth in Section 5(e) with
respect to the Consenting Party’s Relevant Debt and compliance
with applicable Securities Laws. |
| |
|
| (c) |
This Agreement shall in no way be construed to preclude
any Consenting Party from acquiring additional securities of the Company,
in each case subject to compliance with applicable Securities Laws, and
provided that any additional Relevant Debt acquired by a Consenting Party
shall be deemed to be subject to this Agreement. |
| |
|
| (d) |
At any time, a holder of Relevant Debt that is not a
Consenting Party may become a Party to this Agreement by executing and
delivering to the Company and the other Consenting Parties, with a copy to
the Requisite Consenting Party Advisors, a Consent Agreement. |
| |
|
| (e) |
The headings in this Agreement are for reference only and
shall not affect the meaning or interpretation of this
Agreement. |
| |
|
| (f) |
Unless the context otherwise requires, words importing
the singular shall include the plural and vice versa and words importing
any gender shall include all genders. |
| |
|
| (g) |
Unless otherwise specifically indicated, all sums of
money referred to in this Agreement are expressed in lawful money of the
United States of America. |
| |
|
| (h) |
This Agreement and any other agreements contemplated by
or entered into pursuant to this Agreement constitute the entire agreement
and supersedes all prior agreements and understandings, both oral and
written, among the Parties with respect to the subject matter
hereof. |
| |
|
| (i) |
The Company acknowledges and agrees that any waiver or
consent that the Consenting Parties or the Requisite Consenting Parties
may make on or after the date hereof has been made by the Consenting
Parties or the Requisite Consenting Parties, as the case may be, in
reliance upon, and in consideration for, the covenants, agreements,
representations and warranties of the Company. |
| |
|
| (j) |
The agreements, representations and obligations of the
Consenting Parties under this Agreement are, in all respects, several and
not joint or joint and several. |
| |
|
| (k) |
Any person signing this Agreement in a representative
capacity (i) represents and warrants that he/she is authorized to sign
this Agreement on behalf of the Party he/she represents and that his/her
signature upon this Agreement will bind the represented
Party to the terms hereof, and (ii) acknowledges that the other
Parties have relied upon such representation and warranty. |
EXECUTION VERSION
| (l) |
No director, officer or employee of the Company Parties
or any of their legal, financial or other advisors shall have any personal
liability to any of the Consenting Parties under this Agreement or as a
result of the execution or delivery of any officer’s certificate required
by this Agreement. No director, officer or employee of any of the
Consenting Parties or the Requisite Consenting Party Advisors shall have
any personal liability to the Company or the other Consenting Parties or
Requisite Consenting Parties under this Agreement. |
| |
|
| (m) |
Any date, time or period referred to in this Agreement
shall be of the essence except to the extent to which the Parties agree in
writing to vary any date, time or period, in which event the varied date,
time or period shall be of the essence. |
| |
|
| (n) |
All notices, consents and other communications which may
be or are required to be given pursuant to any provision of this Agreement
shall be given or made in writing and shall be deemed to be validly given
if served personally or by PDF/email transmission, in each case addressed
to the particular Party: |
| |
(i) |
If to the Company, at: |
Banro Corporation
First Canadian
Place, Suite 7005
100 King St. W.
Toronto, Ontario, Canada M5X 1E3
| |
Attention: |
Rory Taylor, CFO |
| |
Email: |
rtaylor@banro.com |
With a required copy (which shall not
be deemed notice) to:
Cassels Brock & Blackwell
LLP
Suite 2100, Scotia Plaza
40 King St. W.
Toronto, Ontario, Canada
M5H 3C2
| |
Attention: |
Ryan C. Jacobs / Jane Dietrich |
| |
Email: |
rjacobs@casselsbrock.com/
jdietrich@casselsbrock.com |
With a courtesy copy (which shall not
be deemed notice) to the Monitor:
FTI Consulting Canada Inc.
79
Wellington Street West
Toronto Dominion Centre, Suite 2010, P.P. Box
104
Toronto, Ontario, Canada M5K 1G8
Attention: Nigel Meakin / Toni
Vanderlaan
EXECUTION VERSION
Email:
Nigel.Meakin@fticonsulting.com/
Toni.Vanderlaan@fticonsulting.com
And to:
McMillan LLP
181 Bay Street, Suite
4400
Toronto, Ontario, Canada M5J 2T3
Attention: Wael Rostom/ Caitlin
Fell
Email: wael.rostom@mcmillan.ca/ caitlin.fell@mcmillan.ca
Resource FinanceWorks Limited
17/F
Wilson House, 19-27 Wyndham Street
Central, Hong Kong
| |
Attention: |
Clement Kwong |
| |
Email: |
clementkwong@resourcefinance.works
|
With a required copy (which shall not
be deemed notice) to:
McCarthy Tétrault LLP
Suite
2400
745 Thurlow Street
Vancouver, British Columbia, Canada V6E 0C5
| |
Attention: |
Sean F. Collins / Roger Taplin |
| |
Email: |
scollins@mccarthy.ca / rtaplin@mccarthy.ca
|
| |
(iii) |
If to Gramercy, at: |
Gramercy Funds Management LLC
20
Dayton Avenue
Greenwich, CT 06830 U.S.A.
| |
Attention: |
Robert Rauch / Brian Nunes / Operations |
| |
Email: |
rrauch@gramercy.com / bnunes@gramercy.com/
|
| |
|
operations@gramercy.com |
With a required copy (which shall not
be deemed notice) to:
Goodmans LLP
Bay Adelaide
Centre
333 Bay Street, Suite 3400
Toronto, Ontario, Canada M5H 2S7
EXECUTION VERSION
| |
Attention: |
Kari Mackay / Brendan O’Neill |
| |
Email: |
kmackay@goodmans.ca/ boneill@goodmans.ca
|
| |
(iv) |
If to any other Consenting Party, at the address set
forth on its signature page hereto or to the Consent Agreement, as
applicable, |
or at such other address of which any
Party may, from time to time, advise the other Parties by notice in writing
given in accordance with the foregoing. The date of receipt of any such notice
shall be deemed to be the date of delivery or transmission thereof.
| (o) |
If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated to the fullest extent
possible. |
| |
|
| (p) |
The provisions of this Agreement shall be binding upon
and enure to the benefit of the Parties and their respective successors
and permitted assigns, provided that no Party may assign, delegate or
otherwise transfer any of its rights, interests or obligations under this
Agreement without the prior written consent of the other
Parties. |
| |
|
| (q) |
This Agreement is governed by the laws of the Province of
Ontario and the federal laws of Canada applicable therein, without regard
to principles of conflicts of law. Each Party submits to the jurisdiction
of the courts of competent jurisdiction in the Province of Ontario in
respect of any action or proceeding relating to this Agreement. Without
limiting the foregoing, each Party attorns to the jurisdiction of the
Court for the purposes of the Plan and the compromises and exchanges
effected thereby. The Parties shall not raise any objection to the venue
of any proceedings in any such court, including the objection that the
proceedings have been brought in an inconvenient forum. |
| |
|
| (r) |
It is understood and agreed by the Parties that money
damages would not be a sufficient remedy for any breach of this Agreement
by any Party and each non-breaching Party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy of any
such breach, including an order by a court of competent jurisdiction
requiring any Party to comply promptly with any of its obligations
hereunder. |
| |
|
| (s) |
The Parties waive any right to trial by jury in any
proceeding arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement, present or future, and
whether sounding in contract, tort or otherwise. Any Party may file a copy
of this provision with any court as written evidence of the knowing,
voluntary and bargained for agreement among the Parties irrevocably to
waive trial by jury, and that any proceeding whatsoever between them
relating to this Agreement or any of the transactions contemplated by this
Agreement shall instead be tried by a judge or judges sitting without a
jury. |
EXECUTION VERSION
| (t) |
Unless expressly stated herein, this Agreement shall be
solely for the benefit of the Parties, and no other person or entity shall
be a third-party beneficiary hereof. |
| |
|
| (u) |
This Agreement may be executed by facsimile or other
electronic means and in one or more counterparts, all of which shall be
considered one and the same agreement. |
[Signature pages follow]
EXECUTION VERSION
IN WITNESS WHEREOF the Parties have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
| |
BANRO CORPORATION |
| |
|
|
| |
|
|
| |
Per: |
"Rory
James Taylor" |
| |
|
Name: Rory James Taylor |
| |
|
Title: Chief Financial Officer
|
| |
BANRO GROUP (BARBADOS) LIMITED
|
| |
|
|
| |
|
|
| |
Per: |
"Stephen L. Greaves" |
| |
|
Name: Stephen L. Greaves |
| |
|
Title: Director |
| |
|
|
| |
Witness |
"Gillian M. H. Clarke" |
| |
Name: Gillian M.H. Clarke |
| |
Address: 19 Farringdon Close |
| |
|
Paradise Heights, St. Michael, Barbados |
| |
Occupation: Attorney-at-Law
|
| |
NAMOYA (BARBADOS) LIMITED
|
| |
|
|
|
| |
|
|
|
| |
Per: |
"Stephen L. Greaves" |
| |
|
Name: Stephen L. Greaves |
| |
|
Title: Director |
| |
|
|
|
| |
Witness |
"Gillian M. H. Clarke" |
| |
Name: Gillian M. H. Clarke |
| |
Address: 19 Farringdon Close |
| |
|
Paradise Heights, St. Michael,
Barbados |
| |
Occupation: Attorney-at-Law
|
[Signature page to Support Agreement]
EXECUTION VERSION
| |
TWANGIZA (BARBADOS) LIMITED
|
| |
|
|
|
| |
|
|
|
| |
Per: |
"Stephen L. Greaves" |
| |
|
Name: Stephen L. Greaves |
| |
|
|
|
| |
Witness |
"Gillian M.H. Clarke" |
| |
|
|
|
| |
Name: Gillian M. H. Clarke |
| |
Address: 19 Farringdon Close |
| |
|
Paradise Heights, St. Michael,
Barbados |
| |
Occupation: Attorney-at-Law
|
| |
BANRO CONGO (BARBADOS) LIMITED |
| |
Per: |
"Stephen L. Greaves" |
| |
|
Name: Stephen L. Greaves |
| |
|
Title: Director |
| |
|
|
|
| |
|
|
|
| |
Witness |
"Gillian M. H. Clarke" |
| |
Name: Gillian M. H. Clarke |
| |
Address: 19 Farringdon Close |
| |
|
Paradise Heights, St. Michael,
Barbados |
| |
Occupation: Attorney-at-Law
|
| |
LUGUSHWA (BARBADOS) LIMITED
|
| |
Per: |
"Stephen L. Greaves" |
| |
|
Name: Stephen L. Greaves |
| |
|
Title: Director |
| |
|
|
| |
|
|
| |
Witness |
"Gillian M. H. Clarke" |
| |
Name: Gillian M. H. Clarke |
| |
Address: 19 Farringdon Close |
| |
|
Paradise Heights, St. Michael, Barbados |
| |
Occupation: Attorney-at-Law
|
[Signature page to Support Agreement]
EXECUTION VERSION
| |
KAMITUGA (BARBADOS) LIMITED
|
| |
|
|
| |
|
|
| |
Per: |
"Stephen L. Greaves" |
| |
|
Name: Stephen L. Greaves |
| |
|
Title: Director |
| |
|
|
| |
|
|
| |
Witness |
"Gillian M. H. Clarke" |
| |
Name: Gillian M. H. Clarke |
| |
Address: 19 Farringdon Close |
| |
|
Paradise Heights, St. Michael, Barbados |
| |
Occupation: Attorney-at-Law
|
| |
|
| |
TWANGIZA MINING S.A. |
| |
Per: |
"Désiré Sangara" |
| |
|
Name: Désiré Sangara |
| |
|
Title: Chairman of the Board
|
| |
NAMOYA MINING S.A. |
| |
|
|
| |
|
|
| |
Per: |
"Désiré Sangara" |
| |
|
Name: "Désiré Sangara" |
| |
|
Title: Chairman of the Board
|
[Signature page to Support Agreement]
EXECUTION VERSION
Signature Page to Support Agreement
STRICTLY CONFIDENTIAL
| |
[CONSENTING PARTY SIGNATURE PAGES
|
| |
REDACTED |
| |
|
|
| |
Per: |
|
| |
|
Name: |
| |
|
Title: |
| Relevant Security |
Original Face Amount / Number of Securities Represented
|
| Notes |
|
| Dore Loan |
|
| Namoya Forward |
|
| Namoya II Forward |
|
| Twangiza Forward |
|
| Twangiza 2017 Forward |
|
| Namoya Stream |
|
| Twangiza Stream |
|
STRICTLY CONFIDENTIAL
[Signature page to Support Agreement]
EXECUTION VERSION
SCHEDULE “A”
DEFINITIONS
| Definition |
Section |
| “Affected Parity
Lien Debt” |
Recitals |
| “Affected Priority Lien Debt” |
Recitals |
| “Agreement” |
Preamble |
| “Alternative Transaction” |
Recitals |
| “Banro” |
Preamble |
| “Baiyin” |
Preamble |
| “Breaching Party” |
Section 14(b) |
| “CCAA” |
Recitals |
| “CCAA Proceedings” |
Recitals |
| “Claim” |
Section 6(h) |
| “Common Shares” |
Recitals |
| “Company” |
Preamble |
| “Company Party(s)” |
Preamble |
| “Consent Agreement” |
Preamble |
| “Consenting Party” or “Consenting Parties” |
Preamble |
| “Court” |
Recitals |
| “Creditors’ Meeting” |
Section 6(t) |
| “Effective Time” |
Section 8(a) |
| “Gramercy” |
Preamble |
| “Indemnified Party” or “Indemnified Parties” |
Section 6(h) |
| “Interim Financing Term Sheet” |
Recitals |
| “Meeting Materials” |
Section 6(t) |
| “New Common Shares” |
Recitals |
| “Parity Lien Debt Claims” |
Recitals |
| “Party” or “Parties” |
Recitals |
| “Plan” |
Recitals |
| “PRC Approvals” |
Section 2 |
| “Priority Lien Debt Claims” |
Recitals |
| “Recapitalization” |
Recitals |
| “Recapitalization Terms” |
Section 1 |
| “Relevant Debt” |
Section 3(a) |
| “Representative(s)” |
Section 17 |
| “Restructuring Term Sheet” |
Recitals |
| “SISP” |
Recitals |
| “Transaction” |
Recitals |
| “Transaction Approval Order” |
Section 6(g) |
EXECUTION VERSION
In addition, the following terms used in this Agreement shall
have the following meanings:
“Acceptable Alternative Transaction” means a Successful
Bid as determined in accordance with the SISP, which, for greater certainty,
must provide that the Qualified Consideration (as defined in the SISP) will be
received by Banro at the closing of such Successful Bid.
“Amended and Restated Collateral Trust Agreement” means
the Amended and Restated Collateral Trust Agreement, dated as of April 19, 2017,
among Banro, the Collateral Agent, the U.S. Trustee and Equity Financial Trust
Company.
“BGB” means Banro Group (Barbados) Limited.
“Bonus Payment(s)” means any and all bonus payments,
retention payments, incentive compensation payments or other similar payments
payable by the Company to any of the Company’s current or past directors,
officers, employees or senior managers, including, without limitation, the use
of any funds now held in trust or escrow for the purposes of any of the
foregoing payments, in connection with the transactions contemplated by this
Agreement or otherwise.
“Business Day” means each day, other than a Saturday or
Sunday or a statutory or civic holiday, that banks are open for business in
Toronto, Ontario, Canada.
“Canadian Securities Commissions” means, collectively,
the applicable securities commissions or regulatory authorities in each of the
provinces of Canada.
“Canadian Securities Laws” means, collectively, and, as
the context may require, the applicable securities laws of each of the provinces
of Canada, and the respective regulations and rules made under those securities
laws together with all applicable published policy statements, instruments,
blanket orders and rulings of the Canadian Securities Commissions and all
discretionary orders or rulings, if any, of the Canadian Securities Commissions
made in connection with the transactions contemplated by this Agreement together
with applicable published policy statements of the Canadian Securities
Administrators, as the context may require.
“Canadian Trustee” means TSX Trust Company in its
capacity as Canadian trustee under the Note Indenture.
“Capital Lease” means, with respect to a Person, a lease
or other arrangement in respect of real or personal property that is required to
be classified and accounted for as a capital lease obligation on a balance sheet
of the Person in accordance with GAAP.
“Capital Lease Obligation” means, with respect to a
Person, the obligation of the Person to pay rent or other amounts under a
Capital Lease and for the purposes of this definition, the amount of such
obligation at any date shall be the capitalized amount of such obligation at
such date as determined in accordance with GAAP.
EXECUTION VERSION
“Cassels” means Cassels Brock & Blackwell LLP, legal
counsel to the CCAA Applicants and Company.
“CCAA Applicants” means Banro, BGB, TBL, NBL, Banro
Congo (Barbados) Limited, Lugushwa (Barbados) Limited and Kamituga (Barbados)
Limited.
“Collateral Agent” means TSX Trust Company in its
capacity as collateral agent under the Note Indenture.
“Contingent Liabilities” means, with respect to a
Person, any agreement, undertaking or arrangement by which the Person
guarantees, endorses or otherwise becomes or is contingently liable upon (by
direct or indirect agreement, contingent or other, to provide funds for payment,
to supply funds to, or otherwise to invest in a debtor, or otherwise to assure a
creditor against loss) the obligation, debt or other liability of any other
Person or guarantees the payment of dividends or other distributions upon the
shares (or other ownership interests) of any Person. The amount of any
contingent liability will, subject to any limitation contained therein, be
deemed to be the outstanding principal amount (or maximum principal amount, if
larger) of the obligation, debt or other liability to which the contingent
liability is related.
“Contract(s)” means all agreements, contracts, leases
(whether for real or personal property), purchase orders, undertakings,
covenants not to compete, employment agreements, confidentiality agreements,
licenses, instruments, obligations and commitments to which a Person is a party
or by which a Person or any of its assets are bound or affected, whether written
or oral.
“Definitive Documents” means all definitive agreements,
court materials and other material documents in connection with the Transaction
and the CCAA Proceedings, including, without limitation, the Plan, the Initial
Order, the Meeting Order, the SISP Approval Order, the Transaction Approval
Order, all material applications, motions, pleadings, orders, rulings and other
documents filed by the Company with the Court in respect of the Transaction or
the Plan, the Meeting Materials and any other documentation required in
connection with the amendments to the Affected Priority Lien Debt and any
documentation required to effect the exchange of the Affected Parity Lien Debt
Claims contemplated hereunder and any documentation required to give effect to
the Transaction.
“Disclosure Letter” means a letter from the Company to
the Requisite Consenting Party Advisors dated the date hereof, all or any
portion of which the Requisite Consenting Party Advisors shall be entitled to
share with the Requisite Consenting Parties which they represent.
“Dore Loan” means the loan made available to Twangiza
under the Dore Loan Agreement.
“Dore Loan Agreement” means the letter agreement dated
July 15, 2016 among Baiyin International Investment Ltd and Twangiza (as amended
or restated from time to time) pursuant to which Baiyin International Investment
Ltd agreed to advance a $10 million loan to Twangiza, as amended.
“Environmental Laws” means all Laws regarding the
environment or pursuant to which Environmental Liabilities would arise or have
arisen, including relating to the Release or threatened Release of any contaminant or the generation, use,
storage or transportation of any contaminant.
EXECUTION VERSION
“Environmental Liabilities” means any and all
Liabilities for any Release, any environmental damage, any contamination or any
other environmental problem caused to any Person, property or the environment as
a result of any Release or the condition of any property or asset, whether or
not caused by a breach of applicable Laws, including, without limitation, all
Liabilities arising from or related to: any surface, underground, air,
groundwater, or surface water contamination; the abandonment or plugging of any
well; restorations and reclamations; the removal of or failure to remove any
foundations, structures or equipment; the cleaning up or reclamation of storage
sites; any Release; violation of pollution standards; and personal injury
(including sickness, disease or death) and property damage arising from the
foregoing.
“Financial Instrument Obligations” means, with respect
to any Person, obligations arising under: (i) interest rate swap agreements,
forward rate agreements, floor, cap or collar agreements, futures or options,
insurance or other similar agreements or arrangements, or any combination
thereof, entered into or guaranteed by the Person where the subject matter
thereof is interest rates or the price, value or amount payable thereunder is
dependent or based upon interest rates or fluctuations in interest rates in
effect from time to time (but excluding non-speculative conventional floating
rate Indebtedness); (ii) currency swap agreements, cross-currency agreements,
forward agreements, floor, cap or collar agreements, futures or options,
insurance or other similar agreements or arrangements, or any combination
thereof, entered into or guaranteed by the Person where the subject matter
thereof is currency exchange rates or the price, value or amount payable
thereunder is dependent or based upon currency exchange rates or fluctuations in
currency exchange rates in effect from time to time; and (iii) any agreement for
the making or taking of any commodity (including but not limited to platinum,
gold, silver, copper, nickel, cobalt, coal, natural gas, oil and electricity),
swap agreement, floor, cap or collar agreement or commodity future or option or
other similar agreement or arrangement, or any combination thereof, entered into
or guaranteed by the Person where the subject matter thereof is any commodity or
the price, value or amount payable thereunder is dependent or based upon the
price or fluctuations in the price of any commodity; or any other similar
transaction, including any option to enter into any of the foregoing, or any
combination of the foregoing, in each case to the extent of the net amount due
or accruing due by the Person under the obligations determined by marking the
obligations to market in accordance with their terms.
“Financial Statements” means (i) the audited
consolidated statement of financial position of Banro as at December 31, 2016
and the related audited consolidated statement of comprehensive (loss)/income,
changes in equity and cash flow for the fiscal year then ended, together with
the report thereon of independent auditors, and (ii) the unaudited quarterly
consolidated financial statements of Banro for the three and six month periods
ended June 30, 2017, each prepared in accordance with GAAP consistently applied
throughout the periods covered, and except that the unaudited quarterly
consolidated statements are subject to normal period-end adjustments and may
omit notes which are not required by applicable Laws to be included in the
unaudited statements.
“GAAP” means generally accepted accounting principles
(including IFRS) as applied in the relevant jurisdiction.
EXECUTION VERSION
“Gold Forwards” means, collectively, the Namoya Forward,
the Namoya II Forward, the Twangiza Forward and the Twangiza 2017 Forward.
“Gold Streams” means, collectively, the Namoya Stream
and the Twangiza Stream.
“Goodmans” means Goodmans LLP, legal counsel to
Gramercy.
“Governmental Entity” means any government, regulatory
authority, governmental department, agency, commission, bureau, official,
minister, Crown corporation, court, board, tribunal or dispute settlement panel
or other law, rule or regulation-making organization or entity: (a) having or
purporting to have jurisdiction on behalf of any nation, province, territory or
state or any other geographic or political subdivision of any of them; or (b)
exercising, or entitled or purporting to exercise any administrative, executive,
judicial, legislative, policy, regulatory or taxing authority or power and,
where applicable, include the Canadian Securities Commissions or similar
regulatory bodies of another jurisdiction.
“IFRS” means the International Financial Reporting
Standards.
“Implementation Date” means the date on which the
Transaction is implemented.
“Indebtedness” means, with respect to a Person, without
duplication:
| |
(i) |
all obligations of the Person for borrowed money,
including debentures, notes or similar instruments and other financial
instruments and obligations with respect to bankers’ acceptances and
contingent reimbursement obligations relating to letters of
credit; |
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|
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(ii) |
all Financial Instrument Obligations of the
Person; |
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(iii) |
all Capital Lease Obligations and Purchase Money
Obligations of the Person; |
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|
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(iv) |
all Indebtedness of any other Person secured by a
Security Interest on any asset of the Person; |
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(v) |
all obligations to repurchase or redeem any common shares
or any other securities of such Person; and |
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(vi) |
all Contingent Liabilities of the Person with respect to
obligations of another Person if such obligations are of the type referred
to in paragraphs (i) to (v) above. |
“Information” means information set forth or
incorporated in Banro’s public disclosure documents filed with the applicable
Canadian securities regulators under Securities Laws, as applicable, since
January 1, 2017 and prior to the execution and delivery of this Agreement.
“Initial Order” means the initial order granted by the
Court commencing the CCAA Proceedings, in the form attached hereto as Schedule
“F”.
EXECUTION VERSION
“Interim Financing Facility” means the senior secured
super priority (debtor-in-possession), interim, non-revolving credit facility up
to a maximum amount of US$[20,000,000], subject to the terms and conditions set
out in the Interim Financing Term Sheet.
