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TORONTO, ONTARIO -- (Marketwire) -- 02/21/13 -- Banro Corporation ("Banro" or the "Company") (TSX: BAA)(NYSE Amex: BAA)(NYSE MKT: BAA) is pleased to announce that it has entered into agreements to arrange a financing package of up to US$90 million, comprising:
-- the issue of preferred shares to the value of US$40 million to BlackRock World Mining Trust plc ("BlackRock"), subject to increase at Banro's option to US$60 million, and provided certain conditions are satisfied; and-- credit facilities for aggregate US$30 million with two African commercial banks."2013 is a critical year for this Company's transition to mid-tier, low cost gold producer status, which will result in a step change in the net free-cash flow generated from this business," commented Simon Village, President and CEO. "The strategic objective of growing Banro's gold production organically and in a non-dilutive manner is achieved with these forms of funding, which also demonstrates management's commitment to preserve the integrity of the capital structure. In addition, the competitive cost of capital also highlights the confidence that key stakeholders have in our assets and ability to unlock value from the Twangiza - Namoya gold belt."
Preferred Shares
The Company has entered into a subscription agreement with BlackRock pursuant to which BlackRock has agreed to purchase US$40 million of gold-linked preferred shares of Banro (the "Initial Preferred Shares") (subject to increase, at Banro's option, in the manner described below, to US$60 million, and provided certain conditions are satisfied) (the "Private Placement"). The issuance of the Initial Preferred Shares is subject to conditions precedent customary for transactions of this nature.
The Private Placement will initially consist of 1.6 million preferred shares priced at US$25 each, with each preferred share entitling the holder to cumulative preferential cash dividends that will accrue at the end of each fiscal quarter in an amount that reflects an annual dividend yield (based on the Redemption Price of the preferred shares) of between 8% and 13% based on the amount of gold production from Banro's existing properties during the immediately preceding fiscal quarter. The "Redemption Price" of each preferred share as of any date will be the dollar-equivalent value (at such date) of approximately 0.015625 ounces of gold (subject to certain adjustments) plus the amount of all accrued and unpaid dividends on such date.
The preferred shares will be redeemable by the Company at its option following the date that is the later of five years from the closing date of the issuance of the Initial Preferred Shares and the date on which total cumulative gold production from Banro's existing properties (measured from the closing date of the Private Placement) reaches 800,000 ounces (the "Production Threshold"), by paying a per-share amount equal to (i) the Redemption Price plus (ii) an early redemption premium of 2%.
Following the fifth anniversary of the closing date of the issuance of the preferred shares, and for so long as the Production Threshold has not been met, a holder of the preferred shares will have the option to require the Company to redeem any or all of the holder's preferred shares by paying a per-share amount equal to the Redemption Price. BlackRock will also have the right to require the Company to redeem the preferred shares in the event of asset seizure and change of control, at all times subject to the terms of the high yield note indenture issued by the Company.