“Interim Financing Obligations” means the obligations
owing by Gramercy and Baiyin as the Interim Lenders pursuant to the Interim
Financing Facility and includes, without limitation, all principal, interest,
fees and all costs and expenses of the Interim Lenders as set out in the Interim
Financing Term Sheet.
“Interim Lenders” means the lenders under the Interim
Financing Facility.
“Law” or “Laws” means any law, statute, order,
decree, consent decree, judgment, rule regulation, ordinance or other
pronouncement having the effect of law whether in Canada, the United States, the
Democratic Republic of the Congo, or any other country, or any domestic or
foreign state, county, province, city or other political subdivision or of any
Governmental Entity. “Liability” or “Liabilities” means any direct or indirect
liability, indebtedness, obligation, commitment, expense, claim, deficiency,
guarantee or endorsement of or by any Person of any type, whether accrued,
absolute, contingent, matured, unmatured, liquidated, unliquidated, known or
unknown.
“Material” means, in relation to any asset, fact,
circumstance, change, effect, matter, action, condition, event, occurrence or
development: (i) material (or reasonably expected to be material), individually
or in the aggregate with other such facts, circumstances, changes, effects,
matters, actions, conditions, events, occurrences or developments, to the
business, affairs, results of operations, prospects or financial condition of
the Company or to the ability of the Company to complete the transactions
contemplated by this Agreement in the time and manner provided, or (ii)
reasonably expected to have, individually or in the aggregate with other such
facts, circumstances, changes, effects, matters, actions, conditions, events,
occurrences or developments, a significant effect on the market price or value
of securities of the Company.
“Material Adverse Change” means any change, condition,
event or occurrence (including, without limitation, a change in commodity or
metals prices), which, when considered individually or together with all other
changes, conditions, events or occurrences, could reasonably be expected to have
a material adverse effect (or a series of adverse effects, none of which is
material in and of itself but which, cumulatively, result in a material adverse
effect) on: (i) the condition (financial or otherwise), business, performance,
prospects, operation, assets or property of the Company (including a material
adverse qualification (other than a ‘going concern’ qualification resulting from
the CCAA Proceedings) to any of the financial statements of the Company; a
material adverse misstatement of the financial statements of the Company; or if
after the date of this Agreement, it is determined by the Company, its auditors
or accountants that a restatement of the Company’s financial statements is or is
likely to be necessary or there is a material adverse restatement of the
Company’s financial statements); (ii) the ability of the Company to carry on its
business as presently conducted; (iii) the ability of the Company or Consenting
Parties to timely and fully perform any of their obligations under this
Agreement; or (iv) the validity or enforceability of this Agreement.
EXECUTION VERSION
“Material Contract” means each Contract and other
instrument or document (including any amendment to any of the foregoing) of the
Company:
| |
(vii) |
with any director, officer or affiliate of the
Company; |
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|
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(viii) |
that in any way purports to materially restrict the
business activity of the Company or to limit the freedom of the Company to
engage in any line of business or to compete with any Person or in any
geographic area or to hire or retain any Person; |
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(ix) |
that could reasonably be expected to have a material
effect on the business, affairs, condition, capitalization, properties,
assets, liabilities, prospects, operations or financial performance of the
Company, or on the Recapitalization; and |
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|
|
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(x) |
any other Contract, if a breach of such Contract could
reasonably be expected to result in a Material Adverse
Change. |
“McCarthy Tétrault” means McCarthy Tétrault LLP, legal
counsel to Baiyin.
“Meeting Order” means the order of the Court authorizing
the CCAA Applicants to call and hold the Creditors’ Meeting for the purposes of
considering and voting on the Plan.
“Namoya” means Namoya Mining S.A.
“Namoya Forward” means the Gold Purchase and Sale
Agreement dated April 19, 2017 among Gramercy Funds Management LLC or its
designate, Resource FinanceWorks Limited or its designate, the Company and
Namoya (as amended or restated from time to time).
“Namoya II Forward” means the Gold Purchase and Sale
Agreement dated July 12, 2017 among Gramercy Funds Management LLC or its
designate, Baiyin International Investment Ltd, Banro and Namoya (as amended or
restated from time to time).
“Namoya Stream” means the Gold Purchase and Sale
Agreement dated February 27, 2015 among Namoya GSA Holdings, Banro and Namoya
(as amended or restated from time to time).
“NBL” means Namoya (Barbados) Limited.
“Note Indenture” means the indenture dated April 19,
2017 among the Company, Banro Congo Mining S.A., Kamituga Mining S.A., Lugushwa
Mining S.A., Namoya Mining S.A., Twangiza Mining S.A., Banro Group (Barbados)
Limited, Banro Congo (Barbados) Limited, Kamituga (Barbados) Limited, Lugushwa
(Barbados) Limited, Namoya (Barbados) Limited, Twangiza (Barbados) Limited, the
Trustees and the Collateral Agent.
“Notes” means the 10.00% secured notes of Banro due
March 1, 2021 issued under the Note Indenture.
“NYSE” means NYSE American.
EXECUTION VERSION
“Outside Date” means April 30, 2018, or such other date
as the Requisite Consenting Parties and the Company may agree.
“Person” means an individual, a corporation, a
partnership, a limited liability company, a trust, an unincorporated
association, a Governmental Entity or any agency, instrumentality or political
subdivision of a Governmental Entity, or any other entity or body.
“Purchase Money Obligation” means, with respect to a
Person, indebtedness of the Person issued, incurred or assumed to finance all or
part of the purchase price of any asset or property acquired by such Person.
“PPSA” means the Personal Property Security Act
(Ontario).
“Release” means any presence, release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge,
leeching or migration of any element or compound in or into the indoor or
outdoor environment (including the abandonment or disposal of any barrels,
tanks, containers or receptacles containing any contaminant), or in, into or out
of any vessel or facility, including the movement of any contaminant through the
air, soil, subsoil, surface, water, groundwater, rock formation or otherwise
which is or may be (under any circumstances, whether or not they have not
occurred).
“Requisite Consenting Parties” means, collectively,
Gramercy and Baiyin.
“Requisite Consenting Party Advisors” means,
collectively, Goodmans and McCarthy Tétrault.
“Securities Laws” means, collectively, Canadian
Securities Laws and U.S. Securities Laws.
“Security Interest” means any security interest,
assignment by way of security, mortgage, charge (whether fixed or floating),
hypothec, deposit arrangement, pledge, lien, encumbrance, preference, priority
or other security interest or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing and any other “Security Interest” as defined in section 1(1) of the
PPSA).
“SISP Approval Order” means the order of the Court
approving the SISP, in the form attached hereto as Schedule “G”.
“Special Committee” means the Special Committee of the
Board of Directors of Banro comprised entirely of independent directors of
Banro.
“Successful Bid” has the meaning given to it in the
SISP.
“Tax” means all present and future taxes, rates, levies,
imposts, assessments, dues, government fees, stamp taxes, deductions, charges or
withholdings, and all liabilities with respect thereto, and any interest,
additions to tax and penalties imposed with respect thereto, excluding, with
respect to a lender, taxes imposed on its income or capital and franchise taxes
imposed on it by any taxation authority.
EXECUTION VERSION
“TBL” means Twangiza (Barbados) Limited.
“Trustees” means, collectively, the Canadian Trustee and
the U.S. Trustee.
“TSX” means Toronto Stock
Exchange.
“Twangiza” means Twangiza Mining S.A.
“Twangiza Forward” means the Amended and Restated Gold
Purchase and Sale Agreement Tranche 2/3 dated September 17, 2015 among Twangiza
GFSA Holdings, the Company and Twangiza (as amended by amending agreement dated
as of January 28, 2016 and as further amended or restated from time to
time).
“Twangiza 2017 Forward” means the Gold Purchase and Sale
Agreement dated July 12, 2017 among Baiyin International Investment Ltd, Banro
and Twangiza (as amended or restated from time to time).
“Twangiza Stream Agreement” means the Gold Purchase and
Sale Agreement dated December 31, 2015 among RFW Banro Investments Limited,
Banro and Twangiza (as amended or restated from time to time).
“U.S. Securities Act” means the United States Securities
Act of 1933, as amended from time to time, and the rules and regulations
promulgated thereunder, or any successor statute.
“U.S. Securities Exchange Act” means the United States
Securities Exchange Act of 1934, as amended from time to time, and the rules and
regulations promulgated thereunder, or any successor statute.
“U.S. Securities Commission” means the United States
Securities and Exchange Commission.
“U.S. Securities Laws” means, collectively, the U.S.
Securities Act, the U.S. Securities Exchange Act and the rules and regulations
of the U.S. Securities Commission.
“U.S. Trustee” means The Bank of New York Mellon in its
capacity as U.S. trustee under the Note Indenture.
EXECUTION VERSION
SCHEDULE “B”
FORM OF CONSENT AGREEMENT
This Consent Agreement is made as of
the date below (the “Consent Agreement”) by the undersigned (the
“Consenting Party”) in connection with the support agreement dated
December , 2017 (the “Support Agreement”) among Banro Corporation and
certain of its subsidiaries and the Consenting Parties party thereto.
Capitalized terms used herein have the meanings assigned in the Support
Agreement unless otherwise defined herein.
RECITALS:
| A. |
Section 18(d) of the Support Agreement allows holders of
Relevant Securities to become a party thereto by executing a Consent
Agreement. |
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|
| B. |
Section 5(e) of the Support Agreement requires that,
contemporaneously with a transfer of any Relevant Debt by a Consenting
Party to a transferee who is not also already a Consenting Party, such
transferee shall execute and deliver this Consent Agreement. |
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|
| C. |
The Consenting Party wishes to be bound by the terms of
the Support Agreement pursuant to Section 18(d) or 5(e) of the Support
Agreement on the terms and subject to the conditions set forth in this
Consent Agreement. |
NOW, THEREFORE, in consideration
of the premises and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Consenting Party agrees as
follows:
| 1. |
The Consenting Party hereby agrees to be fully bound as a
Consenting Party under the Support Agreement in respect of the Relevant
Debt that are identified on the signature page hereto, and hereby
represents and warrants that the Relevant Debt set out on the signature
page constitute all of the Relevant Debt that are legally or beneficially
owned by such Consenting Party or which such Consenting Party has the sole
power to vote or dispose of. |
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|
| 2. |
The Consenting Party hereby represents and warrants to
each of the other Parties that the representations and warranties set
forth in Section 2 of the Support Agreement are true and correct with
respect to such Consenting Party as if given on the date hereof. |
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|
| 3. |
Except as expressly modified hereby, the Support
Agreement shall remain in full force and effect, in accordance with its
terms. |
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| 4. |
This Consent Agreement shall be governed by and construed
in accordance with the laws of the Province of Ontario and the federal
laws of the Canada applicable therein, without regard to principles of
conflicts of law. |
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| 5. |
This Consent Agreement may be executed by facsimile or
other electronic means and in one or more counterparts, all of which shall
be considered one and the same agreement. |
[Remainder of this page intentionally left blank; next
page is signature page]
EXECUTION VERSION
Signature Page to Consent Agreement
STRICTLY CONFIDENTIAL
| [CONSENTING PARTY’S |
[CONSENTING PARTY’S NAME]
|
| ADDRESS] |
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Per: |
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Name: |
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Title: |
| Relevant Security |
Original Face Amount / Number of Securities Represented
|
| Notes |
|
| Dore Loan |
|
| Namoya Forward |
|
| Namoya II Forward |
|
| Twangiza Forward |
|
| Twangiza 2017 Forward |
|
| Namoya Stream |
|
| Twangiza Stream |
|
EXECUTION VERSION
SCHEDULE “C”
RECAPITALIZATION TERM SHEET
[Attached]
EXECUTION VERSION
Banro Corporation
Restructuring Term
Sheet
The following represents indicative terms and conditions for
a restructuring of the financial obligations of Banro Corporation (collectively,
the “Recapitalization”) and does not represent a legally binding commitment on
any of the parties referenced herein. This term sheet does not purport to
summarize all of the terms, conditions, representations, warranties and other
provisions with respect to the transactions referred to herein, which
transactions will be entered into on the basis of mutually satisfactory
definitive documentation after, among other things, receipt of necessary
internal and external approvals. This term sheet is for discussion purposes only
and is delivered on a without prejudice basis subject to all applicable rules of
settlement discussion privilege.
Summary of Recapitalization
It is anticipated that the Recapitalization of Banro
Corporation (“Banro” or the “Debtor”) will be implemented through
a pre-arranged restructuring under the Companies’ Creditors Arrangement
Act, R.S.C. 1985, c. C-36 (the “CCAA”). The Recapitalization would
treat debt claims in the DRC as strategic and they would not be impaired.
Priority Lien Debt claims under and as defined in the Amended & Restated
Collateral Trust Agreement dated April 18, 2017 (the “CTA”) would remain
unimpaired although the forward sale delivery schedules under the three priority
GFSA contracts would each be deferred/extended with no deliveries until July
2019 in order to improve the financial flexibility of the Debtor. The Stream
Agreements, which are direct obligations of the DRC entities, would be
consensually amended to provide cash flow relief to the Debtor until the date on
which a certain minimum production level is achieved. 75% of the other Parity
Lien Debt claims would be equitized pro-rata to their claim amounts and receive
100% of the common shares of reorganized Banro (subject to subsequent dilution
on account of the Stream Equity Warrants (as outlined below)) pursuant to a CCAA
plan of compromise or arrangement (the “CCAA Plan”). The remaining 25% of
the Parity Lien Debt would constitute a deficiency claim and be compromised in
the Unsecured Claims Class (as defined herein). Certain unsecured claims against
Banro only (and not as against any of its subsidiaries in the DRC) would be
compromised for nominal consideration pursuant to the CCAA Plan, and all legacy
equity and claims associated with legacy equity will be extinguished for no
consideration pursuant to the CCAA Plan. Baiyin and Gramercy would provide a DIP
facility for working capital during the terms of the CCAA proceedings. It is
anticipated that the CCAA filing would be made by the end of December 2017 and
be completed during March 2018, provided that there is no Qualified Alternative
Transaction that is identified pursuant to the SISP (as defined herein).
Treatment of Strategic Debt Claims
| Local DRC Bank Debt: |
To be serviced as scheduled; unaffected by CCAA Plan.
|
DRC Strategic Vendor
Payables: |
Payment plans to be scheduled with a priority payment
focus; unaffected by CCAA Plan. |
DRC Non-Strategic
Vendor Payables: |
Payment plans to be scheduled with a secondary payment
focus or discounted proposals to be considered; unaffected by CCAA Plan.
|
Treatment of Priority (First) Lien Debt Claims and Equipment
Lien Claims
| Priority Lien Debt: |
• |
Amended and Restated Gold Purchase and Sale Agreement
Tranche 2/3 dated September 17, 2015 among Twangiza GFSA Holdings, Banro
and Twangiza Mining S.A. (as amended or restated from time to time) (the
“Twangiza Forward I Agreement”): US$4,492,200 (US$10.5 million
prepayment); |
|
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|
• |
Gold Purchase and Sale Agreement dated April 19, 2017
among Gramercy Funds Management LLC or its designate, Resource
FinanceWorks Limited or its designate, Banro and Namoya Mining S.A. (as
amended or restated from time to time) (the “Namoya Forward I
Agreement”): US$42 million (US$45.0 million prepayment); and
|
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|
• |
Purchase and Sale Agreement dated July 12, 2017 (as
amended or restated from time to time) among Baiyin International and
Twangiza Mining S.A. (the “Twangiza Forward II Agreement”): US$6.0
million (US$6.0 million prepayment) |
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|
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(collectively, the “Unaffected
Priority Lien Debt”). |
1
EXECUTION VERSION
Treatment of Twangiza
Forward I Agreement:
|
Gold deliveries had been contractually deferred through
December 31, 2017, with the original delivery adjusted to provide a 19.5%
IRR through the amended final delivery date of August 31, 2018. |
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|
|
The delivery schedule will be further amended to (i)
extend the current deferral period termination date from December 31, 2017
to June 30, 2019 and (ii) extend the final delivery date to February 29,
2020 and (iii) revise the number of ounces deliverable each month starting
July 1, 2019 for 8 months from 697.640 ounces to 673.484 ounces to earn a
19.5% IRR through the revised final delivery date. |
Treatment of Namoya
Forward I Agreement: |
Gold deliveries had been contractually deferred through
December 31, 2017, with the original delivery adjusted to provide a 15%
IRR through the initial final delivery date of June 30, 2020. |
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|
|
The delivery schedule will be further amended to (i)
extend the current deferral period termination date from December 31, 2017
to June 30, 2019, and (ii) extend the final delivery date to April 30,
2022 and (iii) revise the number of ounces deliverable each month starting
July 1, 2019 for 34 months to earn a 15% IRR through the revised final
delivery date. |
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Each of Gramercy’s and RFW’s monthly delivery schedule to
be amended from 719.452 ounces to 929.807 ounces. |
Treatment of Twangiza
Forward II Agreement:
|
Gold deliveries in connection with equipment lien
financing had been contractually deferred through December 31, 2017, with
the original delivery adjusted to maintain a 15% IRR through the final
delivery date of August 31, 2018. |
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|
|
The delivery schedule will be further amended to (i)
extend the current deferral period termination date from December 31, 2017
to June 30, 2019, and (ii) extend the final delivery date to February 29,
2020 and (iii) revise the number of ounces deliverable each month starting
July 1, 2019 for 8 months from 792.132 ounces to 945.937 ounces, to
maintain a 15% IRR through the revised final delivery date |
| Early Termination: |
The Namoya Forward I Agreement and the Twangiza Forward
II Agreement shall be amended to include a provision for the early
repayment at the option of Banro at any time after the completion of the
CCAA Plan at a 15% IRR calculated per the XIRR function on Excel from the
initial funding date to the repayment date. |
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|
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The calculation of the Twangiza Forward I Agreement shall
be amended to include a provision for the early repayment at the option of
Banro at any time after the completion of the CCAA Plan at a 19.5% IRR
based on the delivery of equivalent ounces calculated at $1,100 per ounce,
calculated per the XIRR function on Excel from the initial funding date to
the repayment date. |
2
EXECUTION VERSION
Treatment of Stream Agreements
| Stream Agreements: |
• |
Gold Purchase and Sale Agreement dated December 31, 2015
among RFW Banro Investments Limited, Banro and Twangiza Mining S.A. (as
amended or restated from time to time) (the “Twangiza Stream
Agreement”): US$47.8 million (US$67.5 million initial deposit)
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|
• |
Gold Purchase and Sale Agreement dated February 27, 2015
among Namoya GSA Holdings, Banro and Namoya Mining S.A. (as amended or
restated from time to time) (the “Namoya Stream Agreement”):
US$34.7 million (US$50.0 million initial deposit); and |
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(collectively, the “Stream
Agreements”). |
Treatment of Stream
Agreements |
The Stream Agreements would not be affected under the
CCAA Plan. However, the holders of the Stream Agreements would agree to
modify the terms to increase the Ongoing Price from US$150 per ounce to
LBMA PM Gold Price for each Stream Agreement’s respective claim on the
first 200,000 ounces of production delivered at each mine from January 1,
2018 (being equal to 22,200 ounces for Twangiza and 16,660 ounces for
Namoya and totaling US$42.56 million of cash flow relief at $1,250/oz.
spot), after which the Gold Transfer Price will revert to US$150 per
ounce. As consideration for the treatment and amendment of the Stream
Agreements contemplated herein, each purchaser under each Stream Agreement
(each, a “Purchaser”) will receive the Stream Equity Warrants outlined
below on implementation of the CCAA Plan. |
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|
|
In addition, ounces deliverable through December 2017
will be deferred and spread out over 12 months once the entitlements for
200,000 ounces of production from January 1, 2018 have been delivered.
Ounces deferred will be entitled to an additional delivery of 12.325% for
Twangiza stream and 14.808% for the Namoya stream (the Entitlement
Percentage); and Banro will adjust ounces deliverable to ensure that each
stream holder receives the production-weighted average LBMA PM gold price
for each deferral during the deferral period. |
Stream Equity
Warrants - Twangiza |
On implementation of the CCAA Plan, the Purchaser for the
Twangiza Stream Agreement will receive penny warrants exercisable into an
equity stake of up to 4.553% of the Banro common equity subject to the
following conditions. |
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|
The equity stake of the warrant cannot exceed 4.553% of
the Banro common equity. However, if at the time that the warrant vests,
the aggregate value of cash flow relief achieved by Banro is less than
$24.2 million, the equity stake will be reduced pro rata. The aggregate
value of cash flow relief will be equal to the number of ounces delivered
pursuant to the stream agreement commencing January 1, 2018 until the
warrant vests multiplied by the difference between (a) the LBMA PM gold
price fix on each delivery date, less (b) $150 per delivered ounce.
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| |
The warrants will vest on the earlier of: |
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i. |
the Purchaser for the Twangiza Stream Agreement receiving
22,000 ounces of payable gold from the first 200,000 ounces of production
delivered at the Twangiza mine pursuant to the stream claim commencing
January 1, 2018; |
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|
ii. |
completion of the Exit Transaction; and |
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|
iii.
|
termination of the stream pursuant to Banro’s termination
option. |
Stream Equity
Warrants - Namoya |
On implementation of the CCAA Plan, the Purchaser for the
Namoya Stream Agreement will receive penny warrants exercisable into an
equity stake of up to 3.447% of the Banro common equity subject
to the following conditions. |
3
EXECUTION VERSION
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|
The equity stake of the warrant cannot exceed 3.447% of
the Banro common equity. However, if at the time that the warrant vests,
the aggregate value of cash flow relief achieved by Banro is less than
$18.326 million, the equity stake will be reduced pro rata. The aggregate
value of cash flow relief will be equal to the number of ounces delivered
pursuant to the stream agreement commencing January 1, 2018 until the
warrant vests multiplied by the difference between (a) the LBMA PM gold
price fix on each delivery date, less (b) $150 per delivered ounce.
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The warrants will vest on the earlier of: |
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i. |
the Purchaser for the Namoya Stream Agreement receiving
16,660 ounces of payable gold from the first 200,000 ounces of production
delivered at the Namoya mine pursuant to the stream claim commencing
January 1, 2018; |
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|
ii. |
completion of the Exit Transaction; and |
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|
iii. |
termination of the stream pursuant to Banro’s termination
option. |
| Call Option: |
Each holder of a Stream Agreement would agree to allow
Banro to buy out the Stream Agreement at any time up until December 31,
2021 at a price equal to the amount required to give each holder a 15% IRR
from the Initial Deposit calculated using the XIRR function on Excel. In
order to exercise the option, Banro must choose to buy out both the Stream
Agreements simultaneously. |
Treatment of Affected Parity (Second) Lien Debt
Claims
| Affected Parity Lien Debt: |
• |
10% Senior Secured Notes due 2021 (the “Senior Secured
Notes”): US$197.5 million; |
|
|
Letter agreement dated July 15, 2016 among Baiyin
International Investment Ltd and Twangiza Mining S.A.) (the “Dore Loan”):
US$10.0 million; and |
|
• |
Purchase and Sale Agreement dated July 12, 2017 among
Namoya Gold Forward Holdings II LLC, Baiyin International and Namoya
Mining S.A. (the “Namoya Forward II Agreement”): US$20.0 million (US$20.0
million prepayment)(the “Secured Amount”) |
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(collectively, the “Affected Parity Lien Debt”).
|
Claim Values of Affected
Parity Lien Debt: |
The claim value of the parity Senior Secured Notes and
Dore Loan will be recognized at par plus accrued interest through the
filing date, being approximately US$203,506,170 and US$10,247,120,
respectively. |
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|
The claim value of the parity Namoya Forward II Agreement
will be recognized at the Secured Amount, being US$20,000,000. |
Treatment of Affected
Parity Lien Debt: |
The restructuring contemplates an equitization of 75% of
all Affected Parity Lien Debt claims pursuant to the CCAA Plan, pro-rata
with their claim value as set forth or calculated above, into 100% of the
new equity to be issued by Banro (“New Equity”) (subject to
subsequent dilution on account of the Stream Equity Warrants). The balance
of 25% of the Affected Parity Lien Debt claims shall participate in and be
compromised with the Affected Banro Unsecured Claim class. For purposes of
tax planning only, Baiyin and Gramercy reserve the right to have the new
equity be delivered in the form of shares of Banro Group (Barbados)
Limited, instead of Banro Corporation; and if that determination is made,
Banro Group (Barbados) Limited would become the sole owner of Banro
Corporation pursuant to the implementation steps of the CCAA Plan.
|
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| |
For illustration purposes, based upon
relative holdings of debt, it is anticipated that post-restructuring and
before any additional post- implementation equity raise, Baiyin would hold
approximately 34.07% of the New Equity, Gramercy would hold approximately
40.28% of the New Equity, and third parties would hold approximately
25.65% of the New Equity (subject to dilution for third parties down to
23.6% of the New Equity in the event that the Stream Equity Warrants are
exercised at full value). |
| |
|
| |
For purposes of the CCAA Plan, all
holders of Affected Parity Lien Debt (including, but not limited to,
Baiyin and Gramercy) will vote in the same class under the CCAA
Plan. |
4
EXECUTION VERSION
Treatment of Unsecured Claims, Equity Interests and
Equity Claims
| Affected Unsecured Claims: |
• |
Certain general unsecured claims against Banro
Corporation (but not its subsidiaries) outside of the DRC to be identified
by Baiyin and Gramercy (the “Affected Banro Unsecured Claims”); and
|
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| |
• |
Current equity and equity-linked claims |
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(collectively, the “Affected Junior Claims”).
|
Treatment of Banro
Contracts: |
Baiyin and Gramercy shall have a consent right with
respect to which contracts the Debtor elects to disclaim. |
Treatment of Affected
Junior Claims: |
Baiyin and Gramercy shall provide Banro with a list of
Affected Banro Unsecured Claims to be affected by the CCAA Plan (the
“Affected Claims List”), and a claims process will be conducted on
negative notice to determine the quantum of all such claims (the
“Claims Process”). For greater certainty, any holders of unsecured
claims that do not receive notice pursuant to the Claims Process that
their claims shall be affected by the CCAA Plan shall remain unaffected.
Baiyin and Gramercy shall provide the Affected Claims List to Banro two
days in advance of the hearing for entry of the order establishing the
Claims Process. |
|
|
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|
|
All holders of Affected Banro Unsecured Claims will be
given notice of the CCAA Plan and shall vote in a separate class under the
CCAA Plan, together with a deficiency claim of the holders of the Parity
Lien Debt (including Baiyin and Gramercy) equal in the aggregate to 25% of
the aggregate claim amount of the Parity Lien Debt as set forth herein
(the “Deficiency Claim Amount”). |
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|
|
The CCAA Plan will provide for a $10,000 distribution pro
rata among the holders of Affected Banro Unsecured Claims and the holders
of the Parity Lien Debt in respect of, and to the extent of, their
Deficiency Claim Amount. |
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All current equity and all other equity related
instruments and claims will be compromised under the CCAA Plan for no
consideration. |
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The treatment of any and all other Affected Junior Claims
shall otherwise be acceptable to Baiyin and Gramercy. |
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For the avoidance of doubt, to the extent that the holder
of an Affected Banro Unsecured Claim has a claim against any entity other
than Banro Corporation in respect of that same claim, the CCAA Plan shall
have no effect on that claim as against that other entity. For the
avoidance of doubt, this clause does not apply to any guarantees of the
Parity Lien Debt, which shall be compromised by the CCAA Plan as against
all guarantors thereof. |
5
EXECUTION VERSION
Other CCAA Plan
Provisions |
The CCAA Plan shall provide for the payment in cash:
|
| |
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|
i. |
for each creditor holding an Affected Banro Unsecured
Claim that is an employee or former employee who was terminated in the
CCAA proceedings, the amount equal to the payment that such employee would
have received pursuant to the Wage Earner Protection Program Act if Banro
were to be bankrupt; |
|
|
ii. |
of 100% of any amounts referenced in sections 6(3), 6(5)
and 6(6) of the CCAA; and |
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|
iii. |
of any amounts secured by the charges granted in the CCAA
proceedings to the extent such amounts have not been paid or released.
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The foregoing amounts shall be paid by Banro through a
draw under the DIP Facility or otherwise prior to implementation of the
CCAA Plan. |
New Equity Considerations
| Listing: |
It is not anticipated that Banro would remain listed on
either the New York or Toronto stock exchanges, or that it would seek a
listing on any other Exchanges, on the completion of the CCAA proceedings.
In conjunction with the Recapitalization transaction, the Debtor will file
an application to cease to be a reporting issuer in Canada, to be
effective upon the implementation of the Recapitalization transaction.
|
| Jurisdiction: |
In connection with the Recapitalization transaction, it
is anticipated that Banro would be redomiciled or reincorporated in
accordance with the laws of the Cayman Islands or another jurisdiction
acceptable to Gramercy and Baiyin, taking into account, among other
factors, tax and treaty-based international investment protection. The
transactions contemplated herein will be completed in a tax efficient
manner, acceptable to Baiyin, Gramercy, and Banro, acting reasonably.
|
| Exit Provisions: |
Depending on the listing limitations, there would be a
dual path exit provision. The first would be a Banro-level go-to-market
clause, requiring a market-based M&A solicitation or equity public
offering initiated prior to July 1, 2019. The second path would be the
agreement that, if any shareholder holding more than 30% of the shares of
Banro objected to Banro pursuing or completing such go-to-market exercise,
such shareholder would agree to make an offer to buy-out the other
shareholders at a Fair Market Value on or before December 31, 2019. See
Appendix 1. |
| Drag and Tag Rights: |
All shareholders have tag-along rights on transfers of
more than 20% of the outstanding shares, save for reorganization between
affiliated parties within the same shareholder group. Shareholders have 10
days to decide whether they will participate in any tag-along sale.
Shareholders have the right to sell their pro-rata share of the shares
proposed to be sold. |
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One or more shareholders owning 66-2/3% or more of the
outstanding shares in the aggregate can drag all other shareholders in a
sale of Banro. All dragged shareholders must sell their proportional share
of shares to the buyer and otherwise support the transaction. Banro has a
proxy to enforce other shareholders’ compliance with the drag-along
obligations. |
| Transfers: |
Transfers of shares generally permissible by all
shareholders, subject to rights of first offer, tag-along rights and
customary conditions (i.e. compliance with law, no registration/prospectus
required, transferee joining shareholders agreement). ROFO on any transfer
of shares whereby an offer is first made to sell all such shares to all
20%+ shareholders first (on a proportionate basis).
|
6
EXECUTION VERSION
| Pre-emptive Rights: |
Pre-emptive rights apply to all shareholders on equity
issuances (not debt); each of which has 20 days to decide to purchase
their pro rata share of the proposed issuance. For any such rights offer,
the purchase price must be supported by a third-party valuation prepared
by an internationally recognized firm if required by any 20%+
shareholders. For any pre-emptive right not exercised in full, only any
20%+ shareholders will have the right to purchase the additional shares
(on proportionate basis, including any such shares not purchased by a 20%+
shareholder). If issuance is not purchased in full by shareholders, Banro
has 60 days to issue such securities to a third party. |
| Registration Rights: |
Standard demand and piggy back registration rights for
shareholders having at least 20% shareholding post-IPO in the event that
reorganized Banro is listed. |
| Board: |
The Board of reorganized Banro (the “New Board”)
will be composed of five members, of which two nominees shall be named by
Baiyin and two nominees shall be named by Gramercy, with the fifth board
member to be chosen jointly by them. Banro will also create a compensation
committee and an audit committee, and both Baiyin and Gramercy will have a
seat and veto rights on both committees. In addition, both Baiyin and
Gramercy shall have the right to nominate one or more observers to the New
Board and any committees of the New Board. The Chairman of the New Board
shall be agreed by both Baiyin and Gramercy. The New Board shall meet
ordinarily at least once every month, in person or by telephone, and
extraordinarily at any time in case a meeting of the New Board is so
called. Each of Baiyin and Gramercy shall retain its right to
representation on the New Board as long as the Shareholders’ Agreement
remains in effect (per the terms set forth in Appendix 2). |
| Governance Rights: |
Certain governance rights through a Shareholders’
Agreement or Banro’s constating documents, as applicable, would be
included for material investments, financings, related party transactions,
etc. All shareholders would benefit from the exit provisions afforded
under the Shareholders’ Agreement or constating documents, as applicable.
The Shareholders’ Agreement and other governance rights arising from
Banro’s constating documents referred to in this section will be
terminated upon the completion of the go-to-market exercise (“Exit
Transaction”), whether it results in a sale of the equity or assets of
Banro or a public offering of its equity. See Appendix 2. |
| Information Rights: |
All shareholders are entitled to receive (i) audited
annual financial statements within 120 days of the end of each fiscal
year, (ii) unaudited quarterly financial statements within 45 days of the
end of each fiscal quarter. |
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|
| |
Additional information rights are set out in Appendix 2.
|
7
EXECUTION VERSION
DIP Facility
| DIP Facility: |
Upon the filing of the CCAA, Baiyin and Gramercy (the
“Lenders”) will provide a DIP facility (the “DIP Facility”)
to the Debtor of up to US$20 million with an effective all-in 12% p.a.
interest rate, supported by a priming lien, maturing within one year of
the filing. The DIP Facility shall be on standard terms and conditions
consistent with other facilities of this nature, including milestones for
the progression of the CCAA case acceptable to Baiyin and Gramercy; and
will be funded equally. Drawdowns under the DIP Facility and their uses
would be subject to the approval of the Lenders pursuant to an agreed-upon
DIP budget (the “DIP Budget”). |
| Use of Proceeds: |
Working capital or remedial capital expenditures, as
approved by the Lenders. A DIP budget acceptable to the Lenders shall be
established. |
| Repayment/Refinancing: |
Upon exit from the CCAA, the DIP Facility will be
refinanced by conversion into a new secured term loan (the “New Secured
Term Loan”). The New Secured Term Loan will have an interest rate of 10%
p.a. and maturity date of December 31, 2019. The New Secured Term Loan
will be secured by priority liens on the same basis as, and ranking pari
passu with, the Unaffected Priority Lien Debt, and will be enhanced by
penny warrants for 2% of the fully-diluted shares of reorganized Banro.
The New Secured Term Loan will be mandatorily repayable upon settlement of
the Exit Transaction (as defined in Appendix 1). |
Other Considerations
| Implementation: |
The Recapitalization will be implemented through a
pre-arranged plan of arrangement proceeding under the CCAA. Banro and its
Barbados subsidiaries will be applicants in the CCAA proceedings, and
Banro’s subsidiary guarantors shall benefit from the CCAA stay of
proceedings and shall be affected by the Plan, which will release such
subsidiary guarantors from their guarantees and other obligations in
respect of the Affected Parity Lien Debt. |
| Support Agreement: |
A support agreement in respect of the Recapitalization
transaction containing terms and conditions acceptable to Banro, Gramercy
and Baiyin will be entered into with Banro by Gramercy and Baiyin, and
such other holders of Parity Lien Debt who sign such joinder to the
support agreement (the “Support Agreement”). All material consent
rights under the Support Agreement will be provided to Baiyin and Gramercy
only, and not any joining party. The Support Agreement shall contain
standard terms and conditions for a restructuring transaction of this
nature, including obligations to support the Recapitalization transaction
and not to take any action that is adverse to or would otherwise hinder
the completion of the Recapitalization transaction, as well as milestones
for the completion of the Recapitalization transaction and conditions to
the implementation of the Recapitalization transaction (the
“Milestones”). |
| Releases: |
The CCAA Plan shall include releases to be effective as
of the effective date (the “Releases”) which shall, at a minimum, provide
that each of Banro, the Lenders, the parties that enter into the Support
Agreement, and each of their current and former directors, officers,
managers, partners, shareholders, employees, advisors, legal counsel and
agents, including the respective advisors to Gramercy and Baiyin
(collectively, the “Released Parties”), shall be released and discharged
from all present and future actions, causes of action, damages, judgments,
executions, obligations and claims of any kind or nature whatsoever (other
than liabilities or claims attributable, directly or indirectly, to any of
such Released Parties’ gross negligence, fraud or willful misconduct as
determined by the final, non-applicable judgment of a court of competent
jurisdiction) arising on or prior to the implementation date of the
Recapitalization transaction in connection with the Priority Lien Debt,
the Parity Lien Debt, the current equity of the Company, the
Recapitalization transaction, the CCAA Plan or proceedings commenced under
the CCAA, the actions or transactions contemplated herein, the business
and affairs of Banro prior to the effective date, or any other actions or
matters related directly or indirectly to the foregoing, including any
claims that may be made against the Released Parties where by law such
Released Parties may be liable in their capacity as directors of the
Company or any of its subsidiaries that are CCAA applicants, provided that
the Released Parties shall not be released from (i) any claims referenced
in section 19(2) of the CCAA, (ii) any claims based on fraud or willful
misconduct or (iii) in respect of any of their respective obligations
under the Recapitalization transaction, the CCAA Plan or the CCAA
proceedings or any document or order ancillary to any of the foregoing. To
the extent that any claims as against the directors and officers of Banro
cannot be released under the CCAA based on statutory limitations set out
in the CCAA (such as claims under section 5.1(2) of the CCAA), any and all
such claims (other than claims for fraud) shall be channeled pursuant to
the terms of the CCAA Plan and the sanction order approving same to the
directors and officers insurance policies currently in place. |
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| |
The Debtor shall conduct a standard claims process
to call for and quantify claims as against the directors and officers of
Banro. |
8
EXECUTION VERSION
| SISP: |
As part of the CCAA proceedings, Banro will conduct a
Sales and Investment Solicitation Process (a “SISP”) on terms and
conditions acceptable to Banro, Baiyin and Gramercy, pursuant to which any
interested parties will be afforded the opportunity to acquire Banro
pursuant to a “Successful Bid”, meaning an alternative transaction to the
Recapitalization which (i) is on terms that Banro, in its business
judgment and in consultation with the Monitor and the Lenders, determines
is superior to the terms of the Recapitalization, and (ii) indefeasibly
repays in full in immediately available funds (x) all of the outstanding
DIP obligations, and (y) at least 75% of the principal amount of each of
the obligations that form part of the Affected Parity Lien Debt, and (z)
100% of the Unaffected Priority Lien Debt, and (iv) treats each of the
Stream Agreements on the same terms as the Recapitalization or
indefeasibly repays in full all amounts due under the Stream Agreements.
|
| Meeting Order |
It is agreed that the Meeting Order to be presented to
the CCAA court will be presented by the Debtor for approval by the CCAA
Court on the following basis: |
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|
• |
all holders of Affected Parity Lien Debt will vote
together in a single class; |
|
• |
all holders of Affected Parity Lien Debt will be entitled
to vote 75% of the full amount of their respective claims in the amounts
specified herein and above; and |
|
• |
each holder of Affected Parity Lien Debt will be entitled
to vote the full amount of its respective portion of the Deficiency Claim
Amount in the class established in respect of the Affected Banro Unsecured
Claims. |
| Legal Relationship: |
Neither Baiyin nor Gramercy shall have any express or
implied right or authority to assume or create any obligations on behalf
of or in the name of the other party or to bind the other party to any
contract, agreement or undertaking with any third party, in each case,
without such other party’s prior written consent, other than certain Exit
Provision obligations. Under no circumstances shall the Shareholders’
Agreement or constating documents, as applicable, be deemed or construed
to (1) create or imply a partnership or joint venture between the parties
or an employer/employee or agency relationship, or (2) enlarge the
fiduciary duties and responsibilities, if any, of the parties or any of
their respective affiliates. |
9
EXECUTION VERSION
| Headquarters: |
It is contemplated that Banro will establish its
corporate headquarters in a jurisdiction satisfactory to Baiyin and
Gramercy, while initially maintaining an administrative office in Toronto
for its financial and legal staff. It would maintain its Bukavu office as
the local DRC headquarters. |
| Fees and Expenses: |
The Debtor will pay all reasonable fees and expenses of
the advisors to Baiyin and Gramercy that are directly related to the
Recapitalization in accordance with the DIP Budget. |
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The Debtor will pay all reasonable fees and expenses of
the Monitor, and the legal advisors to the Monitor and the Debtor, in
accordance with the DIP Budget. |
| Definitive Documentation: |
The parties will work in good faith to negotiate, execute
and deliver definitive documentation necessary to implement the
Recapitalization transaction in accordance with the terms set out in this
term sheet and in form and substance acceptable to the Debtor, Gramercy
and Baiyin, acting reasonably. |
| Selection of CCAA Monitor: |
FTI Consulting Canada Inc. shall be the proposed Monitor
in the CCAA proceedings. |
10
EXECUTION VERSION
Appendix 1: Exit Provisions
On or before July 1, 2019, Banro shall have taken all the
necessary measures (at Banro’s expense) to initiate the sale of the equity of
the Company to a third party or parties (the “Exit Transaction”) either
by (a) initiating the sale of Banro to a strategic buyer by engaging a qualified
M&A banker (which shall be one of the banks listed below in the third
paragraph) and conducting a transparent and competitive auction for the sale of
both of Baiyin and Gramercy’s interests in Banro, together with the other
remaining minority equity interests, or (b) conducting an initial public
offering of no less than a 30% interest in Banro’s equity post-offering through
a qualified underwriter (which shall be one of the banks listed below in the
third paragraph), pursuant to customary documentation and market practice for
such offerings, and as directed by Baiyin and Gramercy in the event that they
agree on which path Banro should pursue as between options (a) and (b) above.
Neither Baiyin nor Gramercy shall do anything to delay or obstruct the Exit
Transaction (except to the extent that the Fair Market Value process described
below is engaged), shall make best efforts to accommodate the Exit Transaction
process, and will agree to abide with the results if either process results in a
successful sale or placement. For avoidance of doubt, either Baiyin or Gramercy
may participate in the auction. Banro shall make best efforts to complete the
Exit Transaction by December 31, 2019, unless such date is extended with the
consent of Baiyin and Gramercy, and any other 20%+ shareholder.
In the event that a shareholder holding more than 30% of the
shares of Banro objects to Banro pursuing such go-to-market clause, or in
completing either option under the Exit Transaction, such shareholder shall make
an irrevocable offer to buy-out the other shareholders at a Fair Market Value.
Any such pre-emption should be completed on or before December 31, 2019.
The Fair Market Value shall be calculated by two of the
following banks using the methodology described below:
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Bank of Montreal |
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Bank of Nova Scotia |
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Barclays |
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BofA Merrill Lynch |
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Canadian Imperial Bank of Commerce |
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Citigroup |
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Credit Suisse |
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Deutsche Bank |
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Duff & Phelps |
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Goldman Sachs |
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Houlihan Lokey |
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JP Morgan |
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• |
Macquarie |
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Moelis |
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• |
Morgan Stanley |
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Rothschilds |
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• |
Royal Bank of Canada |
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• |
Standard Bank |
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• |
Toronto Dominion Bank |
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• |
UBS |
Each of Baiyin and Gramercy shall appoint one of the two banks
and shall ensure that each bank has access to such books, records and
information in Banro’s possession or control as they may reasonably request for
the purpose of making their calculation of Fair Market Value (the “Initial
Values”), with the exception of valuation material prepared by the other bank.
The Fair Market Value shall be the simple average of the Initial Values,
provided that such average is no more than 10% above or below either of such
valuations. In the event that such average is more than 10% above or below
either of the two valuations, the Fair Market Value shall be the simple average
of (i) a valuation prepared by a third bank jointly appointed by the foregoing
two banks and using the methodology described below and (ii) the Initial Value
that is closest to the calculation of Fair Market Value prepared by such third
bank.
Fees and expenses of the banks doing such valuations shall be
paid by Banro.
11
EXECUTION VERSION
Each bank shall determine the amount (which cannot be less than
zero) which is the cash purchase price that a knowledgeable party would pay for
the relevant Banro shares in an arm's length transaction, and such determination
shall be prepared using a valuation methodology based on the present pre tax US
Dollar discounted value, taking into account all factors it considers relevant,
including the following:
| 1. |
current and projected demand and supply conditions in the
global gold market; |
| 2. |
appropriate price projections for refined gold based on
the average of recently published prices for refined gold issued by not
less than six reputable third party consultants, analysts and financial
institutions selected by the bank, other than the highest and lowest
prices (which shall be excluded from such calculation); |
| 3. |
country and political risk; |
| 4. |
social and political environment; |
| 5. |
tenure security; |
| 6. |
technical risk; |
| 7. |
expected production; |
| 8. |
quantum and nature of mineral reserves and mineral
resources, as well as continued resource potential that could be
reasonably expected based on actual exploration results on the Banro
properties completed up to the time the bank is completing their
valuation; |
| 9. |
the current life of mine plan in relation to the relevant
Banro properties; |
| 10. |
likely timing and scale of developments and/or expansion
and/or reductions; |
| 11. |
projected capital and operating costs, to the extent
affecting development or production; |
| 12. |
reclamation and environmental liabilities to the extent
greater than established sinking funds which may affect the extent and/or
continuation of production; |
| 13. |
other liabilities which may affect the extent and/or
continuation of production; |
| 14. |
regulatory considerations (including environmental and
tax) to the extent affecting development or production; |
| 15. |
appropriate foreign exchange projections issued by
reputable third party consultants, analyst and financial institutions; |
| 16. |
an appropriate discount rate generally used by financial
professionals in respect of the precious metals industry, using mid-period
discounting and taking into account all relevant risks; |
| 17. |
relevant comparable multiples in precedent transactions
(price to net asset value, price to cash flow and/or any other
conventional multiples used in the industry at the time); |
| 18. |
control premium; and |
| 19. |
any other material factors which the bank believes that
it should consider. |
12
EXECUTION VERSION
Appendix 2: Minority Governance Rights
Certain governance rights will be established through a
Shareholders’ Agreement or Banro’s constating documents, as applicable. The
Shareholders’ Agreement or other governance rights arising from Banro’s
constating documents referred to in this section will be terminated upon the
completion of the go-to-market exercise (“Exit Transaction”), whether it
results in a sale of the equity or assets of Banro or a public offering of its
equity. For so long as Baiyin or Gramercy has representation on the New Board,
Banro and each of its key subsidiaries shall not take the following actions
without the affirmative vote of at least one member representing Baiyin and at
least one member representing Gramercy:
| 1. |
Any change in Banro’s articles or by-laws, or any other
action, that may alter or change the rights, privileges or preferences of
the New Shares; |
| 2. |
Changing the nature of the business of Banro; |
| 3. |
Approval of certain senior officers of the company,
including the Chief Executive Officer, Chief Operating Officer, and Chief
Financial Officer, with any initial changes to be agreed no later than one
year prior to the commencement of the Exit Transaction. |
| 4. |
Approval of acquisitions, mergers, consolidation,
issuance/sale of shares or Banro’s assets or similar transaction and
investments in share participations or equivalents; |
| 5. |
Establishment of any partnership, joint venture or
similar alliance with a third party, except in the ordinary course of
business; |
| 6. |
Authorizing or issuing any equity security and/or
convertible debt instruments; |
| 7. |
Any redemption or repurchase of shares by
Banro; |
| 8. |
Any reduction or increase in Banro’s capital, including
the authorized capital; |
| 9. |
The transfer of shares such that the effective holdings
of any one shareholder/related group were to exceed 66.67%; |
| 10. |
Liquidation or dissolution of Banro or any of its key
subsidiaries; |
| 11. |
Transfer of shares or any other securities of key
subsidiaries to any other person; |
| 12. |
Entering into any related party transaction or business
arrangement in excess of US$25,000 with a company or other legal entity in
which an officer, New Board member, executive, or principal shareholder of
Banro has a financial interest; |
| 13. |
Approval and/or amendment of the annual budget and/or
business plan (the “Budget”); |
| 14. |
Nomination, change or removal of the independent auditor
or any material change in the accounting policies, practices or
principles; |
| 15. |
The establishment, any amendment or cancellation of any
equity-linked, stock option program or share buy- back program or any
similar instruments; |
| 16. |
Material change of any employee compensation or benefit
plan by Banro or its subsidiaries, including bonus plans, profit sharing
arrangements and equity-linked incentive compensation programs, except
those already in place in Banro or approved by the Compensation
Committee; |
| 17. |
Approval of capital expenditure individually or in
aggregate to an amount exceeding a 10% increase in the level previously
approved in the Budget; |
| 18. |
Change in the dividend policy, declaration or
distribution of dividends, other than those required by law; |
| 19. |
Any increase or decrease in the authorized number of
members of the New Board; |
| 20. |
Settlement of any litigation in excess of US$25,000
except as contemplated in the Budget or which threatens the operations of
Banro; |
| 21. |
Incurrence of any indebtedness except as contemplated in
the annual Budget; notwithstanding the foregoing, if potential cumulative
indebtedness to be incurred in excess of the budget is within US$3million,
it may be approved solely by majority vote of the New Board; |
| 22. |
Making material loans or other extensions of credit to
any third party, guaranteeing indebtedness not related to the direct
operations of Banro, and establishing any liens on Banro’s assets, except
in ordinary course of business and when certain equipment is being given
as a guarantee of the financing specifically obtained for its acquisition;
and |
| 23. |
Any other material action which is out of the ordinary
course of business. |
For avoidance of doubt and notwithstanding any of the
abovementioned, Baiyin and Gramercy agree that any refinancing of existing debt
of Banro on materially superior terms shall be a majority decision of the New
Board, provided that either of Baiyin and/or Gramercy shall have the equal right
to provide or share such financing on the proposed superior terms, or to take up
the right of the other if either party does not provide such financing.
“Materially superior terms” means being a facility or loan agreement that
contains or provides terms or conditions as to rates or fees, tenor, affirmative
or negative covenants, security, representations and warranties or events of
default that would be materially more favorable to Banro than the
provisions in or under the existing debt (i.e. rates or fees lower, tenor and
average life longer, covenants looser, and collateral weaker).
13
EXECUTION VERSION
Moreover, Baiyin and Gramercy agree that the financing of
certain agreed remedial capex projects of Banro (the “Agreed Remedial Capex
Projects”) and funding of up to an additional US$20 million for working
capital purposes in 2018 shall be a majority decision of the New Board, subject
to review and completion of feasibility studies on the Agreed Remedial Capex
Projects. Such financing shall be done with a maturity of December 31, 2019 and
an interest rate of no more than 12% p.a., and be supported by a first priority
lien on the same basis as, and ranking pari passu with, the Priority Lien Debt.
Either of Baiyin and/or Gramercy shall have the equal right to provide or share
such financing on the proposed terms, or to take up the right of the other if
either party does not provide such financing.
The Agreed Remedial Capex Projects shall include: Twangiza
primary crusher, stockpile, mill and thickener to treat transition/fresh ore
arising up to a rate of 35ktpm (US$6.5 million, approximate budget ±15%), Namoya
CIL project with a separate crushing and feeding system (US$17 million), Namoya
tertiary crusher (US$1 million), construction of the N2 alternate supply road
(US$4.5 million), security upgrades (US$2 million), mobile mining equipment
(US$14 million), exploration drilling to define additional reserves and
resources (US$10 million).
For so long as Baiyin and/or Gramercy holds any equity interest
in Banro, Banro will deliver to Baiyin and/or Gramercy: (i) audited annual
financial statements within 120 days of the end of each fiscal year, (ii)
unaudited quarterly financial statements within 45 days of the end of each
fiscal quarter, (iii) monthly financial statements within 15 days of the end of
month, (iv) capital or operating annual budget within 45 days, (v) minutes of
all New Board meetings and materials submitted to the New Board, (vi) technical
reports prepared by an independent Qualified Person in compliance with NI 43-101
annually or delivery of a certificate of the independent Qualified Person that
the reports are current, (vii) if the Company is not then subject to the ESTMA,
delivery of a report in compliance therewith, and (viii) any other information
Baiyin and/or Gramercy reasonably requests (such as a 13-week rolling budget,
resource model updates, or mine plan updates). Baiyin and Gramercy shall also
have all information and inspection rights as set forth in Section 6.5 of the
Gold Purchase and Sale Agreement dated as of Feb 27, 2015 among Namoya Mining
SA, Banro Corporation and Namoya GSA Holdings, as amended by the side letter
dated as of July 12, 2017.
Banro shall maintain appropriate internal control procedures
typical of a public company, including an effective anti-corruption compliance
program and an employee dedicated to compliance (which may be the chief legal
officer). Baiyin and Gramercy shall upon request receive copies of all
management letters of accountants, notification of material litigation and
copies of all filings made with governmental regulatory authorities. Baiyin and
Gramercy shall also be entitled to customary inspection and visitation rights,
including the right to discuss Banro’s affairs directly with its independent
auditors. For so long as Baiyin and/or Gramercy holds any equity interest in
Banro, (i) Banro will operate in compliance with applicable laws and
regulations, including the Mining Convention and related agreements and with
laws, permits and acceptable practices typical in the North American mining
industry and (ii) Banro and anyone acting on behalf of Banro will comply with
the U.S. Foreign Corrupt Practices Act and any other anti-corruption laws or
regulations applicable to Banro.
The Shareholders’ Agreement will be governed by the laws of a
jurisdiction acceptable to Baiyin and Gramercy.
14
EXECUTION VERSION
SCHEDULE “D”
SALE AND INVESTMENT SOLICITATION PROCESS
[Attached]
EXECUTION VERSION
Procedures for the Sale and Investment Solicitation
Process
1. On December 22, 2017, Banro
Corporation (“Banro”) and its direct and indirect subsidiaries, Banro
Group (Barbados) Limited (“BGB”), Banro Congo (Barbados) Limited, Namoya
(Barbados) Limited, Lugushwa (Barbados) Limited, Twangiza (Barbados) Limited,
and Kamituga (Barbados) Limited (collectively, with Banro and BGB, the
“Applicants”) obtained an initial order (the “Initial Order”)
under the Companies' Creditors Arrangement Act (“CCAA”) from the
Ontario Superior Court of Justice (Commercial List) (the “Court”).
2. The Initial Order authorizes and
approves the Applicants entering into an Interim Financing Term Sheet dated as
of December 21, 2017 (the “DIP Term Sheet”) for the provision of a senior
secured super priority (debtor-in-possession), interim, non-revolving credit
facility (the “DIP Facility”) from Gramercy and Baiyin (together with and
any permitted assignees, the “DIP Lender”). A copy of the DIP Term Sheet
is attached at Exhibit “N” to the Affidavit of Rory James Taylor sworn on
December 22, 2017 (the “Taylor Affidavit”) a copy of which is available
at www.cfcanada/fticonsulting.com/banro (the “Case Website”).
3. The DIP Term Sheet contemplates Banro
completing the Sale and Investment Solicitation Process (“SISP”) set
forth herein.
4. The purpose of the SISP is to
solicit proposals for an Alternative Transaction that may constitute a
Successful Bid and where no Successful Bid is obtained, to provide for the
completion of the Recapitalization (each as defined below).
5. Set forth below are the procedures
(the “SISP Procedures”) to be followed with respect to the SISP and, if
applicable, following determination of a Successful Bid, to complete the
transaction contemplated thereby.
Defined Terms
6. All capitalized terms used but not
otherwise defined herein shall have the meanings given to them in the Initial
Order. In addition, capitalized terms used in these SISP Procedures shall have
the meanings set out in Appendix “A”.
Solicitation Process and Timeline
7. The SISP Procedures set forth herein
describe the manner in which prospective bidders may gain access to or continue
to have access to due diligence materials concerning the Banro Group, their
businesses and operations (the “Business”) and their assets, undertakings
and properties (collectively, the “Property”), the manner in which a bid
becomes a Qualified Alternative Transaction Bid, the receipt and negotiation of
bids received, the ultimate selection of a Successful Bid, if any, and the
approval thereof by the Court.
8. Banro shall implement these SISP
Procedures with the assistance and supervision of the Monitor and, where
specified, in consultation with the DIP Lender. In the event that there is
disagreement as to the interpretation or application of these SISP Procedures,
the Court will have jurisdiction to hear and resolve any such dispute.
9. The following table sets out the key
milestones under this SISP, subject to extension by Banro pursuant to and in
accordance with these SISP Procedures:
EXECUTION VERSION
| Milestone |
Deadline |
| Commencement of SISP |
January 22, 2018 |
| LOI Bid Deadline |
March 2, 2018 |
| Bid Deadline |
April 9, 2018 |
Solicitation of Interest
10. As soon as reasonably practicable, and in
no event later than January 22, 2018, Banro and the Monitor shall (a) prepare a
list of potential bidders, including strategic and financial parties, that may
be interested in submitting an Alternative Transaction (a “Potential
Bidder”); (b) prepare a summary teaser describing the opportunity to
participate in the SISP and an overview of the SISP Procedures (the “Teaser
Letter”); (c) prepare a confidential information memorandum (“CIM”)
with respect to the opportunity, if appropriate; and (d) establish a data room
(the “Data Room”) of due diligence materials (the CIM and the materials
in the Data Room collectively being the “Diligence Materials”) that Banro
and the Monitor believe may be useful for Potential Bidders. At the same time,
Banro shall issue a press release setting out relevant information regarding the
SISP with Canada Newswire and such other major news-outlets for dissemination in
Canada, major financial centres in the United States and such other
international locations as the Monitor and Banro may determine to be reasonably
appropriate.
11. As soon as reasonably practicable, the
Monitor shall contact the Potential Bidders to introduce the opportunity,
provide copy of the Teaser Letter to any Potential Bidder that requests a copy
thereof and shall post a copy of the SISP and the Teaser Letter on the Case
Website.
Due Diligence Access
12. In order to participate in the SISP and
be granted access to the Diligence Materials by a Potential Bidder must deliver
to Banro with a copy to the Monitor, at the addresses specified in Appendix
“B” hereto (including by email): (i) an executed confidentiality
agreement in form and substance satisfactory to Banro and the Monitor
(“Confidentiality Agreement”), and (ii) an executed acknowledgement of
these SISP Procedures, in form and substance satisfactory to Banro and the
Monitor (“SISP Acknowledgement”).
13. All Potential Bidders that have provided
an executed a Confidentiality Agreement and an executed SISP Acknowledgment
shall be deemed to be a qualified phase 1 bidder (a “Qualified Phase 1
Bidder”) and will be promptly notified of such classification by the
Monitor. Qualified Phase 1 Bidders shall be provided with a copy of the CIM, if
applicable, and access to the Data Room. Banro and the Monitor make no
representation or warranty as to the accuracy or completeness of the information
contained in the Teaser Letter or the Diligence Materials, except to the extent
expressly provided in any definitive sale or investment agreement executed and
delivered by Banro (a “Definitive Agreement”).
14. Banro, in consultation with the Monitor,
reserves the right to withhold any Diligence Materials that Banro determines, in
its sole discretion, is business sensitive or otherwise not appropriate for
disclosure to a Potential Bidder who is a competitor or customer of any member
of the Banro Group or is affiliates with any competitor or customer of any
member of the Banro Group.
15. In respect of information requests or any
other matters concerning a possible Alternative Transaction and this SISP,
Potential Bidders and/or Qualified Bidders must only communicate with Banro and
the Monitor or with such other individual or individuals as Banro, in
consultation with the Monitor, may authorize in writing. Without the prior
written consent of Banro, in consultation with the Monitor, no Prospective Bidders and/or
Qualified Bidders or representatives thereof may initiate or cause to be
initiated or maintain any communication with a member of any government,
government representative, director, agent, employee, affiliate, creditor,
shareholder, customer or supplier of the Banro Group concerning Banro or its
Business, assets, operations, prospects or finances, or any matters relating to
a possible Alternative Transaction.
EXECUTION VERSION
LOI Submissions
16. Each Qualified Phase 1 Bidder wishing to
be eligible to submit an Alternative Transaction Bid shall submit a non-binding
letter of intent (each, a “LOI”) to Banro with a copy to the Monitor at
the addresses specified in Appendix “B” hereto (including by
email) so as to be received by them no later than 12:00 p.m. (Eastern Standard
Time) on March 2, 2018, or such later date or time as may be agreed by Banro and
the Monitor with the consent of the DIP Lender (the “LOI Deadline”).
17. Each LOI shall include the following
information on the Qualified Bidder’s proposed Alternative
Transaction: (a) the amount of, and details regarding the form of, consideration
for the Alternative Transaction in U.S. Dollars; (b) a specific indication of
the expected structure of the Alternative Transaction and the financing needed
to consummate the Alternative Transaction; (c) the key terms and provisions to
be included in any order of the Court approving the Alternative Transaction; (d)
an outline of any additional Diligence Materials or due diligence required to be
conducted in order to submit an Alternative Transaction Bid; (e) preliminary
evidence satisfactory to Banro and the Monitor of such person’s
financial wherewithal to consummate an Alternative Transaction; (f) any other
terms or conditions that the Qualified Bidder considers material; (g) specific
information as to how the Qualified Bidder intends to satisfy the requirements
for a Qualified Alternative Transaction Bid set forth in paragraph 24 hereof,
and (h) any other information that may be requested by the Company or the
Monitor, after consultation with the DIP Lender, prior to the LOI Deadline.
18. Without limiting the foregoing, each LOI
shall also include:
| |
(a) |
in the case of a Sale Transaction, identification of the
shares owned by any one or more of the Applicants proposed to be acquired
and any liabilities of the Applicants proposed to be assumed; or |
| |
|
|
| |
(b) |
in the case of a Plan Transaction, details regarding the
proposed equity and debt structure of the Banro Group following completion
of the proposed transaction, the direct or indirect investment target and
the aggregate amount of equity and debt investment (including the sources
of such capital, the underlying assumptions regarding the pro forma
capital structure, as well as anticipated tranches of debt, debt service
fees, interest and amortization) to be made in the Banro Group, the debt,
equity or other securities, if any, proposed to be allocated to any
secured or unsecured creditors of the Applicants, the terms of repayment
of the DIP Obligations, the Priority Claims, the Affected Parity Lien Debt
and whether and what portion, if any, of the secured and unsecured
creditors of the Applicants will be paid in cash or other
consideration. |
19. A LOI also must also fully disclose the
identity of each person (including any person that controls such person) that
will be directly or indirectly sponsoring, participating in or financing the
Alternative Transaction and the complete terms of any such sponsorship,
participation or financing.
EXECUTION VERSION
Assessment of LOIs
20. Banro or the Monitor shall provide to the
DIP Lender copies of all the LOIs received, provided that both Gramercy and
Baiyin (in their capacity as DIP Lenders and sponsors of the Recapitalization)
each confirm to Banro and the Monitor in writing that they shall not submit any
other proposal other than the Recapitalization Transaction and shall not amend
the terms of the Recapitalization Transaction to provide greater consideration
or value than what is currently provided for therein (a “Conforming DIP
Lender”).
21. Banro, in consultation with the Monitor
and the Conforming DIP Lender, shall review each LOI received by the LOI
Deadline. Banro shall determine in its business judgment, with the assistance of
the Monitor, if each LOI could form the basis of a Qualified Alternative
Transaction Bid. If Banro, with the assistance of the Monitor and after
consultation with the Conforming DIP Lender, determines that an LOI could not
form the basis of a Qualified Alternative Transaction Bid, Banro and the Monitor
may refuse to provide any further Diligence Materials to the Qualified Phase 1
Bidder and such Qualified Phase 1 Bidder shall not be eligible to submit an
Alternative Transaction Bid. If Banro, with the consent of the Monitor or
further Order of the Court and after consultation with the Conforming DIP
Lender, determines that none of the LOIs received could form the basis of a
Qualified Alternative Transaction Bid, Banro shall give notice to Qualified
Phase 1 Bidders that this SISP is terminated and that Banro will proceed to
complete the Recapitalization.
22. If Banro, with the assistance of the
Monitor and after consultation with the DIP Lender, determines that a LOI could
form the basis of a Qualified Alternative Transaction Bid, the Monitor shall
inform the Qualified Phase 1 Bidder that submitted such LOI of Banro’s
determination and each such Qualified Phase 1 Bidder shall be entitled to submit
an Alternative Transaction Bid in accordance with these SISP Procedures. If the
Conforming DIP Lender, acting reasonably, advises Banro and the Monitor that it
does not agree that any of the LOIs received could form the basis of a Qualified
Alternative Transaction Bid, Banro may either (i) with the consent of the
Monitor, elect to terminate this SISP (and provide notice thereof to Qualified
Bidders) and proceed to complete the Recapitalization, or (ii) seek further
direction from the Court.
Alternative Transaction Bids
23. A Qualified Bidder that is determined in
accordance with paragraph 22 hereof to be eligible to submit an Alternative
Transaction Bid (a “Qualified Bidder”) may deliver written copies of a
binding offer or proposal for an Alternative Transaction (an “Alternative
Transaction Bid”) to Banro with a copy to the Monitor at the addresses
specified in Appendix “B” hereto (including by email) so as to be
received by them no later than 12:00 p.m. (Eastern Standard Time) on April 9,
2018, or such other later date or time as may be agreed by Banro and the Monitor
with the consent of the DIP Lenders (the “Bid Deadline”).
24. An Alternative Transaction Bid will be
deemed to be “Qualified Alternative Transaction Bid” only if the
Alternative Transaction Bid complies with all of the following:
| |
(i) |
in the case of a Sale Transaction, an executed Definitive
Agreement, including all exhibits and schedules contemplated thereby
(other than exhibits and schedules that by their nature must be prepared
by Banro), together with a blackline against the draft form of Definitive
Agreement which shall be prepared by Banro with the assistance of the
Monitor and posted in the Data Room, describing the terms and conditions of
the proposed transaction, including identification of the shares owned by any
one or more of the Applicants proposed to be acquired and any liabilities
proposed to be assumed, the purchase price for such shares expressed in U.S.
Dollars (the “Purchase Price”), and the structure and financing of the
proposed transaction; or |
EXECUTION VERSION
| |
(ii) |
in the case of a Plan Transaction, an executed Definitive
Agreement, including all exhibits and schedules contemplated thereby
(other than exhibits and schedules that by their nature must be prepared
by Banro), together with a blackline against the draft form of Definitive
Agreement which shall be prepared by Banro with the assistance of the
Monitor and posted in the Data Room, describing the terms and conditions
of the proposed transaction, including details regarding the proposed
equity and debt structure of the Banro Group following completion of the
proposed transaction, the direct or indirect investment target and the
aggregate amount of equity and debt investment (including the sources of
such capital, the underlying assumptions regarding the pro forma capital
structure, as well as anticipated tranches of debt, debt service fees,
interest and amortization) to be made in the Banro Group, the debt, equity
or other securities, if any, proposed to be allocated to any secured or
unsecured creditors of the company, the terms of repayment of the DIP
Obligations, the Priority Claims, the Note Obligations and the Affected
parity Lien Debt, and whether and what portion, if any, of the other
secured and unsecured creditors of the Applicants will be paid in
cash; |
| |
(b) |
clearly demonstrates that the Qualified Consideration
will be received by Banro at closing without any deduction, set-off or
other adjustment. |
| |
|
|
| |
(c) |
it fully discloses the identity of each person (including
any person that controls such person) that will be directly or indirectly
sponsoring or participating in the Alternative Transaction Bid and the
complete terms of any such sponsorship or participation; |
| |
|
|
| |
(d) |
it fully discloses any regulatory and third-party
approvals required to consummate the Alternative Transaction Bid and the
time period within which the Qualified Bidder expects to receive such
regulatory and third-party approvals, and those actions that the Qualified
Bidder will take to ensure receipt of such approvals as promptly as
possible; |
| |
|
|
| |
(e) |
it does not include any request for or entitlement to any
break or termination fee, expense reimbursement or similar type of
payment; |
| |
|
|
| |
(f) |
it includes “ letter stating that the offer is
irrevocable until the earlier of (i) the approval of the Recapitalization
or a Successful Bid by the Court and (ii) thirty (30) calendar days
following the Bid Deadline (the “Irrevocable Bid Date”), provided
that if such bidder’s Alternative Transaction Bid is selected as a
Successful Bid, its bid shall remain irrevocable until the closing of the
transaction; |
| |
|
|
| |
(g) |
it includes written evidence, in form and substance
reasonably satisfactory to Banro and the Monitor, of a firm commitment for
all required financing, or other evidence of the financial ability to
consummate the proposed transaction, that will allow Banro and the
Monitor, in consultation with the Conforming DIP Lender,
to make “ reasonable determination as to the Qualified Bidder's
financial and other capabilities to consummate the transaction contemplated by
the Alternative Transaction Bid; |
EXECUTION VERSION
| |
(h) |
it is not conditioned on (i) the outcome of unperformed
due diligence and/or (ii) obtaining financing; |
| |
|
|
| |
(i) |
it includes an acknowledgement and representation that
the Qualified Bidder: (i) has relied solely upon its own independent
review, investigation and/or inspection of any documents and/or the
Property to be acquired and liabilities to be assumed in making its bid;
and (ii) did not rely upon any written or oral statements,
representations, promises, warranties or guaranties whatsoever, whether
express or implied (by operation of law or otherwise), regarding the
Business, the Property to be acquired or liabilities to be assumed or the
completeness of any information provided in connection therewith, except
as expressly provided in a Definitive Agreement; |
| |
|
|
| |
(j) |
it includes evidence, in form and substance reasonably
satisfactory to Banro and the Monitor, of authorization and approval from
the Qualified Bidder's board of directors (or comparable governing body)
with respect to the submission, execution, delivery and closing of the
transaction contemplated by the bid, and identifies any anticipated
shareholder, regulatory or other approvals outstanding, and the
anticipated time frame and any anticipated impediments for obtaining such
approvals; |
| |
|
|
| |
(k) |
it is accompanied by a refundable deposit (the
“Deposit”) in the form of a wire transfer (to a bank account
specified by the Monitor payable to the order of the Monitor, in trust, in
an amount equal to 5% of the cash consideration in the Alternative
Transaction Bid which Deposit is to be held and dealt with in accordance
with these SISP Procedures; |
| |
|
|
| |
(l) |
it includes a commitment to close the transactions
contemplated by the Alternative Transaction Bid by no later than April 30,
2018 (the “Outside Date”); |
| |
|
|
| |
(m) |
it contains such other information as may reasonably be
requested by Banro or the Monitor, in consultation with the Conforming DIP
Lender; and |
| |
|
|
| |
(n) |
it is received by the Bid
Deadline. |
Review of Alternative Transaction Bid(s)
25. Following the Bid Deadline, Banro or the
Monitor shall distribute copies of the Alternative Transaction Bids received to
the Conforming DIP Lender. Banro and the Monitor, in consultation with the
Conforming DIP Lender, will assess the Alternative Transaction Bids received by
the Bid Deadline and determine whether such bids constitute Qualified
Alternative Transaction Bids. Banro, in consultation with the Monitor and the
DIP Lender, may waive compliance with any one or more of the requirements
specified herein other than the requirement set forth in sections 24(b) and
24(k), and deem such non-compliant bids to be Qualified Alternative Transaction
Bids.
26. Banro, in consultation with the Monitor
and the Conforming DIP Lender, also reserves the right to take one or more of
the following steps: (i) identify the highest or otherwise most favourable Qualified Alternative Transaction Bid(s) (the
“Successful Bid”); (ii) request that certain Qualified Bidders who have
submitted Qualified Alternative Transaction Bids revisit their proposals in the
event that multiple Qualified Alternative Transaction Bids are competitive, or
(iii) commence an auction process with respect to multiple Qualified Alternative
Transaction Bids to identify a Successful Bid, pursuant to procedures approved
by Banro and the Monitor, with the consent of the Conforming DIP Lender or
further Order of the Court, that shall be distributed to Qualified Bidders
selected by Banro, with the consent of the Monitor, to participate in such
auction at least five (5) Business Days in advance of the proposed start time
for the auction.
EXECUTION VERSION
27. For greater certainty, Banro, in
consultation with the Monitor and the Conforming DIP Lender, may select more
than one Qualified Alternative Transaction Bid as a Successful Bid to the extent
that, based on the nature of such Qualified Alternative Transaction Bids,
multiple Qualified Alternative Transaction Bids when take together will
constitute the highest or otherwise most favourable Qualified Alternative
Transaction Bid.
28. In the event that Banro, in consultation
with the Monitor and the Conforming DIP Lender determines that no Qualified
Alternative Transaction Bids are received or Banro determines in its business
judgment not to select a Successful Bid, Banro shall give notice to Qualified
Bidders that this SISP is terminated and Banro will proceed to complete the
Recapitalization.
29. If Banro selects a Successful Bid, Banro,
with the assistance of the Monitor, shall then proceed to negotiate and settle
the terms and conditions of a Definitive Agreement in respect of a Successful
Bid, all of which shall be conditional upon Court approval.
30. Once a Definitive Agreement has been
negotiated and settled in respect of a Successful Bid, the person(s) who made
the Successful Bid shall be the “Successful Bidder” hereunder.
Court Approval
31. Banro shall apply to the Court (the
“Approval Motion”) for an order approving a Successful Bid and
authorizing Banro (and/or any applicable member of the Banro Group) to enter
into a Definitive Agreement with the Successful Bidder and any and all necessary
further instruments and agreements with respect to the Successful Bid, as well
as an order, in the case of a Sale Transaction, vesting title to purchased
property in the name of the Successful Bidder.
32. The Approval Motion shall take place on
or before April 27, 2018, but may be adjourned or postponed by Banro, with the
consent of the Successful Bidder, the Monitor and the DIP Lender, to a later
date as agreed between those parties.
33. All Qualified Alternative Transaction
Bids (other than a Successful Bid) shall be deemed rejected on and as of the
Irrevocable Bid Date.
34. Banro shall implement the Successful Bid
or the Recapitalization, as applicable, by no later than the Outside Date or
such other date as Banro, the Monitor and the DIP Lender may agree.
Deposits
35. All Deposits shall be retained by the
Monitor and deposited in a trust account. If there is a Successful Bid, the
Deposit paid by the Successful Bidder whose bid is approved at the Approval
Motion shall be applied to the Purchase Price to be paid or investment amount to
be made by the Successful Bidder upon closing of the approved transaction and
will be non-refundable. The Deposits of Qualified Bidders not selected as a
Successful Bidder shall be returned to such bidders within five (5) Business Days of the
date upon the earlier of the Irrevocable Bid Date or (ii) the date that this
SISP is terminated.
EXECUTION VERSION
Approvals
36. For greater certainty, the approvals
required pursuant to the terms hereof are in addition to, and not in
substitution for, any other approvals required by the CCAA, or any other statute
or as otherwise required at law in order to implement or complete a Successful
Bid.
No Amendment
37. There shall be no amendments to this
SISP, including for greater certainty the process and procedures set out herein,
without the consent of Banro, the Monitor and the DIP Lender or further Order of
the Court.
“As Is, Where Is”
38. Any Alternative Transaction will be on an
“as is, where is” basis and without surviving representations or warranties of
any kind, nature, or description by any member of the Banro Group or the Monitor
or any of their employees, agents or estates, except to the extent expressly
provided under a Definitive Agreement with a Successful Bidder executed and
delivered by Banro and/or any member of the Banro Group.
Free Of Any And All Claims And Interests
39. In the event of a sale of the some or all
of the shares owned by one or more of the Applicants, to the extent permitted by
law, all of the rights, title and interests of the applicable Applicants in and
to such shares to be acquired will be sold free and clear of all pledges, liens,
security interests, encumbrances, claims, charges, options and interests on or
against such shares (collectively, the “Claims and Interests”) pursuant
to a Court order made under section 36(6) of the CCAA, such Claims and Interests
to attach to the net proceeds of the sale of such shares (without prejudice to
any claims or causes of action regarding the priority, validity or
enforceability thereof), except to the extent otherwise set forth in a
Definitive Agreement with a Successful Bidder.
No Obligation to Conclude a Transaction
40. Banro has no obligation to agree to
conclude an Alternative Transaction arising out of the SISP, and it reserves the
right and unfettered discretion to reject any offer or other proposal made in
connection with the SISP. In addition, at any time during these SISP Procedures,
Banro, with the consent of the Monitor and the DIP Lender, or further Order of
the Court may determine to terminate these SISP Procedures, and shall provide
notice of such a decision to any Qualified Bidders.
Further Orders
41. At any time during the SISP, Banro and/or
the Monitor may apply to the Court, following consultation with the DIP Lenders,
for advice and directions with respect to the discharge of its powers and duties
hereunder.
EXECUTION VERSION
Banro Authority
42. Where under these SISP Procedures, a
decision, determination, approval, consent, waiver or agreement is required from
Banro, or that a matter must be satisfactory or acceptable to Banro, such
decision, determination, approval, consent, waiver, agreement, satisfaction,
acceptance or other action shall be determined by the Special Committee and
shall be effective or shall have been obtained or satisfied, as the case may be,
for the purposes of this SISP where the Special Committee, shall have confirmed
its decision, determination, approval, consent, waiver, agreement, satisfaction,
acceptance or other action, as the case may be, through Cassels. Any person
shall be entitled to rely on any such decision, determination, approval,
consent, waiver, agreement, satisfaction, acceptance or other action
communicated by Cassels without any obligation to inquire into Cassels’
authority to do so on behalf of the Banro and such communication shall be
effective for all purposes of this SISP and the SISP Procedures.
EXECUTION VERSION
Appendix “A”
Definitions
“Affected Parity Lien Debt” has the
meaning given to such term in the Restructuring Term Sheet.
“Alternative Transaction” means either a
Plan Transaction (other than the Recapitalization) or a Sale Transaction.
“Alternative Transaction Bid” has
the meaning given to such term in paragraph 23 hereof.
“Applicants” has the meaning given
to such term in paragraph 1 hereof.
“Approval Motion” has the meaning
given to such term in paragraph 31 hereof.
“Baiyin” means Baiyin International
Limited and affiliates thereof within the direct or indirect control of Baiyin
Nonferrous Group Company, Limited.
“Banro” has the meaning given to such term
in paragraph 1 hereof.
“Banro Group” means, collectively, the
Applicants and their direct and indirect subsidiaries as more particularly
described in the Taylor Affidavit.
“BGB” has the meaning given to such
term in paragraph 1 hereof.
“Business Day” means a day, other than a
Saturday, Sunday, or a day on which banks in Toronto, Ontario are authorized or
obligated by applicable law to close or otherwise are generally closed.
“Bid Deadline” has the meaning given
to such term in paragraph 23 hereof.
“Business” has the meaning given to such
term in paragraph 7 hereof.
“Case Website” has the meaning given
to such term in paragraph 2 hereof.
“Cassels” means Cassels Brock &
Blackwell LLP, legal counsel to the Applicants.
“CCAA” has the meaning given to such
term in paragraph 1 hereof.
“CIM” has the meaning given to such
term in paragraph 10 hereof.
“Claims and Interests” has the
meaning given to such term in paragraph 39 hereof.
“Confidentiality Agreement” has the
meaning given to such term in paragraph 12 hereof.
“Conforming DIP Lender” has the
meaning given to such term in paragraph 20 hereof.
EXECUTION VERSION
“Court” has the meaning given to
such term in paragraph 1 hereof.
“Data Room” has the meaning given to
such term in paragraph 10 hereof.
“Definitive Agreement” has the
meaning given to such term in paragraph 13 hereof.
“Deposit” has the meaning given to
such term in paragraph 24(k) hereof.
“Diligence Materials” has the
meaning given to such term in paragraph 10 hereof.
“DIP Facility” has the meaning given
to such term in paragraph 2 hereof.
“DIP Lender” has the meaning given
to such term in paragraph 2 hereof.
“DIP Obligations” means the aggregate of
all amounts owing under the DIP Term Sheet.
“DIP Term Sheet” has the meaning
given to such term in paragraph 2 hereof.
“Dore Loan” means the loan advanced under
that letter agreement dated July 15, 2016 among Baiyin International Investment
Ltd. and Twangiza Mining S.A. (as amended or restated from time to time).
“Dore Obligations” means the aggregate of
all amounts owing under the Dore Loan.
“Gramercy” means Gramercy Funds Management
LLC, as agent for and on behalf of certain of the funds and accounts for whom it
acts as investment manager or advisor.
“Initial Order” has the meaning
given to such term in paragraph 1 hereof.
“Irrevocable Bid Date” has the
meaning given to such term in paragraph 24(f) hereof.
“Monitor” means FTI Consulting Canada
Inc., in its capacity as Court-appointed monitor pursuant to the Initial Order,
and not in its personal or corporate capacity.
“Note Indenture” means the New Senior
Secured Note Indenture dated as of March 19, 2017;
“Notes” means the 10.00% senior
secured notes due March 1, 2021 issued pursuant to the Note Indenture.
“Note Obligations” means the aggregate of
all amounts owing under the Notes.
“Plan Transaction” means a restructuring,
refinancing, recapitalization, workout or plan of compromise or arrangement or
reorganization of, or in respect of, all or part of the Banro Group.
“Potential Bidder” has the meaning given
to such term in paragraph 10 hereof.
“Priority Claims” mean all claims ranking
in priority to: (i) the DIP Obligations; or (ii) the Affected Parity Lien
Debt.
“Property” has the meaning given to
such term in paragraph 7 hereof.
EXECUTION VERSION
“Purchase Price” has the meaning given to
such term in paragraph 24(a) hereof.
“Qualified Alternative Transaction Bid”
has the meaning given to such term in paragraph 24 hereof.
“Qualified Bidder” has the meaning given
to such term in paragraph 23 hereof.
“Qualified Consideration” means (i) cash
consideration sufficient to indefeasibly repay all DIP Obligations; plus (ii)
cash consideration sufficient to indefeasibly pay all Priority Claims; plus
(iii) cash consideration sufficient to indefeasibly repay not less than 75% of
the aggregate principal amount outstanding under the Affected Parity Lien Debt;
plus (iv) cash consideration sufficient to indefeasibly repay all amounts due
under the Stream Agreements or treatment of the Stream Agreements on the same
terms as the Recapitalization.
“Qualified Phase 1 Bidder” has the meaning
given to such term in paragraph 13 hereof.
“Recapitalization” means a
recapitalization and restructuring of the Banro Group proposed by Baiyin and
Gramercy in accordance with the terms and conditions set out in the
Restructuring Term Sheet, to be consummated in the event that a Successful Bid
is not obtained.
“Restructuring Term Sheet” means the term
sheet attached hereto at Exhibit “•” to the Taylor Affidavit.
“Sale Transaction” means a sale of the
common shares of certain members of the Banro Group that are held by Banro
and/or BGB.
“SISP” has the meaning given to such term
in paragraph 3 hereof.
“SISP Acknowledgement” has the meaning
given to such term in paragraph 12 hereof.
“SISP Approval Order” means the Order of
the Court approving these SISP Procedures.
“SISP Procedures” has the meaning given to
such term in paragraph 5 hereof.
“Special Committee” means the Special
Committee of the Board of Directors of Banro comprised entirely of independent
directors of Banro.
“Stream Agreements” has the meaning given
to such term in the Restructuring Term Sheet.
“Successful Bid” has the meaning given to
such term in paragraph 27 hereof.
“Successful Bidder” has the meaning given
to such term in paragraph 30 hereof.
“Taylor Affidavit” has the meaning given
to such term in paragraph 2 hereof.
“Teaser Letter” has the meaning given to
such term in paragraph 10 hereof.
EXECUTION VERSION
Appendix “B”
Addresses for Notices
If to Banro:
Banro Corporation
1 First Canadian Place
100 King St.
West, Suite 7005
Toronto, Ontario M5X 1E3
Attention: Rory Taylor
Email:
RTaylor@banro.com
With a copy to:
Cassels Brock & Blackwell LLP
Scotia Plaza
40 King
Street West, Suite 2100
Toronto, Ontario M5H 3C2
Attention: Ryan C. Jacobs
/ Jane Dietrich / Joseph
Bellissimo
Email:rjacobs@casselsbrock.com/jdietrich@casselsbrock.com/jbellissimo@casselsbrock.com
If to the Monitor:
FTI Consulting Canada Inc.
TD Waterhouse Tower
79
Wellington Street West, Suite 2010
Toronto, Ontario M5K 1G8
Attention:
Nigel Meakin and Toni Vanderlaan
Email: nigel.meakin@fticonsulting.com
/ toni.vanderlaan@fticonsulting.com
With a copy to:
McMillan LLP
Brookfield Place
181 Bay Street, Suite
4400
Toronto, Ontario M5J 2T3
Attention: Wael Rostom and Caitlin
Fell
Email: wael.rostom@mcmillan.ca / caitlin.fell@mcmillan.ca
EXECUTION VERSION
SCHEDULE “E”
PRESS RELEASE
[Attached]
Banro Corporation announces support agreement for a
recapitalization
transaction with key stakeholders, commences
restructuring proceedings and
receives order permitting interim
financing of up to
US$20 million
Toronto, Canada –December 22, 2017 – Banro Corporation
("Banro" or the "Company") (NYSE American - "BAA"; TSX - "BAA")
announced today that the Company and its Barbados based subsidiaries have
commenced restructuring proceedings under the Companies’ Creditors
Arrangement Act (“CCAA”) pursuant to an initial order granted by the
Ontario Superior Court of Justice (Commercial List) (the “Court”) on
December 22, 2017 (the “Initial Order”). Pursuant to the Initial Order,
the Company has obtained protection from its creditors under the CCAA for an
initial period expiring January 19, 2018, and approval of interim financing of
up to US$20 million. The Company also announced that it has entered into a
support agreement (the “Support Agreement”) with major
stakeholders representing in excess of 74% of claims for the support of a
recapitalization plan (the “Recapitalization Plan”) to be implemented by
the end of March or mid-April 2018, in the event that a superior transaction is
not identified and implemented under a CCAA court-approved sales and investment
solicitation process (the “SISP”) anticipated to commence on or around
January 22, 2018.
The key features of the Recapitalization Plan pursuant to the
Support Agreement include: (i) an exchange of certain parity lien debt,
including the amounts owing under the US$197.5 million 10.00% secured notes due
March 1, 2021, the Company’s US$10 million dore loan and the US$20 million gold
forward sale agreement for production at the Company’s Namoya mine, for all of
the equity of restructured Banro (subject to dilution on account of certain
equity warrants to be issued as discussed below); (ii) consensual amendment of
priority lien debt and streaming obligations held by Baiyin International
Investment Ltd (“Baiyin”) and Gramercy Funds Management LLC
(“Gramercy”) or related parties of those entities, including deferrals or
partial forgiveness of certain obligations owing thereunder; (iii) compromising
certain unsecured claims at Banro for nominal consideration; and (iv) a
cancellation of all existing equity of Banro and any and all equity related
claims. A copy of the Support Agreement (and detailed recapitalization term
sheet) can be found on Banro’s SEDAR profile.
All debt and other obligations of Banro within the Democratic
Republic of the Congo (the “DRC”) will be unaffected under the
Recapitalization Plan. It is expected that the Company’s operations in the DRC
will continue in the ordinary course of business and that obligations to DRC
lenders, employees and key suppliers of goods and services, both during the CCAA
proceedings and after the reorganization is completed, will continue to be met
on an ongoing basis. To enable the Company to maintain normal business
operations, the Initial Order provides a stay of certain creditor claims and the
exercise of contractual rights arising out of the CCAA process.
The Company also announced that, in order to provide additional
liquidity for the Company’s operations, the Company has agreed with certain
affiliates of Baiyin and funds and accounts managed by Gramercy to continue to
defer certain gold deliveries that would otherwise be due to Gramercy and such
Baiyin affiliates (collectively, the “Gold Forward Deferrals”)
under gold purchase and sale agreements until June 30, 2019. The amounts
deferred are estimated to provide US$30.9 million of liquidity relief to the
Company through mid-2019. In addition, the gold streaming agreements between
Banro, Gramercy and Baiyin will be amended to modify the terms (collectively,
the “Gold Stream Forgiveness”) to increase the proceeds to Banro from
gold delivered under these agreements from US$150 per ounce to the then
prevailing gold price for the first 200,000 ounces of production delivered at
each mine from January 1, 2018 (equal to 22,000 ounces for Twangiza and 16,660
ounces for Namoya), in exchange for a maximum amount of 8% of the fully-diluted
equity of reorganized Banro (depending on go-forward production levels and gold
prices through the relevant period), effectively forgiving over an estimated
US$42.5 million of obligatory deliveries through mid-2019, after which the
proceeds to Banro from each delivery under the agreements will revert to US$150
per ounce. An additional amount of approximately US$8.9 million of stream
deliveries previously deferred will be further deferred to late-2019. The Gold
Forward Deferrals and Gold Stream Forgiveness will terminate if the CCAA
proceedings terminate for any reason other than the implementation of the
Recapitalization Plan.
- 2 -
The Company has also received commitments from Baiyin and
Gramercy for up to US$20 million in interim financing to support its continued
operations, which interim financing was approved by the Court in the Initial
Order (the “DIP Facility”). Funding under the DIP Facility is subject to
the satisfaction of a number of conditions precedent, including the receipt of
approvals from the relevant subdivision of the Government of the People’s
Republic of China, which is also a condition precedent to effectiveness of the
Support Agreement. Subject to the satisfaction of these conditions precedent,
the DIP Facility is expected to be available to the Company by the third week of
January 2018 to provide liquidity to support the Company’s business during the
CCAA proceedings.
Pursuant to the SISP process contemplated by the Support
Agreement, if approved by the Court, interested parties will be given an
opportunity to acquire the Company (i) for cash proceeds equal to the
outstanding amount of the DIP Facility, the priority debt, 75% of the affected
parity lien debt of Banro, and cash consideration sufficient to repay all
amounts due under the stream agreements or treatment of the stream agreements on
the same terms as the Recapitalization Plan, or (ii) on other terms superior to
the Recapitalization Plan.
FTI Consulting Canada Inc. has been appointed Monitor (the
“Monitor”) of the Company for the CCAA proceedings. While under CCAA
protection, management of the Company will remain responsible for the day-to-day
operations of the Company under the general oversight of the Monitor and
supervision of the Court. At this time, there are no intended changes to the
management team or the composition of the Board of Directors of the Company and
the Company anticipates that such individuals will continue in their respective
roles throughout the CCAA process.
A copy of the Support Agreement and Initial Order will be made
available and details relating to this case may be accessed on the Monitor’s
website at http://cfcanada.fticonsulting.com/banro. The Monitor has also
established the following information hotline related to enquiries regarding the
CCAA process, at 416-649-8131 or 1-888-425-0980.
Further news releases will be provided on an ongoing basis
throughout the CCAA process as may be determined necessary.
Banro Corporation is a Canadian gold mining company
focused on production from the Twangiza and Namoya mines, which began commercial
production in September 2012 and January 2016 respectively. The Company’s
longer-term objectives include the development of two additional major,
wholly-owned gold projects, Lugushwa and Kamituga. The four projects, each of
which has a mining license, are located along the 210 kilometres long
Twangiza-Namoya gold belt in the South Kivu and Maniema Provinces of the DRC. All business activities are followed in a
socially and environmentally responsible manner.
- 3 -
Cautionary Note Concerning Forward-Looking
Statements
This press release contains forward-looking statements.
All statements, other than statements of historical fact, that address
activities, events or developments that the Company believes, expects or
anticipates will or may occur in the future (including, without limitation,
statements regarding the CCAA proceedings, the restructuring process and the
ability of the Company to meet its obligations, the ability of the Company to
implement financing or other appropriate strategic transactions as part of the
ongoing process, the Company’s liquidity and ability to meet payment
obligations and the timing of meeting such payment obligations, the
Company’s intentions for the future of its business operations and
long-term strategy, and the Company’s commitment to its employees and
suppliers) are forward-looking statements. These forward-looking statements
reflect the current expectations or beliefs of the Company based on information
currently available to the Company. Forward-looking statements are subject to a
number of risks and uncertainties that may cause the actual results of the
Company to differ materially from those discussed in the forward-looking
statements, and even if such actual results are realized or substantially
realized, there can be no assurance that they will have the expected
consequences to, or effects on the Company. Factors that could cause actual
results or events to differ materially from current expectations include, among
other things the possibility that the Company will be unable to implement the
restructuring or obtain advances under the interim financing due to the failure
of one or more of the conditions precedent to be satisfied, or that the SISP
will be unsuccessful. In addition, actual results or events could differ
materially from current expectations due to instability in the eastern DRC where
the Company’s mines are located; political developments in the DRC;
uncertainties relating to the availability and costs of financing or other
appropriate strategic transactions; uncertainty of estimates of capital and
operating costs, production estimates and estimated economic return of the
Company’s projects; the possibility that actual circumstances will
differ from the estimates and assumptions used in the economic studies of the
Company’s projects; failure to establish estimated mineral resources
and mineral reserves (the Company’s mineral resource and mineral
reserve figures are estimates and no assurance can be given that the intended
levels of gold will be produced); fluctuations in gold prices and currency
exchange rates; inflation; gold recoveries being less than expected; changes in
capital markets; lack of infrastructure; failure to procure or maintain, or
delays in procuring or maintaining, permits and approvals; lack of availability
at a reasonable cost or at all, of plants, equipment or labour; inability to
attract and retain key management and personnel; changes to regulations
affecting the Company's activities; the uncertainties involved in interpreting
drilling results and other geological data; and the other risks disclosed under
the heading "Risk Factors" and elsewhere in the Company's annual report on Form
20-F dated April 2, 2017 filed on SEDAR at www.sedar.comand EDGAR at
www.sec.gov. Any forward-looking statement speaks only as of the date on which
it is made and, except as may be required by applicable securities laws, the
Company disclaims any intent or obligation to update any forward-looking
statement, whether as a result of new information, future events or results or
otherwise. Although the Company believes that the assumptions inherent in the
forward-looking statements are reasonable, forward-looking statements are not
guarantees of future performance and accordingly undue reliance should not be
put on such statements due to the inherent uncertainty therein. The
forward-looking statements contained in this press release are expressly
qualified by this cautionary note.
Enquiries for the Monitor may be directed to:
FTI Consulting Canada Inc., in its capacity as Monitor of Banro
Corporation et al
| Telephone: |
+1 (416) 649-8131 |
| Toll Free: |
+1-888-425-0980 |
| Email: |
banro@fticonsulting.com |
| Web: |
http://cfcanada.fticonsulting.com/banro
|
| For further information, please visit our website at
www.banro.com, or contact Investor Relations at: |
| +1 (416) 366-2221 |
| +1-800-714-7938 |
| info@banro.com. |
EXECUTION VERSION
SCHEDULE “F”
INITIAL ORDER
[Attached]
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
| THE HONOURABLE |
) |
FRIDAY, THE 22nd |
| |
) |
|
| MR. JUSTICE HAINEY |
) |
DAY OF DECEMBER,
2017 |
| IN THE MATTER OF THE COMPANIES’ CREDITORS
|
| ARRANGEMENT ACT, R.S.C. 1985, C. C-36,
AS AMENDED |
| |
| AND IN THE MATTER OF A PLAN OF COMPROMISE OR
|
| ARRANGEMENT OF BANRO CORPORATION, BANRO GROUP
|
| (BARBADOS) LIMITED, BANRO CONGO (BARBADOS) |
| LIMITED, NAMOYA (BARBADOS) LIMITED, LUGUSHWA
|
| (BARBADOS) LIMITED, TWANGIZA (BARBADOS) LIMITED
|
| AND KAMITUGA (BARBADOS) LIMITED
|
(the “Applicants”)
INITIAL ORDER
THIS APPLICATION, made by the
Applicants, pursuant to the Companies’ Creditors Arrangement Act, R.S.C.
1985, c. C-36, as amended (the “CCAA”) was heard this day at 330
University Avenue, Toronto, Ontario.
ON READING the affidavit of Rory
James Taylor sworn December 21, 2017 (the “Taylor Affidavit”) and the
Exhibits thereto, the affidavit of Geoffrey Farr sworn December 22, 2017 (the
“Farr Affidavit”), and the pre-filing report dated December 22, 2017 (the
“Pre-Filing Report”) of FTI Consulting Canada Inc. (“FTI”) in its
capacity as the proposed monitor of the Applicants, and on being advised that
the secured creditors who are likely to be affected by the charges created
herein were given notice, and on hearing the submissions of counsel for the
Applicants, FTI, Gramercy Funds Management LLC (“Gramercy”) and Baiyin
International Investment Ltd/Baiyin Nonferrous Group Company, Limited
(“Baiyin”), no one appearing for any other party although duly served as appears from the
affidavit of service of Benjamin Goodis sworn December 22, 2017 and on reading
the consent of FTI to act as the Monitor,
SERVICE
1. THIS COURT ORDERS that the time for
service of the Notice of Application and the Application Record is hereby
abridged and validated so that this Application is properly returnable today and
hereby dispenses with further service thereof.
APPLICATION
2. THIS COURT ORDERS AND DECLARES that
the Applicants are each companies to which the CCAA applies.
PLAN OF ARRANGEMENT
3. THIS COURT ORDERS that each of the
Applicants shall have the authority to file and may, subject to further order of
this Court, file with this Court a plan of compromise or arrangement
(hereinafter referred to as the “Plan”).
POSSESSION OF PROPERTY AND OPERATIONS
4. THIS COURT ORDERS that the
Applicants shall remain in possession and control of their current and future
assets, undertakings and properties of every nature and kind whatsoever, and
wherever situate including all proceeds thereof (the “Property”). Subject
to further Order of this Court, each of the Applicants shall continue to carry
on business in a manner consistent with the preservation of its business (the
“Business”) and Property. The Applicants are each authorized and
empowered to continue to retain and employ the employees, consultants, agents,
experts, accountants, counsel and such other persons (collectively
“Assistants”) currently retained or employed by such Applicant, with
liberty, subject to the terms of the DIP Term Sheet (as defined below), the
Definitive Documents (as defined below), to retain such further Assistants as
such Applicant deems reasonably necessary or desirable in the ordinary course of
business or for the carrying out of the terms of this Order.
5. THIS COURT ORDERS that the
Applicants shall be entitled to continue to utilize the central cash management
system currently in place as described in the Taylor Affidavit or,
with the approval of the DIP Lender, replace it with another
substantially similar central cash management system (the “Cash Management
System”) and that any present or future bank providing the Cash Management
System shall not be under any obligation whatsoever to inquire into the
propriety, validity or legality of any transfer, payment, collection or other
action taken under the Cash Management System, or as to the use or application
by the Applicants of funds transferred, paid, collected or otherwise dealt with
in the Cash Management System, shall be entitled to provide the Cash Management
System without any liability in respect thereof to any Person (as hereinafter
defined) other than the Applicants, pursuant to the terms of the documentation
applicable to the Cash Management System, and shall be, in its capacity as
provider of the Cash Management System, an unaffected creditor under the Plan
with regard to any claims or expenses it may suffer or incur in connection with
the provision of the Cash Management System.
6. THIS COURT ORDERS that, subject to
the terms of the DIP Term Sheet and the Definitive Documents, each of the
Applicants shall be entitled but not required to pay the following expenses
whether incurred prior to or after this Order:
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(a) |
all outstanding and future wages, salaries, employee and
pension benefits, vacation pay and expenses payable on or after the date
of this Order, in each case incurred in the ordinary course of business
and consistent with existing compensation policies and arrangements (but
not including termination or severance pay); and |
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(b) |
the fees and disbursements of any Assistants retained or
employed by such Applicant in respect of these proceedings, at their
standard rates and charges. |
7. THIS COURT ORDERS that, except as
otherwise provided to the contrary herein and subject to the terms of the DIP
Term Sheet and the Definitive Documents, each of the Applicants shall be
entitled but not required to pay all reasonable expenses incurred by such
Applicant in carrying on the Business in the ordinary course after this Order,
and in carrying out the provisions of this Order and any other Order of this
Court, which expenses shall include, without limitation:
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(a) |
all expenses and capital expenditures reasonably
necessary for the preservation of the Property or the Business including,
without limitation, payments on account of insurance (including directors’ and officers’ insurance),
maintenance and security services and payments to subsidiaries; and |
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(b) |
payment for goods or services actually supplied to such
Applicant following the date of this Order. |
8. THIS COURT ORDERS that each of the
Applicants shall remit, in accordance with legal requirements, or pay:
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(a) |
any statutory deemed trust amounts in favour of the Crown
in right of Canada or of any Province thereof or any other taxation
authority which are required to be deducted from employees’ wages,
including, without limitation, amounts in respect of (i) employment
insurance, (ii) Canada Pension Plan, and (iii) income taxes; |
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(b) |
all goods and services taxes, harmonized sales taxes or
other applicable sales taxes (collectively, “Sales Taxes”) required
to be remitted by such Applicant in connection with the sale of goods and
services by such Applicant, but only where such Sales Taxes are accrued or
collected after the date of this Order, or where such Sales Taxes were
accrued or collected prior to the date of this Order but not required to
be remitted until on or after the date of this Order, and |
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(c) |
any amount payable to the Crown in right of Canada or of
any Province thereof or any political subdivision thereof or any other
taxation authority in respect of municipal realty, municipal business or
other taxes, assessments or levies of any nature or kind which are
entitled at law to be paid in priority to claims of secured creditors and
which are attributable to or in respect of the carrying on of the Business
by such Applicant. |
9. THIS COURT ORDERS that until a real
property lease is disclaimed in accordance with the CCAA, each of the Applicants
shall pay all amounts constituting rent or payable as rent under real property
leases (including, for greater certainty, common area maintenance charges,
utilities and realty taxes and any other amounts payable to the landlord under
the lease) or as otherwise may be negotiated between such Applicant and the
landlord from time to time (“Rent”), for the period commencing from and
including the date of this Order, twice-monthly in equal payments on the first
and fifteenth day of each month, in advance (but not in arrears). On the date of the first of such payments, any Rent relating to
the period commencing from and including the date of this Order shall also be
paid.
10. THIS COURT ORDERS that, except as specifically permitted
herein, in the DIP Term Sheet, or in the Definitive Documents, each of the
Applicants are hereby directed, until further Order of this Court: (a) to make
no payments of principal, interest thereon or otherwise on account of amounts
owing by such Applicant to any of its creditors as of this date; (b) to grant no
security interests, trust, liens, charges or encumbrances upon or in respect of
any of its Property; and (c) to not grant credit or incur liabilities except in
the ordinary course of the Business.
RESTRUCTURING
11. THIS COURT ORDERS that each of the
Applicants shall, subject to such requirements as are imposed by the CCAA and
such covenants as may be contained in the DIP Term Sheet, the Definitive
Documents, have the right to:
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(a) |
permanently or temporarily cease, downsize or shut down
any of its business or operations, and to dispose of redundant or
non-material assets not exceeding $100,000 in any one transaction or
$1,000,000 in the aggregate; |
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(b) |
terminate the employment of such of its employees or
temporarily lay off such of their employees as such Applicant deems
appropriate; and |
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(c) |
pursue all avenues of refinancing, restructuring, selling
and reorganizing the Business or Property, in whole or part, subject to
prior approval of this Court being obtained before any material
refinancing, sale or reorganization, |
all of the foregoing to permit each of the Applicants to
proceed with an orderly restructuring of the Applicants and/or the Business (the
“Restructuring”).
12. THIS COURT ORDERS that each of the
Applicants shall provide each of the relevant landlords with notice of such
Applicant’s intention to remove any fixtures from any leased premises at least
seven (7) days prior to the date of the intended removal. The relevant landlord
shall be entitled to have a representative present in the leased premises to
observe such removal and, if the landlord disputes such Applicant’s entitlement
to remove any such fixture under the provisions of the lease, such fixture shall remain on the
premises and shall be dealt with as agreed between any applicable secured
creditors, such landlord and such Applicant, or by further Order of this Court
upon application by the Applicants on at least two (2) days notice to such
landlord and any such secured creditors. If the applicable Applicant disclaims
the lease governing such leased premises in accordance with Section 32 of the
CCAA, it shall not be required to pay Rent under such lease pending resolution
of any such dispute (other than Rent payable for the notice period provided for
in Section 32(5) of the CCAA), and the disclaimer of the lease shall be without
prejudice to such Applicant’s claim to the fixtures in dispute.
13. THIS COURT
ORDERS that if a notice of disclaimer is delivered pursuant to Section 32 of the
CCAA by either of the Applicants, then (a) during the notice period prior to the
effective time of the disclaimer, the landlord may show the affected leased
premises to prospective tenants during normal business hours, on giving the such
Applicant and the Monitor 24 hours’ prior written notice, and (b) at the
effective time of the disclaimer, the relevant landlord shall be entitled to
take possession of any such leased premises without waiver of or prejudice to
any claims or rights such landlord may have against such Applicant in respect of
such lease or leased premises, provided that nothing herein shall relieve such
landlord of its obligation to mitigate any damages claimed in connection
therewith.
SUPPORT AGREEMENT
14. THIS COURT ORDERS that each of the
Applicants is authorized and empowered to take all steps and actions in respect
of, and to comply with all of its obligations pursuant to, the Support Agreement
among the Applicants, Gramercy, Baiyin and each of the other parties thereto
dated December 22, 2017 (the “Support Agreement”), and that nothing in
this Order shall be construed as waiving or modifying any of the rights,
commitments or obligations of any of the Applicants under the Support Agreement,
provided that nothing in this paragraph shall constitute approval of the
Restructuring Term Sheet or the SISP as those terms are defined in the Support
Agreement.
NO PROCEEDINGS AGAINST THE APPLICANTS, THE BUSINESS OR THE
PROPERTY
15. THIS COURT ORDERS that until and
including January 19, 2018, or such later date as this Court may order (the
“Stay Period”), no proceeding or enforcement process in any court or
tribunal (each, a “Proceeding”) shall be commenced or continued against
or in respect of either of the Applicants or the Monitor, or affecting the
Business or the Property, except with the written consent of the Applicants and
the Monitor, or with leave of this Court, and any and all Proceedings currently
under way against or in respect of either of the Applicants or affecting the
Business or the Property are hereby stayed and suspended pending further Order
of this Court.
16. THIS COURT ORDERS that, during the
Stay Period, no Proceeding shall be commenced or continued against or in respect
of the direct or indirect subsidiaries of the Applicants listed in Schedule “A”
hereto (the “Non-Applicant Subsidiaries”), or affecting their respective
current and future business (the “Subsidiary Businesses”) or assets,
undertakings and property wherever situate (the “Subsidiary Property”),
except with the written consent of the Applicants and the Monitor, or with leave
of this Court, and any and all Proceedings currently under way against or in
respect of any of the Non-Applicant Subsidiaries or affecting the Subsidiary
Businesses or the Subsidiary Property are hereby stayed and suspended pending
further Order of this Court.
NO EXERCISE OF RIGHTS OR REMEDIES
17. THIS COURT ORDERS that during the
Stay Period, all rights and remedies of any individual, firm, corporation,
partnership, governmental body or agency, or any other entities (all of the
foregoing, collectively being “Persons” and each being a “Person”)
against or in respect of either of the Applicants or the Monitor, or affecting
the Business or the Property, are hereby stayed and suspended, except with the
written consent of the Applicants and the Monitor, or leave of this Court,
provided that nothing in this Order shall (i) empower either of the Applicants
to carry on any business which such Applicant is not lawfully entitled to carry
on, (ii) affect such investigations, actions, suits or proceedings by a
regulatory body as are permitted by Section 11.1 of the CCAA, (iii) prevent the
filing of any registration to preserve or perfect a security interest, or (iv)
prevent the registration of a claim for lien.
18. THIS COURT ORDERS that during the
Stay Period, all rights and remedies of any Persons against or in respect of any
of the Non-Applicant Subsidiaries, or affecting the Subsidiary Businesses or the
Subsidiary Property, are hereby stayed and suspended, except with the written
consent of the Applicants and the Monitor, or leave of this Court, provided that
nothing in this Order shall (i) empower any of the Non-Applicant Subsidiaries to
carry on any business which such Non-Applicant Subsidiary is not lawfully
entitled to carry on, (ii) affect such investigations, actions, suits or
proceedings by a regulatory body as are permitted by Section 11.1 of the CCAA,
(iii) prevent the filing of any registration to preserve or perfect a security
interest, or (iv) prevent the registration of a claim for lien.
NO INTERFERENCE WITH RIGHTS
19. THIS COURT ORDERS that during the
Stay Period, no Person shall discontinue, fail to honour, alter, interfere with,
repudiate, terminate or cease to perform any right, renewal right, contract,
agreement, licence or permit in favour of or held by either of the Applicants or
any Non-Applicant Subsidiary, except (i) with the written consent of the
Applicants, the Monitor and the DIP Lender, (ii) termination of the Support
Agreement in accordance with the terms thereof, or (iii) with leave of this
Court. Without limiting the foregoing, no contract, agreement, licence or permit
in favour of the relevant Applicant or Non-Applicant Subsidiary shall be or
shall be deemed to be suspended, waived, and/or terminated as a result of this
Order.
CONTINUATION OF SERVICES
20. THIS COURT ORDERS that during the
Stay Period, all Persons having oral or written agreements with either of the
Applicants or any Non-Applicant Subsidiary or statutory or regulatory mandates
for the supply of goods and/or services, including without limitation all
computer software, communication and other data services, centralized banking
services, payroll services, insurance, transportation services, utility or other
services to the Business or either of the Applicants or any Non-Applicant
Subsidiary, are hereby restrained until further Order of this Court from
discontinuing, altering, interfering with or terminating the supply of such
goods or services as may be required by such Applicant or Non-Applicant
Subsidiary and that such Applicant or Non-Applicant Subsidiary shall be entitled
to the continued use of their current premises, telephone numbers, facsimile
numbers, internet addresses and domain names, provided in each case that the
normal prices or charges for all such goods or services received after
the date of this Order are paid by such Applicant or Non-Applicant
Subsidiary in accordance with normal payment practices of such Applicant or
Non-Applicant Subsidiary or such other practices as may be agreed upon by the
supplier or service provider, such Applicant or Non-Applicant Subsidiary and the
Monitor, or as may be ordered by this Court.
NON-DEROGATION OF RIGHTS
21. THIS COURT ORDERS that,
notwithstanding anything else in this Order, no Person shall be prohibited from
requiring immediate payment for goods, services, use of lease or licensed
property or other valuable consideration provided on or after the date of this
Order, nor shall any Person be under any obligation on or after the date of this
Order to advance or re-advance any monies or otherwise extend any credit to
either of the Applicants. Nothing in this Order shall derogate from the rights
conferred and obligations imposed by the CCAA.
PROCEEDINGS AGAINST DIRECTORS AND OFFICERS
22. THIS COURT ORDERS that during the
Stay Period, and except as permitted by subsection 11.03(2) of the CCAA, no
Proceeding may be commenced or continued against any of the former, current or
future directors or officers of either of the Applicants or any Non-Applicant
Subsidiary with respect to any claim against the directors or officers that
arose before the date hereof and that relates to any obligations of either of
the Applicants or any Non-Applicant Subsidiary whereby the directors or officers
are alleged under any law to be liable in their capacity as directors or
officers of either of the Applicants or any Non-Applicant Subsidiary for the
payment or performance of such obligations, until a compromise or arrangement in
respect of the Applicants, if one is filed, is sanctioned by this Court or is
refused by the creditors of the Applicants or this Court.
DIRECTORS’ AND OFFICERS’ INDEMNIFICATION AND CHARGE
23. THIS COURT ORDERS that the
Applicants shall indemnify their directors and officers against obligations and
liabilities that they may incur as directors or officers of the Applicants after
the commencement of the within proceedings, except to the extent that, with
respect to any officer or director, the obligation or liability was incurred as
a result of the director’s or officer’s gross negligence or wilful
misconduct.
24.
THIS COURT ORDERS that the directors and officers of the Applicants
shall be entitled to the benefit of and are hereby granted a charge on the
Property, which charge shall not exceed an aggregate amount of
USD$3,200,000 (the “Directors’ Charge”), as security
for the indemnity provided in paragraph 22 of
this Order. The Directors’ Charge shall have the priority set out in
paragraphs 41 and
43 herein.
25.
THIS COURT ORDERS that, notwithstanding any language in any applicable
insurance policy to the contrary, (a) no insurer shall be entitled to be
subrogated to or claim the benefit of the Directors’ Charge, and (b) the
Applicants’ directors and officers shall only be entitled to the benefit of the
Directors’ Charge to the extent that they do not have coverage under any
directors’ and officers’ insurance policy, or to the extent that such coverage
is insufficient to pay amounts indemnified in accordance with paragraph 24 of
this
Order.
APPOINTMENT OF MONITOR
26.
THIS COURT ORDERS that FTI is hereby appointed pursuant to the CCAA as
the Monitor, an officer of this Court, to monitor the business and financial
affairs of the Applicants with the powers and obligations set out in the CCAA or
set forth herein and that each of the Applicants and their shareholders,
officers, directors, and Assistants shall advise the Monitor of all material
steps taken by such Applicant pursuant to this Order, and shall co-operate fully
with the Monitor in the exercise of its powers and discharge of its obligations
and provide the Monitor with the assistance that is necessary to enable the
Monitor to adequately carry out the Monitor’s
functions.
27. THIS COURT ORDERS that the Monitor,
in addition to its prescribed rights and obligations under the CCAA, is hereby
directed and empowered to:
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(a) |
monitor each of the Applicants’ receipts and
disbursements; |
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(b) |
report to this Court at such times and intervals as the
Monitor may deem appropriate with respect to matters relating to the
Property, the Business, and such other matters as may be relevant to the
proceedings herein; |
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(c) |
assist each of the Applicants, to the extent required by
such Applicant, in their dissemination, to the DIP Lender and its counsel
on a periodic basis of financial and other information as agreed to between the Applicants and the
DIP Lender which may be used in these proceedings including reporting on a basis
to be agreed with the DIP Lender; |
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(d) |
advise the Applicants in their preparation of the
Applicants’ cash flow statements and any reporting required by the DIP
Lender pursuant to the Definitive Documents (as defined below), which
information shall be reviewed with the Monitor and delivered to the DIP
Lender and its counsel on a periodic basis, pursuant to and in accordance
with the Definitive Documents; |
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(e) |
advise the Applicants in their development of the Plan
and any amendments to the Plan; |
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(f) |
assist each of the Applicants, to the extent required by
such Applicant, with the holding and administering of creditors’ or
shareholders’ meetings for voting on the Plan; |
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(g) |
have full and complete access to the Property, including
the premises, books, records, data, including data in electronic form, and
other financial documents of each of the Applicants, to the extent that is
necessary to adequately assess such Applicant’s business and financial
affairs or to perform its duties arising under this Order; |
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(h) |
be at liberty to engage independent legal counsel or such
other persons as the Monitor deems necessary or advisable respecting the
exercise of its powers and performance of its obligations under this
Order; and |
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(i) |
perform such other duties as are required by this Order
or by this Court from time to time. |
28. THIS COURT ORDERS that the Monitor
shall not take possession of the Property and shall take no part whatsoever in
the management or supervision of the management of the Business and shall not,
by fulfilling its obligations hereunder, be deemed to have taken or maintained
possession or control of the Business or Property, or any part
thereof.
29.
THIS COURT ORDERS that nothing herein contained shall require the
Monitor to occupy or to take control, care, charge, possession or management
(separately and/or collectively, “Possession”) of any of the Property that might
be environmentally contaminated, might be a pollutant or a contaminant, or might
cause or contribute to a spill, discharge, release or deposit of a substance
contrary to any federal, provincial or other law respecting the protection,
conservation, enhancement, remediation or rehabilitation of the environment or
relating to the disposal of waste or other contamination including, without
limitation,
the Canadian
Environmental Protection Act, the Ontario Environmental Protection Act, the
Ontario Water Resources Act, or the Ontario Occupational Health and Safety Act
and regulations thereunder (the “Environmental Legislation”),
provided however that nothing herein shall exempt the Monitor from any duty to
report or make disclosure imposed by applicable Environmental Legislation. The
Monitor shall not, as a result of this Order or anything done in pursuance of
the Monitor’s duties and powers under this Order, be deemed to be in Possession
of any of the Property within the meaning of any Environmental Legislation,
unless it is actually in possession.
30. THIS COURT ORDERS
that that the Monitor shall provide any creditor of an Applicant and the DIP
Lender with information provided by either of the Applicants in response to
reasonable requests for information made in writing by such creditor addressed
to the Monitor. The Monitor shall not have any responsibility or liability with
respect to the information disseminated by it pursuant to this paragraph. In the
case of information that the Monitor has been advised by either of the
Applicants is confidential, the Monitor shall not provide such information to
creditors unless otherwise directed by this Court or on such terms as the
Monitor and such Applicant may
agree.
31.
THIS COURT ORDERS that, in addition to the rights and protections
afforded the Monitor under the CCAA or as an officer of this Court, the Monitor
shall incur no liability or obligation as a result of its appointment or the
carrying out of the provisions of this Order, save and except for any gross
negligence or wilful misconduct on its part. Nothing in this Order shall
derogate from the protections afforded the Monitor by the CCAA or any applicable
legislation.
32.
THIS COURT ORDERS that the Monitor, counsel to the Monitor and counsel
to the Applicants shall be paid their reasonable fees and disbursements incurred
prior to or
following the date hereof, in each case at their standard rates and
charges, by the Applicants as part of the costs of these proceedings. The
Applicants are hereby authorized and directed to pay the accounts of the
Monitor, counsel for the Monitor and counsel for the Applicants on a weekly
basis.
33. THIS COURT ORDERS that the Monitor
and its legal counsel shall pass their accounts from time to time, and for this
purpose the accounts of the Monitor and its legal counsel are hereby referred to
a judge of the Commercial List of the Ontario Superior Court of Justice.
34. THIS COURT ORDERS that the Monitor,
counsel to the Monitor, and the Applicants’ counsel shall be entitled to the
benefit of and are hereby granted a charge (the “Administration
Charge”) on the Property, which charge shall not exceed the amount of
$1,500,000, as security for their professional fees and disbursements incurred
at their respective standard rates and charges of the Monitor and such counsel,
both before and after the making of this Order in respect of these proceedings.
The Administration Charge shall have the priority set out in paragraphs 41 and
43 hereof.
DIP FINANCING
35. THIS COURT ORDERS that the
Applicants are hereby authorized and empowered to obtain and borrow or
guarantee, as applicable, under a credit facility from certain funds and
accounts managed or advised by Gramercy Funds Management and Baiyin
International Limited and affiliates thereof within the direct or indirect
control of Baiyin Nonferrous Group Company, Limited (in such capacities,
collectively, the “DIP Lender”) in order to finance, in accordance with
the DIP Term Sheet and the Definitive Documents, the Applicants’ working capital
requirements, restructuring costs, and other general corporate purposes and
capital expenditures, provided that borrowings under such credit facility shall
not exceed $20,000,000 unless permitted by further Order of this Court.
36. THIS COURT ORDERS THAT such credit
facility shall be on the terms and subject to the conditions set forth in the
Interim Financing Term Sheet between the Applicants and the DIP Lender dated as
of December 22, 2017 (the “DIP Term Sheet”) appended as Exhibit N to the
Taylor Affidavit, and the other Definitive Documents.
37. THIS COURT ORDERS that the
Applicants are hereby authorized and empowered to execute and deliver such
credit agreements, mortgages, charges, hypothecs and security documents,
guarantees and other definitive documents (collectively, and including any
schedules (as amended and updated from time to time) thereto, the “Definitive
Documents”), as are contemplated by the DIP Term Sheet or as may be
reasonably required by the DIP Lender pursuant to the terms thereof, and the
Applicants are hereby authorized and directed to pay and perform all of their
indebtedness, interest, fees, liabilities and obligations to the DIP Lender
under and pursuant to the DIP Term Sheet and the Definitive Documents as and
when the same become due and are to be performed, notwithstanding any other
provision of this Order.
38. THIS COURT ORDERS that the DIP
Lender shall be entitled to the benefit of and is hereby granted a charge (the
“DIP Lender’s Charge”) on the Property, which DIP Lender’s
Charge shall not secure an obligation that exists before this Order is made. The
DIP Lender’s Charge shall have the priority set out in paragraphs 41
and 43 hereof.
39. THIS COURT ORDERS that,
notwithstanding any other provision of this Order:
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(a) |
the DIP Lender may take such steps from time to time as
it may deem necessary or appropriate to file, register, record or perfect
the DIP Lender’s Charge or any of the Definitive Documents; |
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(b) |
upon the occurrence of an event of default under the DIP
Term Sheet or the Definitive Documents, or the DIP Lender’s Charge, the
DIP Lender may, subject to the provisions of the DIP Term Sheet and the
Definitive Documents with respect to the giving of notice or otherwise,
and in accordance with the DIP Term Sheet and the other related Definitive
Documents and the DIP Lender’s Charge, cease making advances to the
Applicants and make demand, accelerate payment and give other notices;
provided that the DIP Lender must apply to this Court on three (3) days
written notice (which may include the service of materials in connection
with such an application to this Court) to the Applicants and the Monitor,
to enforce against or exercise any other rights and remedies against the
Applicants or the Property (including to set off and/or consolidate any
amounts owing by the DIP Lender to the Applicants against the obligations
of the Applicants to the DIP Lender under or pursuant to the DIP Term
Sheet, Definitive Documents and the DIP Lender’s
Charge) to appoint a receiver, receiver and manager or interim
receiver, or for a bankruptcy order against the Applicants and for the
appointment of a trustee in bankruptcy of the Applicants; and |
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(c) |
the foregoing rights and remedies of the DIP Lender shall
be enforceable against any trustee in bankruptcy, interim receiver,
receiver or receiver and manager of the Applicants or the
Property. |
40. THIS COURT ORDERS AND DECLARES
that, unless otherwise agreed in writing by the DIP Lender, the DIP Lender shall
be treated as unaffected in any plan of arrangement or compromise filed by the
Applicants under the CCAA, or any proposal filed by the Applicants under the
Bankruptcy and Insolvency Act of Canada (the “BIA”), with respect to any
advances made under the DIP Term Sheet or the Definitive Documents.
VALIDITY AND PRIORITY OF CHARGES CREATED BY THIS
ORDER
41. THIS COURT ORDERS that the
priorities of the Directors’ Charge, the Administration Charge and the DIP
Lender’s Charge (the “Charges”), as among them, shall be as follows:
First – Administration Charge (to the
maximum amount of $1,500,000);
Second – DIP Lender’s Charge; and
Third – Directors’ Charge (to the
maximum amount of USD$3,200,000).
42. THIS COURT ORDERS that the filing,
registration or perfection of the Charges shall not be required, and that the
Charges shall be valid and enforceable for all purposes, including as against
any right, title or interest filed, registered, recorded or perfected subsequent
to the Charges coming into existence, notwithstanding any such failure to file,
register, record or perfect.
43. THIS COURT ORDERS that each of the
Charges shall constitute a charge on the Property and such Charges shall rank in
priority to all other security interests, trusts, liens, charges and
encumbrances, claims of secured creditors, statutory or otherwise (collectively,
“Encumbrances”) in favour of any Person, except for Encumbrances the
holders of which did not receive notice of the application for this order. The
Applicants and the beneficiaries of the Charges are hereby granted leave to bring a motion at the
Comeback Date (as defined below) to have the Charges rank ahead of all such
Encumbrances, on notice to the holders thereof.
44. THIS COURT ORDERS that except as
otherwise expressly provided for herein, or as may be approved by this Court,
neither of the Applicants shall grant any Encumbrances over any Property that
rank in priority to, or pari passu with, any of the Charges, unless the
Applicants also obtain the prior written consent of the Monitor, the DIP Lender
and the beneficiaries of the Charges (as applicable), or further Order of this
Court.
45. THIS COURT ORDERS that the Charges,
the DIP Term Sheet and the Definitive Documents shall not be rendered invalid or
unenforceable and the rights and remedies of the chargees entitled to the
benefit of the Charges (collectively, the “Chargees”) and/or the DIP
Lender thereunder shall not otherwise be limited or impaired in any way by (a)
the pendency of these proceedings and the declarations of insolvency made
herein; (b) any application(s) for bankruptcy order(s) issued pursuant to BIA,
or any bankruptcy order made pursuant to such applications; (c) the filing of
any assignments for the general benefit of creditors made pursuant to the BIA;
(d) the provisions of any federal or provincial statutes; or (e) any negative
covenants, prohibitions or other similar provisions with respect to borrowings,
incurring debt or the creation of Encumbrances, contained in any existing loan
documents, lease, sublease, offer to lease or other agreement (collectively, an
“Agreement”) which binds either of the Applicants, and notwithstanding
any provision to the contrary in any Agreement:
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(a) |
neither the creation of the Charges nor the execution,
delivery, perfection, registration or performance of the DIP Term Sheet or
the Definitive Documents shall create or be deemed to constitute a breach
by either of the Applicants of any Agreement to which such Applicant is a
party; |
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(b) |
none of the Chargees shall have any liability to any
Person whatsoever as a result of any breach of any Agreement caused by or
resulting from either of the Applicants entering into the DIP Term Sheet,
the creation of the Charges, or the execution, delivery or performance of
the Definitive Documents; and |
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|
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(c) |
the payments made by either of the Applicants pursuant to
this Order, the DIP Term Sheet or the Definitive Documents, and the
granting of the Charges, do not and
will not constitute preferences, fraudulent conveyances, transfers
at undervalue, oppressive conduct, or other challengeable or voidable
transactions under any applicable law. |
46. THIS COURT ORDERS that any Charge
created by this Order over leases of real property in Canada shall only be a
Charge in the applicable Applicant’s interest in such real property leases.
SERVICE AND NOTICE
47. THIS COURT ORDERS that the Monitor
shall (i) without delay, publish in The Globe and Mail (National Edition)
in Canada and Nation News in Barbados a notice containing the information
prescribed under the CCAA, (ii) within five days after the date of this Order,
(A) make this Order publicly available in the manner prescribed under the CCAA,
(B) send, in the prescribed manner, a notice to every known creditor who has a
claim against either of the Applicants of more than $1,000 (other than creditors
who are natural persons), and (C) prepare a list showing the names and addresses
of those creditors (other than creditors who are natural persons) and the
estimated amounts of those claims, and make it publicly available in the
prescribed manner, all in accordance with Section 23(1)(a) of the CCAA and the
regulations made thereunder.
48. THIS COURT ORDERS that the
E-Service Protocol of the Commercial List (the “Protocol”) is approved
and adopted by reference herein and, in this proceeding, the service of
documents made in accordance with the Protocol (which can be found on the
Commercial List website at
http://www.ontariocourts.ca/scj/practice/practice-directions/toronto/e-service-protocol/)
shall be valid and effective service. Subject to Rule 17.05 this Order shall
constitute an order for substituted service pursuant to Rule 16.04 of the Rules
of Civil Procedure. Subject to Rule 3.01(d) of the Rules of Civil Procedure and
paragraph 21 of the Protocol, service of documents in accordance with the
Protocol will be effective on transmission. This Court further orders that a
Case Website (the “Case Website”) shall be established in accordance with
the Protocol with the following URL:
http://cfcanada/fticonsulting.com/banro.
49. THIS COURT ORDERS that if the
service or distribution of documents in accordance with the Protocol is not
practicable, the Applicants and the Monitor are at liberty to serve
or distribute this Order, any other materials and orders in these proceedings, any notices or other correspondence, by forwarding true copies
thereof by prepaid ordinary mail, courier, personal delivery or facsimile
transmission to the Applicants’ creditors or other interested parties at their
respective addresses as last shown on the records of the Applicants and that any
such service or distribution by courier, personal delivery or facsimile
transmission shall be deemed to be received on the next business day following
the date of forwarding thereof, or if sent by ordinary mail, on the third
business day after mailing.
50. THIS COURT ORDERS that the
Applicants, the Monitor and their counsel are at liberty to serve or distribute
this Order, any other materials and orders as may be reasonably required in
these proceedings, including any notices, or other correspondence, by forwarding
true copies thereof by electronic message to any of the Applicants’ creditors or
other interested parties and their advisors. For greater certainty, any such
distribution or service shall be deemed to be in satisfaction of a legal or
juridical obligation and notice requirements within the meaning of clause 3(c)
of the Electronic Commerce Protection Regulation, Reg.
81000-2-175(SOR/DORS).
51. THIS COURT ORDERS that the Monitor
shall create, maintain and update as necessary a list of all Persons appearing
in person or by counsel in this proceeding (the “Service List”). The
Monitor shall post the Service List, as may be updated from time to time, on the
Case Website as part of the public materials to be recorded thereon in relation
to this proceeding. Notwithstanding the foregoing, the Monitor shall have no
liability in respect of the accuracy of or the timeliness of making any changes
to the Service List.
COMEBACK DATE
52. THIS COURT ORDERS that the comeback
motion shall be heard on January 19, 2018 (the “Comeback Date”).
GENERAL
53. THIS COURT ORDERS that, except with
respect to any motion to be heard on the Comeback Date, and subject to further
Order of this Court in respect of urgent motions, any interested party wishing
to object to the relief sought in a motion brought in these proceedings
(provided such motion is brought on at least five (5) days’ notice) shall,
subject to further Order of this Court, provide the Service List with responding
motion materials or a written notice (including by e-mail) stating its objection to the motion and
the grounds for such objection no later than 5:00 p.m. (Toronto time) on the
date that is three (3) days prior to the date such motion is returnable (the
“Objection Deadline”). The Monitor shall have the ability to extend the
Objection Deadline after consulting with the Applicants.
54. THIS COURT ORDERS that following
the expiry of the Objection Deadline, counsel to the Monitor or counsel to the
Applicant shall inform the Court, including by way of a 9:30 a.m. appointment,
of the absence of the status of any objections to the motion and the judge
having carriage of the motion may determine whether the motion should proceed at
a 9:30 a.m. chambers appointment or otherwise on consent, or whether a hearing
will be held in the ordinary course on the date specified in the notice of
motion.
55. THIS COURT ORDERS that any
interested party (other than the Applicants and the Monitor) that wishes to
amend or vary this Order shall bring a motion before this Court on the Comeback
Date and any such interested party shall give seven (7) days’ notice to the
Service List and any other party or parties likely to be affected by the relief
sought by such party in advance of the Comeback Date, provided that the DIP
Lender shall be entitled to rely on this Order as issued and entered and on the
DIP Lender’s Charge, up and to the date this Order may be varied or stayed.
56. THIS COURT ORDERS that the
Applicants or the Monitor, as the case may be, may from time to time apply to
this Court for advice and directions in the discharge of their powers and duties
hereunder.
57. THIS COURT ORDERS that nothing in
this Order shall prevent the Monitor from acting as an interim receiver, a
receiver, a receiver and manager, or a trustee in bankruptcy of either of the
Applicants, the Business or the Property.
58. THIS COURT HEREBY REQUESTS the aid
and recognition of any court, tribunal, regulatory or administrative body having
jurisdiction in Canada or in the United States, to give effect to this Order and
to assist either of the Applicants, the Monitor and their respective agents in
carrying out the terms of this Order. All courts, tribunals, regulatory and
administrative bodies are hereby respectfully requested to make such orders and
to provide such assistance to either of the Applicants or to the Monitor, as an
officer of this Court, as may be necessary or desirable to give effect to this Order, to grant representative
status to the Applicants or the Monitor in any foreign proceeding, or to assist
either of the Applicants or the Monitor and their respective agents in carrying
out the terms of this Order.
59. THIS COURT ORDERS that each of the
Applicants and the Monitor be at liberty and are hereby authorized and empowered
to apply to any court, tribunal, regulatory or administrative body, wherever
located, for the recognition of this Order and for assistance in carrying out
the terms of this Order, and that either of the Applicants or the Monitor is
authorized and empowered to act as a representative in respect of the within
proceedings for the purpose of having these proceedings recognized in a
jurisdiction outside Canada.
60. THIS COURT ORDERS that this Order
and all of its provisions are effective as of 12:01 a.m. Eastern
Standard/Daylight Time on the date of this Order.
____________________________________
SCHEDULE “A”
Non-Applicant Subsidiaries
| 1. |
Bango Congo Mining S.A.; |
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| 2. |
Namoya Mining S.A.; |
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| 3. |
Lugushwa Mining S.A.; |
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| 4. |
Twangiza Mining S.A.; and |
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| 5. |
Kamituga Mining S.A. |
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|
Court File No. |
|
IN THE MATTER OF THE COMPANIES’ CREDITORS
ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF
A PLAN OF COMPROMISE OR ARRANGEMENT OF BANRO CORPORATION, BANRO GROUP
(BARBADOS) LIMITED, BANRO CONGO (BARBADOS) LIMITED, NAMOYA (BARBADOS)
LIMITED, LUGUSHWA (BARBADOS) LIMITED, TWANGIZA (BARBADOS) LIMITED AND
KAMITUGA (BARBADOS) LIMITED |
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ONTARIO |
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SUPERIOR COURT OF JUSTICE
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COMMERCIAL LIST |
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PROCEEDING COMMENCED AT TORONTO
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INITIAL ORDER |
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Cassels Brock & Blackwell LLP
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2100 Scotia Plaza |
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40 King Street West |
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Toronto, ON M5H 3C2 |
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|
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Ryan C. Jacobs LSUC# 59510J |
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Tel: |
416.860.6465 |
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Fax: |
416.640.3189 |
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rjacobs@casselsbrock.com |
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|
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Jane O. Dietrich LSUC# 49302U |
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Tel: |
416.860.5223 |
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Fax: |
416.640.3144 |
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jdietrich@casselsbrock.com |
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Joseph J. Bellissimo LSUC# 46555R
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Tel: |
416.860.6572 |
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Fax: |
416.642.7150 |
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jbellissimo@casselsbrock.com |
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Ben Goodis LSUC# 70303H |
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Tel: |
416.869.5312 |
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Fax: |
416.640.3199 |
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bgoodis@casselsbrock.com |
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Lawyers for the Applicants
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EXECUTION VERSION
SCHEDULE “G”
SISP APPROVAL ORDER
[Attached]
Court File No.
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
| THE HONOURABLE |
) |
FRIDAY, THE 19TH |
| |
) |
|
| JUSTICE |
) |
DAY OF JANUARY, 2018
|
| IN THE MATTER OF THE COMPANIES CREDITORS
|
| ARRANGEMENT ACT, R.S.C. 1985, C. C-36, AS AMENDED
|
| |
| AND IN THE MATTER OF A PLAN OF COMPROMISE OR
|
| ARRANGEMENT OF BANRO CORPORATION, BANRO |
| GROUP (BARBADOS) LIMITED, BANRO CONGO |
| (BARBADOS) LIMITED, NAMOYA (BARBADOS) |
| LIMITED, LUGUSHWA (BARBADOS) LIMITED, |
| TWANGIZA (BARBADOS) LIMITED AND KAMITUGA |
| (BARBADOS) LIMITED |
(the “Applicants”)
SISP APPROVAL ORDER
THIS MOTION, made by the
Applicants, pursuant to the Companies’ Creditors Arrangement Act, R.S.C.
1985, c. c-36, as amended (the “CCAA”) for an order, inter alia,
approving the SISP (as defined below) and certain related relief, was heard this
day at 330 University Avenue, Toronto, Ontario.
ON READING the Notice of Motion
of the Applicants, the affidavit of Rory James Taylor sworn December 21, 2017
(the “Taylor Affidavit”) and the Exhibits thereto, the First Report of
FTI Consulting Canada Inc., in its capacity as monitor of the Applicants (the
“Monitor”) dated December 22, 2017 and on hearing the submissions of
counsel for the Applicants, the Monitor, Gramercy Funds Management LLC
(“Gramercy”) and Baiyin International Investment Limited/Baiyin
Nonferrous Group Company, Limited (“Baiyin”), no one appearing for any other party although duly served as
appears from the affidavit of service of [NAME] sworn [DATE],
1. THIS COURT ORDERS that the time for
service of the Notice of Motion and the Motion Record is hereby abridged and
validated so that this Motion is properly returnable today and hereby dispenses
with further service thereof.
2. THIS COURT ORDERS that the sale and
investment solicitation process (the “SISP”) attached as Schedule “A”
to this Order be and is hereby approved and each of the Applicants and the
Monitor are hereby authorized and directed to perform, subject to the DIP Term
Sheet and the Definitive Documents (as defined in the Initial Order), each of
their obligations thereunder and to do all things reasonably necessary to
perform their obligations thereunder.
3. THIS COURT ORDERS that the Monitor,
the Applicants and their respective affiliates, partners, directors, employees
and agents shall have no liability with respect to any and all losses, claims,
damages or liabilities, of any nature or kind to any person in connection with
or as a result of the SISP, except to the extent such losses, claims, damages or
liabilities result from the gross negligence or wilful misconduct of the Monitor
or the Applicants, as applicable, in performing its obligations under the SISP
(as determined by this Court).
4. THIS COURT ORDERS that, in
connection with the SISP and pursuant to clause 7(3)(c) of the Personal
Information Protection and Electronic Documents Act (Canada), each of the
Applicants and the Monitor are authorized and permitted to disclose personal
information of identifiable individuals to prospective purchasers or bidders or
to their advisers, but only to the extent desirable or required to negotiate and
attempt to complete one or more transactions, as contemplated by the SISP (each,
a “Transaction”). Each prospective purchaser or bidder to whom such
information is disclosed shall maintain and protect the privacy of such
information and shall limit the use of such information to its evaluation of a
Transaction and if it does not complete a Transaction, shall (i) return all such
information to the applicable Applicant; (ii) destroy all such information; or
(iii) in the case of such information that is electronically stored, destroy all
such information to the extent it is reasonably practical to do so. The
purchaser of any Property shall be entitled to continue to use the personal
information provided to it, and related to the Property purchased, in any manner
which is in all respects identical to the prior use of such information by the applicable Applicants, and shall return all
other personal information to the Applicants or ensure that all other personal
information is destroyed.
5. THIS COURT ORDERS that each of the
Applicants and the Monitor be at liberty and are hereby authorized and empowered
to apply to any court, tribunal, regulatory or administrative body, wherever
located, for the recognition of this Order and for assistance in carrying out
the terms of this Order, and that either of the Applicants or the Monitor is
authorized and empowered to act as a representative in respect of the within
proceedings for the purpose of having these proceedings recognized in a
jurisdiction outside Canada.
6. THIS COURT HEREBY REQUESTS the aid
and recognition of any court, tribunal, regulatory or administrative body having
jurisdiction in Canada or in the United States, to give effect to this Order and
to assist either of the Applicants, the Monitor and their respective agents in
carrying out the terms of this Order. All courts, tribunals, regulatory and
administrative bodies are hereby respectfully requested to make such orders and
to provide such assistance to either of the Applicants or to the Monitor, as an
officer of this Court, as may be necessary or desirable to give effect to this
Order, to grant representative status to the Applicants or the Monitor in any
foreign proceeding, or to assist either of the Applicants or the Monitor and
their respective agents in carrying out the terms of this Order.
7. THIS COURT ORDERS that the
Applicants or the Monitor, as the case may be, may from time to time apply to
this Court for advice and directions with respect to the SISP.
____________________________________
SCHEDULE “A”
Sale and Investment Solicitation
Process
EXECUTION VERSION
Procedures for the Sale and Investment Solicitation
Process
1. On December 22, 2017, Banro
Corporation (“Banro”) and its direct and indirect subsidiaries, Banro
Group (Barbados) Limited (“BGB”), Banro Congo (Barbados) Limited, Namoya
(Barbados) Limited, Lugushwa (Barbados) Limited, Twangiza (Barbados) Limited,
and Kamituga (Barbados) Limited (collectively, with Banro and BGB, the
“Applicants”) obtained an initial order (the “Initial Order”)
under the Companies' Creditors Arrangement Act (“CCAA”) from the
Ontario Superior Court of Justice (Commercial List) (the “Court”).
2. The Initial Order authorizes and
approves the Applicants entering into an Interim Financing Term Sheet dated as
of December 21, 2017 (the “DIP Term Sheet”) for the provision of a senior
secured super priority (debtor-in-possession), interim, non-revolving credit
facility (the “DIP Facility”) from Gramercy and Baiyin (together with and
any permitted assignees, the “DIP Lender”). A copy of the DIP Term Sheet
is attached at Exhibit “N” to the Affidavit of Rory James Taylor sworn on
December 22, 2017 (the “Taylor Affidavit”) a copy of which is available
at www.cfcanada/fticonsulting.com/banro (the “Case Website”).
3. The DIP Term Sheet contemplates
Banro completing the Sale and Investment Solicitation Process (“SISP”)
set forth herein.
4. The purpose of the SISP is to
solicit proposals for an Alternative Transaction that may constitute a
Successful Bid and where no Successful Bid is obtained, to provide for the
completion of the Recapitalization (each as defined below).
5. Set forth below are the procedures
(the “SISP Procedures”) to be followed with respect to the SISP and, if
applicable, following determination of a Successful Bid, to complete the
transaction contemplated thereby.
Defined Terms
6. All capitalized terms used but not
otherwise defined herein shall have the meanings given to them in the Initial
Order. In addition, capitalized terms used in these SISP Procedures shall have
the meanings set out in Appendix “A”.
Solicitation Process and Timeline
7. The SISP Procedures set forth herein
describe the manner in which prospective bidders may gain access to or continue
to have access to due diligence materials concerning the Banro Group, their
businesses and operations (the “Business”) and their assets, undertakings
and properties (collectively, the “Property”), the manner in which a bid
becomes a Qualified Alternative Transaction Bid, the receipt and negotiation of
bids received, the ultimate selection of a Successful Bid, if any, and the
approval thereof by the Court.
8. Banro shall implement these SISP
Procedures with the assistance and supervision of the Monitor and, where
specified, in consultation with the DIP Lender. In the event that there is
disagreement as to the interpretation or application of these SISP Procedures,
the Court will have jurisdiction to hear and resolve any such dispute.
9. The following table sets out the key
milestones under this SISP, subject to extension by Banro pursuant to and in
accordance with these SISP Procedures:
EXECUTION VERSION
| Milestone
|
Deadline |
| Commencement of
SISP |
January 22, 2018 |
| LOI Bid Deadline
|
March
2, 2018 |
| Bid Deadline |
April
9, 2018 |
Solicitation of Interest
10. As soon as reasonably practicable,
and in no event later than January 22, 2018, Banro and the Monitor shall (a)
prepare a list of potential bidders, including strategic and financial parties,
that may be interested in submitting an Alternative Transaction (a “Potential
Bidder”); (b) prepare a summary teaser describing the opportunity to
participate in the SISP and an overview of the SISP Procedures (the “Teaser
Letter”); (c) prepare a confidential information memorandum (“CIM”)
with respect to the opportunity, if appropriate; and (d) establish a data room
(the “Data Room”) of due diligence materials (the CIM and the materials
in the Data Room collectively being the “Diligence Materials”) that Banro
and the Monitor believe may be useful for Potential Bidders. At the same time,
Banro shall issue a press release setting out relevant information regarding the
SISP with Canada Newswire and such other major news-outlets for dissemination in
Canada, major financial centres in the United States and such other
international locations as the Monitor and Banro may determine to be reasonably
appropriate.
11. As soon as reasonably practicable,
the Monitor shall contact the Potential Bidders to introduce the opportunity,
provide copy of the Teaser Letter to any Potential Bidder that requests a copy
thereof and shall post a copy of the SISP and the Teaser Letter on the Case
Website.
Due Diligence Access
12. In order to participate in the SISP
and be granted access to the Diligence Materials by a Potential Bidder must
deliver to Banro with a copy to the Monitor, at the addresses specified in
Appendix “B” hereto (including by email): (i) an executed confidentiality
agreement in form and substance satisfactory to Banro and the Monitor
(“Confidentiality Agreement”), and (ii) an executed acknowledgement of
these SISP Procedures, in form and substance satisfactory to Banro and the
Monitor (“SISP Acknowledgement”).
13. All Potential Bidders that have
provided an executed a Confidentiality Agreement and an executed SISP
Acknowledgment shall be deemed to be a qualified phase 1 bidder (a “Qualified
Phase 1 Bidder”) and will be promptly notified of such classification by the
Monitor. Qualified Phase 1 Bidders shall be provided with a copy of the CIM, if
applicable, and access to the Data Room. Banro and the Monitor make no
representation or warranty as to the accuracy or completeness of the information
contained in the Teaser Letter or the Diligence Materials, except to the extent
expressly provided in any definitive sale or investment agreement executed and
delivered by Banro (a “Definitive Agreement”).
14. Banro, in consultation with the
Monitor, reserves the right to withhold any Diligence Materials that Banro
determines, in its sole discretion, is business sensitive or otherwise not
appropriate for disclosure to a Potential Bidder who is a competitor or customer
of any member of the Banro Group or is affiliates with any competitor or
customer of any member of the Banro Group.
15. In respect of information requests
or any other matters concerning a possible Alternative Transaction and this
SISP, Potential Bidders and/or Qualified Bidders must only communicate with
Banro and the Monitor or with such other individual or individuals as Banro, in
consultation with the Monitor, may authorize in writing. Without the prior
written consent of Banro, in consultation with the Monitor, no Prospective Bidders and/or
Qualified Bidders or representatives thereof may initiate or cause to be
initiated or maintain any communication with a member of any government,
government representative, director, agent, employee, affiliate, creditor,
shareholder, customer or supplier of the Banro Group concerning Banro or its
Business, assets, operations, prospects or finances, or any matters relating to
a possible Alternative Transaction.
EXECUTION VERSION
LOI Submissions
16. Each Qualified Phase 1 Bidder
wishing to be eligible to submit an Alternative Transaction Bid shall submit a
non-binding letter of intent (each, a “LOI”) to Banro with a copy to the
Monitor at the addresses specified in Appendix “B” hereto (including by
email) so as to be received by them no later than 12:00 p.m. (Eastern Standard
Time) on March 2, 2018, or such later date or time as may be agreed by Banro and
the Monitor with the consent of the DIP Lender (the “LOI Deadline”).
17. Each LOI shall include the
following information on the Qualified Bidder’s proposed Alternative
Transaction: (a) the amount of, and details regarding the form of, consideration
for the Alternative Transaction in U.S. Dollars; (b) a specific indication of
the expected structure of the Alternative Transaction and the financing needed
to consummate the Alternative Transaction; (c) the key terms and provisions to
be included in any order of the Court approving the Alternative Transaction; (d)
an outline of any additional Diligence Materials or due diligence required to be
conducted in order to submit an Alternative Transaction Bid; (e) preliminary
evidence satisfactory to Banro and the Monitor of such person’s
financial wherewithal to consummate an Alternative Transaction; (f) any other
terms or conditions that the Qualified Bidder considers material; (g) specific
information as to how the Qualified Bidder intends to satisfy the requirements
for a Qualified Alternative Transaction Bid set forth in paragraph 24 hereof,
and (h) any other information that may be requested by the Company or the
Monitor, after consultation with the DIP Lender, prior to the LOI Deadline.
18. Without limiting the foregoing,
each LOI shall also include:
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(a) |
in the case of a Sale Transaction, identification of the
shares owned by any one or more of the Applicants proposed to be acquired
and any liabilities of the Applicants proposed to be assumed; or |
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(b) |
in the case of a Plan Transaction, details regarding the
proposed equity and debt structure of the Banro Group following completion
of the proposed transaction, the direct or indirect investment target and
the aggregate amount of equity and debt investment (including the sources
of such capital, the underlying assumptions regarding the pro forma
capital structure, as well as anticipated tranches of debt, debt service
fees, interest and amortization) to be made in the Banro Group, the debt,
equity or other securities, if any, proposed to be allocated to any
secured or unsecured creditors of the Applicants, the terms of repayment
of the DIP Obligations, the Priority Claims, the Affected Parity Lien Debt
and whether and what portion, if any, of the secured and unsecured
creditors of the Applicants will be paid in cash or other
consideration. |
19. A LOI also must also fully disclose
the identity of each person (including any person that controls such person)
that will be directly or indirectly sponsoring, participating in or financing
the Alternative Transaction and the complete terms of any such sponsorship,
participation or financing.
EXECUTION VERSION
Assessment of LOIs
20. Banro or the Monitor shall provide
to the DIP Lender copies of all the LOIs received, provided that both Gramercy
and Baiyin (in their capacity as DIP Lenders and sponsors of the
Recapitalization) each confirm to Banro and the Monitor in writing that they
shall not submit any other proposal other than the Recapitalization Transaction
and shall not amend the terms of the Recapitalization Transaction to provide
greater consideration or value than what is currently provided for therein (a
“Conforming DIP Lender”).
21. Banro, in consultation with the
Monitor and the Conforming DIP Lender, shall review each LOI received by the LOI
Deadline. Banro shall determine in its business judgment, with the assistance of
the Monitor, if each LOI could form the basis of a Qualified Alternative
Transaction Bid. If Banro, with the assistance of the Monitor and after
consultation with the Conforming DIP Lender, determines that an LOI could not
form the basis of a Qualified Alternative Transaction Bid, Banro and the Monitor
may refuse to provide any further Diligence Materials to the Qualified Phase 1
Bidder and such Qualified Phase 1 Bidder shall not be eligible to submit an
Alternative Transaction Bid. If Banro, with the consent of the Monitor or
further Order of the Court and after consultation with the Conforming DIP
Lender, determines that none of the LOIs received could form the basis of a
Qualified Alternative Transaction Bid, Banro shall give notice to Qualified
Phase 1 Bidders that this SISP is terminated and that Banro will proceed to
complete the Recapitalization.
22. If Banro, with the assistance of
the Monitor and after consultation with the DIP Lender, determines that a LOI
could form the basis of a Qualified Alternative Transaction Bid, the Monitor
shall inform the Qualified Phase 1 Bidder that submitted such LOI of
Banro’s determination and each such Qualified Phase 1 Bidder shall be
entitled to submit an Alternative Transaction Bid in accordance with these SISP
Procedures. If the Conforming DIP Lender, acting reasonably, advises Banro and
the Monitor that it does not agree that any of the LOIs received could form the
basis of a Qualified Alternative Transaction Bid, Banro may either (i) with the
consent of the Monitor, elect to terminate this SISP (and provide notice thereof
to Qualified Bidders) and proceed to complete the Recapitalization, or (ii) seek
further direction from the Court.
Alternative Transaction Bids
23. A Qualified Bidder that is
determined in accordance with paragraph 22 hereof to be eligible to submit an
Alternative Transaction Bid (a “Qualified Bidder”) may deliver written
copies of a binding offer or proposal for an Alternative Transaction (an
“Alternative Transaction Bid”) to Banro with a copy to the Monitor at the
addresses specified in Appendix “B” hereto (including by email) so as to
be received by them no later than 12:00 p.m. (Eastern Standard Time) on April 9,
2018, or such other later date or time as may be agreed by Banro and the Monitor
with the consent of the DIP Lenders (the “Bid Deadline”).
24. An Alternative Transaction Bid will
be deemed to be “Qualified Alternative Transaction Bid” only if the
Alternative Transaction Bid complies with all of the following:
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(i) |
in the case of a Sale Transaction, an executed Definitive
Agreement, including all exhibits and schedules contemplated thereby
(other than exhibits and schedules that by their nature must be prepared
by Banro), together with a blackline against the draft form of Definitive
Agreement which shall be prepared by Banro with the assistance of the
Monitor and posted in the Data Room, describing the terms and conditions of
the proposed transaction, including identification of the shares owned by any
one or more of the Applicants proposed to be acquired and any liabilities
proposed to be assumed, the purchase price for such shares expressed in U.S.
Dollars (the “Purchase Price”), and the structure and financing of the
proposed transaction; or |
EXECUTION VERSION
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(ii) |
in the case of a Plan Transaction, an executed Definitive
Agreement, including all exhibits and schedules contemplated thereby
(other than exhibits and schedules that by their nature must be prepared
by Banro), together with a blackline against the draft form of Definitive
Agreement which shall be prepared by Banro with the assistance of the
Monitor and posted in the Data Room, describing the terms and conditions
of the proposed transaction, including details regarding the proposed
equity and debt structure of the Banro Group following completion of the
proposed transaction, the direct or indirect investment target and the
aggregate amount of equity and debt investment (including the sources of
such capital, the underlying assumptions regarding the pro forma capital
structure, as well as anticipated tranches of debt, debt service fees,
interest and amortization) to be made in the Banro Group, the debt, equity
or other securities, if any, proposed to be allocated to any secured or
unsecured creditors of the company, the terms of repayment of the DIP
Obligations, the Priority Claims, the Note Obligations and the Affected
parity Lien Debt, and whether and what portion, if any, of the other
secured and unsecured creditors of the Applicants will be paid in
cash; |
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(b) |
clearly demonstrates that the Qualified Consideration
will be received by Banro at closing without any deduction, set-off or
other adjustment. |
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(c) |
it fully discloses the identity of each person (including
any person that controls such person) that will be directly or indirectly
sponsoring or participating in the Alternative Transaction Bid and the
complete terms of any such sponsorship or participation; |
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(d) |
it fully discloses any regulatory and third-party
approvals required to consummate the Alternative Transaction Bid and the
time period within which the Qualified Bidder expects to receive such
regulatory and third-party approvals, and those actions that the Qualified
Bidder will take to ensure receipt of such approvals as promptly as
possible; |
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(e) |
it does not include any request for or entitlement to any
break or termination fee, expense reimbursement or similar type of
payment; |
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(f) |
it includes “ letter stating that the offer is
irrevocable until the earlier of (i) the approval of the Recapitalization
or a Successful Bid by the Court and (ii) thirty (30) calendar days
following the Bid Deadline (the “Irrevocable Bid Date”), provided
that if such bidder’s Alternative Transaction Bid is selected as a
Successful Bid, its bid shall remain irrevocable until the closing of the
transaction; |
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(g) |
it includes written evidence, in form and substance
reasonably satisfactory to Banro and the Monitor, of a firm commitment for
all required financing, or other evidence of the financial ability to
consummate the proposed transaction, that will allow Banro and the
Monitor, in consultation with the Conforming DIP Lender,
to make a reasonable determination as to the Qualified Bidder's
financial and other capabilities to consummate the transaction contemplated by
the Alternative Transaction Bid; |
EXECUTION VERSION
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(h) |
it is not conditioned on (i) the outcome of unperformed
due diligence and/or (ii) obtaining financing; |
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(i) |
it includes an acknowledgement and representation that
the Qualified Bidder: (i) has relied solely upon its own independent
review, investigation and/or inspection of any documents and/or the
Property to be acquired and liabilities to be assumed in making its bid;
and (ii) did not rely upon any written or oral statements,
representations, promises, warranties or guaranties whatsoever, whether
express or implied (by operation of law or otherwise), regarding the
Business, the Property to be acquired or liabilities to be assumed or the
completeness of any information provided in connection therewith, except
as expressly provided in a Definitive Agreement; |
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(j) |
it includes evidence, in form and substance reasonably
satisfactory to Banro and the Monitor, of authorization and approval from
the Qualified Bidder's board of directors (or comparable governing body)
with respect to the submission, execution, delivery and closing of the
transaction contemplated by the bid, and identifies any anticipated
shareholder, regulatory or other approvals outstanding, and the
anticipated time frame and any anticipated impediments for obtaining such
approvals; |
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(k) |
it is accompanied by a refundable deposit (the
“Deposit”) in the form of a wire transfer (to a bank account
specified by the Monitor payable to the order of the Monitor, in trust, in
an amount equal to 5% of the cash consideration in the Alternative
Transaction Bid which Deposit is to be held and dealt with in accordance
with these SISP Procedures; |
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(l) |
it includes a commitment to close the transactions
contemplated by the Alternative Transaction Bid by no later than April 30,
2018 (the “Outside Date”); |
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(m) |
it contains such other information as may reasonably be
requested by Banro or the Monitor, in consultation with the Conforming DIP
Lender; and |
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(n) |
it is received by the Bid
Deadline. |
Review of Alternative Transaction Bid(s)
25. Following the Bid Deadline, Banro
or the Monitor shall distribute copies of the Alternative Transaction Bids
received to the Conforming DIP Lender. Banro and the Monitor, in consultation
with the Conforming DIP Lender, will assess the Alternative Transaction Bids
received by the Bid Deadline and determine whether such bids constitute
Qualified Alternative Transaction Bids. Banro, in consultation with the Monitor
and the DIP Lender, may waive compliance with any one or more of the
requirements specified herein other than the requirement set forth in sections
24(b) and 24(k), and deem such non-compliant bids to be Qualified Alternative
Transaction Bids.
26. Banro, in consultation with the
Monitor and the Conforming DIP Lender, also reserves the right to take one or
more of the following steps: (i) identify the highest or otherwise
most favourable Qualified Alternative Transaction Bid(s) (the
“Successful Bid”); (ii) request that certain Qualified Bidders who have
submitted Qualified Alternative Transaction Bids revisit their proposals in the
event that multiple Qualified Alternative Transaction Bids are competitive, or
(iii) commence an auction process with respect to multiple Qualified Alternative
Transaction Bids to identify a Successful Bid, pursuant to procedures approved
by Banro and the Monitor, with the consent of the Conforming DIP Lender or
further Order of the Court, that shall be distributed to Qualified Bidders
selected by Banro, with the consent of the Monitor, to participate in such
auction at least five (5) Business Days in advance of the proposed start time
for the auction.
EXECUTION VERSION
27. For greater certainty, Banro, in
consultation with the Monitor and the Conforming DIP Lender, may select more
than one Qualified Alternative Transaction Bid as a Successful Bid to the extent
that, based on the nature of such Qualified Alternative Transaction Bids,
multiple Qualified Alternative Transaction Bids when take together will
constitute the highest or otherwise most favourable Qualified Alternative
Transaction Bid.
28. In the event that Banro, in
consultation with the Monitor and the Conforming DIP Lender determines that no
Qualified Alternative Transaction Bids are received or Banro determines in its
business judgment not to select a Successful Bid, Banro shall give notice to
Qualified Bidders that this SISP is terminated and Banro will proceed to
complete the Recapitalization.
29. If Banro selects a Successful Bid,
Banro, with the assistance of the Monitor, shall then proceed to negotiate and
settle the terms and conditions of a Definitive Agreement in respect of a
Successful Bid, all of which shall be conditional upon Court approval.
30. Once a Definitive Agreement has
been negotiated and settled in respect of a Successful Bid, the person(s) who
made the Successful Bid shall be the “Successful Bidder” hereunder.
Court Approval
31. Banro shall apply to the Court (the
“Approval Motion”) for an order approving a Successful Bid and
authorizing Banro (and/or any applicable member of the Banro Group) to enter
into a Definitive Agreement with the Successful Bidder and any and all necessary
further instruments and agreements with respect to the Successful Bid, as well
as an order, in the case of a Sale Transaction, vesting title to purchased
property in the name of the Successful Bidder.
32. The Approval Motion shall take
place on or before April 27, 2018, but may be adjourned or postponed by Banro,
with the consent of the Successful Bidder, the Monitor and the DIP Lender, to a
later date as agreed between those parties.
33. All Qualified Alternative
Transaction Bids (other than a Successful Bid) shall be deemed rejected on and
as of the Irrevocable Bid Date.
34. Banro shall implement the
Successful Bid or the Recapitalization, as applicable, by no later than the
Outside Date or such other date as Banro, the Monitor and the DIP Lender may
agree.
Deposits
35. All Deposits shall be retained by
the Monitor and deposited in a trust account. If there is a Successful Bid, the
Deposit paid by the Successful Bidder whose bid is approved at the Approval
Motion shall be applied to the Purchase Price to be paid or investment amount to
be made by the Successful Bidder upon closing of the approved transaction and
will be non-refundable. The Deposits of Qualified Bidders not selected as a
Successful Bidder shall be returned to such bidders within five (5) Business Days of the
date upon the earlier of the Irrevocable Bid Date or (ii) the date that this
SISP is terminated.
EXECUTION VERSION
Approvals
36. For greater certainty, the
approvals required pursuant to the terms hereof are in addition to, and not in
substitution for, any other approvals required by the CCAA, or any other statute
or as otherwise required at law in order to implement or complete a Successful
Bid.
No Amendment
37. There shall be no amendments to
this SISP, including for greater certainty the process and procedures set out
herein, without the consent of Banro, the Monitor and the DIP Lender or further
Order of the Court.
“As Is, Where Is”
38. Any Alternative Transaction will be
on an “as is, where is” basis and without surviving representations or
warranties of any kind, nature, or description by any member of the Banro Group
or the Monitor or any of their employees, agents or estates, except to the
extent expressly provided under a Definitive Agreement with a Successful Bidder
executed and delivered by Banro and/or any member of the Banro Group.
Free Of Any And All Claims And Interests
39. In the event of a sale of the some
or all of the shares owned by one or more of the Applicants, to the extent
permitted by law, all of the rights, title and interests of the applicable
Applicants in and to such shares to be acquired will be sold free and clear of
all pledges, liens, security interests, encumbrances, claims, charges, options
and interests on or against such shares (collectively, the “Claims and
Interests”) pursuant to a Court order made under section 36(6) of the CCAA,
such Claims and Interests to attach to the net proceeds of the sale of such
shares (without prejudice to any claims or causes of action regarding the
priority, validity or enforceability thereof), except to the extent otherwise
set forth in a Definitive Agreement with a Successful Bidder.
No Obligation to Conclude a Transaction
40. Banro has no obligation to agree to
conclude an Alternative Transaction arising out of the SISP, and it reserves the
right and unfettered discretion to reject any offer or other proposal made in
connection with the SISP. In addition, at any time during these SISP Procedures,
Banro, with the consent of the Monitor and the DIP Lender, or further Order of
the Court may determine to terminate these SISP Procedures, and shall provide
notice of such a decision to any Qualified Bidders.
Further Orders
41. At any time during the SISP, Banro
and/or the Monitor may apply to the Court, following consultation with the DIP
Lenders, for advice and directions with respect to the discharge of its powers
and duties hereunder.
Banro Authority
EXECUTION VERSION
42. Where under these SISP Procedures,
a decision, determination, approval, consent, waiver or agreement is required
from Banro, or that a matter must be satisfactory or acceptable to Banro, such
decision, determination, approval, consent, waiver, agreement, satisfaction,
acceptance or other action shall be determined by the Special Committee and
shall be effective or shall have been obtained or satisfied, as the case may be,
for the purposes of this SISP where the Special Committee, shall have confirmed
its decision, determination, approval, consent, waiver, agreement, satisfaction,
acceptance or other action, as the case may be, through Cassels. Any person
shall be entitled to rely on any such decision, determination, approval,
consent, waiver, agreement, satisfaction, acceptance or other action
communicated by Cassels without any obligation to inquire into Cassels’
authority to do so on behalf of the Banro and such communication shall be
effective for all purposes of this SISP and the SISP Procedures.
EXECUTION VERSION
Appendix “A”
Definitions
“Affected Parity Lien Debt” has the
meaning given to such term in the Restructuring Term Sheet.
“Alternative Transaction” means either a
Plan Transaction (other than the Recapitalization) or a Sale Transaction.
“Alternative Transaction Bid” has the
meaning given to such term in paragraph 23 hereof.
“Applicants” has the meaning given to such
term in paragraph 1 hereof.
“Approval Motion” has the meaning given to such term in
paragraph 31 hereof.
“Baiyin” means Baiyin International Limited and
affiliates thereof within the direct or indirect control of Baiyin Nonferrous
Group Company, Limited.
“Banro” has the meaning given to such term in paragraph
1 hereof.
“Banro Group” means, collectively, the Applicants and
their direct and indirect subsidiaries as more particularly described in the
Taylor Affidavit.
“BGB” has the meaning given to such term in paragraph 1
hereof.
“Business Day” means a day, other than a Saturday,
Sunday, or a day on which banks in Toronto, Ontario are authorized or obligated
by applicable law to close or otherwise are generally closed.
“Bid Deadline” has the meaning given to such term in
paragraph 23 hereof.
“Business” has the meaning given to such term in
paragraph 7 hereof.
“Case Website” has the meaning given to such term
in paragraph 2 hereof.
“Cassels” means Cassels Brock & Blackwell LLP, legal
counsel to the Applicants.
“CCAA” has the meaning given to such term in paragraph 1
hereof.
“CIM” has the meaning given to such term in paragraph 10
hereof.
“Claims and Interests” has the meaning given to such
term in paragraph 39 hereof.
“Confidentiality Agreement” has the meaning given to
such term in paragraph 12 hereof.
“Conforming DIP Lender” has the meaning given to such
term in paragraph 20 hereof.
EXECUTION VERSION
“Court” has the meaning given to such term in
paragraph 1 hereof.
“Data Room” has the meaning given to such term in
paragraph 10 hereof.
“Definitive Agreement” has the meaning given
to such term in paragraph 13 hereof.
“Deposit” has the meaning given to such term
in paragraph 24(k) hereof.
“Diligence Materials” has the meaning given to
such term in paragraph 10 hereof.
“DIP Facility” has the meaning given to such
term in paragraph 2 hereof.
“DIP Lender” has the meaning given to such
term in paragraph 2 hereof.
“DIP Obligations” means the aggregate of all amounts
owing under the DIP Term Sheet.
“DIP Term Sheet” has the meaning given to such
term in paragraph 2 hereof.
“Dore Loan” means the loan advanced under that letter
agreement dated July 15, 2016 among Baiyin International Investment Ltd. and
Twangiza Mining S.A. (as amended or restated from time to time).
“Dore Obligations” means the aggregate of all amounts
owing under the Dore Loan.
“Gramercy” means Gramercy Funds Management LLC, as agent
for and on behalf of certain of the funds and accounts for whom it acts as
investment manager or advisor.
“Initial Order” has the meaning given to such
term in paragraph 1 hereof.
“Irrevocable Bid Date” has the meaning given
to such term in paragraph 24(f) hereof.
“Monitor” means FTI Consulting Canada Inc., in its
capacity as Court-appointed monitor pursuant to the Initial Order, and not in
its personal or corporate capacity.
“Note Indenture” means the New Senior Secured Note
Indenture dated as of March 19, 2017;
“Notes” means the 10.00% senior secured notes
due March 1, 2021 issued pursuant to the Note Indenture.
“Note Obligations” means the aggregate of all amounts
owing under the Notes.
“Plan Transaction” means a restructuring, refinancing,
recapitalization, workout or plan of compromise or arrangement or reorganization
of, or in respect of, all or part of the Banro Group.
“Potential Bidder” has the meaning given to such term in
paragraph 10 hereof.
“Priority Claims” mean all claims ranking in priority
to: (i) the DIP Obligations; or (ii) the Affected Parity Lien Debt.
“Property” has the meaning given to such term
in paragraph 7 hereof.
EXECUTION VERSION
“Purchase Price” has the meaning given to such
term in paragraph 24(a) hereof.
“Qualified Alternative Transaction Bid” has
the meaning given to such term in paragraph 24 hereof.
“Qualified Bidder” has the meaning given to
such term in paragraph 23 hereof.
“Qualified Consideration” means (i) cash consideration
sufficient to indefeasibly repay all DIP Obligations; plus (ii) cash
consideration sufficient to indefeasibly pay all Priority Claims; plus (iii)
cash consideration sufficient to indefeasibly repay not less than 75% of the
aggregate principal amount outstanding under the Affected Parity Lien Debt; plus
(iv) cash consideration sufficient to indefeasibly repay all amounts due under
the Stream Agreements or treatment of the Stream Agreements on the same terms as
the Recapitalization.
“Qualified Phase 1 Bidder” has the meaning
given to such term in paragraph 13 hereof.
“Recapitalization” means a recapitalization and
restructuring of the Banro Group proposed by Baiyin and Gramercy in accordance
with the terms and conditions set out in the Restructuring Term Sheet, to be
consummated in the event that a Successful Bid is not obtained.
“Restructuring Term Sheet” means the term sheet attached
hereto at Exhibit “•” to the Taylor Affidavit.
“Sale Transaction” means a sale of the common shares of
certain members of the Banro Group that are held by Banro and/or BGB.
“SISP” has the meaning given to such term in
paragraph 3 hereof.
“SISP Acknowledgement” has the meaning given
to such term in paragraph 12 hereof.
“SISP Approval Order” means the Order of the Court
approving these SISP Procedures.
“SISP Procedures” has the meaning given to
such term in paragraph 5 hereof.
“Special Committee” means the Special Committee of the
Board of Directors of Banro comprised entirely of independent directors of
Banro.
“Stream Agreements” has the meaning given to such term
in the Restructuring Term Sheet.
“Successful Bid” has the meaning given to such
term in paragraph 27 hereof.
“Successful Bidder” has the meaning given to
such term in paragraph 30 hereof.
“Taylor Affidavit” has the meaning given to
such term in paragraph 2 hereof.
“Teaser Letter” has the meaning given to such
term in paragraph 10 hereof.
EXECUTION VERSION
Appendix “B”
Addresses for Notices
| If to Banro: |
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| Banro Corporation |
| 1 First Canadian Place |
| 100 King St. West, Suite 7005 |
| Toronto, Ontario M5X 1E3 |
| Attention: Rory Taylor |
| Email: RTaylor@banro.com |
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| With a copy to: |
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| Cassels Brock & Blackwell LLP |
| Scotia Plaza |
| 40 King Street West, Suite 2100 |
| Toronto, Ontario M5H 3C2 |
| Attention: Ryan C. Jacobs / Jane Dietrich / Joseph
Bellissimo |
| Email:rjacobs@casselsbrock.com/jdietrich@casselsbrock.com/jbellissimo@casselsbrock.com
|
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| If to the Monitor: |
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| FTI Consulting Canada Inc. |
| TD Waterhouse Tower |
| 79 Wellington Street West, Suite 2010 |
| Toronto, Ontario M5K 1G8 |
| Attention: Nigel Meakin and Toni Vanderlaan |
| Email: nigel.meakin@fticonsulting.com/
toni.vanderlaan@fticonsulting.com |
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| With a copy to: |
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| McMillan LLP |
| Brookfield Place |
| 181 Bay Street, Suite 4400 |
| Toronto, Ontario M5J 2T3 |
| Attention: Wael Rostom and Caitlin Fell |
| Email: wael.rostom@mcmillan.ca/
caitlin.fell@mcmillan.ca |
|
IN THE MATTER OF THE COMPANIES’ CREDITORS
ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE
MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF BANRO CORPORATION,
BANRO GROUP (BARBADOS) LIMITED, BANRO CONGO (BARBADOS) LIMITED,
NAMOYA (BARBADOS) LIMITED, LUGUSHWA (BARBADOS) LIMITED, TWANGIZA
(BARBADOS) LIMITED AND KAMITUGA (BARBADOS) LIMITED |
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Court File No. |
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ONTARIO |
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SUPERIOR COURT OF JUSTICE
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COMMERCIAL LIST |
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PROCEEDING COMMENCED AT TORONTO
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SISP APPROVAL ORDER |
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Cassels Brock & Blackwell LLP
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2100 Scotia Plaza |
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40 King Street West |
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Toronto, ON M5H 3C2 |
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Ryan C. Jacobs LSUC# 59510J |
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Tel: |
416.860.6465 |
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Fax: |
416.640.3189 |
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rjacobs@casselsbrock.com |
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Joseph Bellissimo LSUC# 46555R |
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Tel: |
416.860.6572 |
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Fax: |
416.642.7150 |
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jbellissimo@casselsbrock.com |
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Jane Dietrich LSUC# 49302U |
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Tel: |
416.860.5223 |
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Fax: |
416.640.3144 |
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jdietrich@casselsbrock.com |
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Lawyers for the Applicants
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