TORONTO, ONTARIO -- (Marketwire) -- 04/01/13 -- First Nickel Inc. ("FNI" or the "Company") (TSX: FNI) announces that it has entered into agreements with its lenders to restructure all of the Company's existing indebtedness (the "Refinancing"). The Refinancing includes an increase in the principal amount of the revolving credit facility (the "BNS Facility") with The Bank of Nova Scotia ("BNS") from US$10 million to US$15 million and the extension of the maturity dates for the BNS Facility and the Company's loan agreements with each of Resource Capital Fund IV L.P. ("RCF IV"), Resource Capital Fund V L.P. ("RCF V" and together with RCF IV, "RCF") and a fund managed by West Face Capital Inc. ("West Face"). RCF and West Face are insiders of the Company and were insiders of the Company at the time of entering into the loan agreements with RCF V and West Face.
Terms of the Refinancing
Pursuant to the terms of the Refinancing, the BNS Facility will be increased from a US$10 million loan facility to a US$15 million revolving credit facility with a new maturity date of March 30, 2015 and will be backed by a total of US$15 million of standby letters of credit (the "Letters of Credit") pursuant to two letters of credit arranged for by RCF and West Face. BNS may draw from the Letters of Credit in the event of an event of default under the BNS Facility in accordance with its terms.
Each of the RCF Letter of Credit and the West Face Letter of Credit will be backstopped by a new credit facility between the Company and each of RCF and West Face (the "Shareholder LC Facilities"). Any draws by BNS on the Letters of Credit will be treated as draws by FNI under the Shareholder LC Facilities. Each such draw will be treated as a separate secured loan under the Shareholder LC Facilities and bear interest at an annual rate of 12%. The Shareholder LC Facilities have a maturity date of three years from the closing date of the Refinancing. Interest payments owing under the Shareholder LC Facilities may be payable in cash or, at the election of the applicable lender, in common shares in the capital of the Company ("Common Shares") calculated on the basis of the volume-weighted average trading price for the five business days immediately preceding the date of issuance of such Common Shares.
In addition, the maturity dates of the US$10 million 8% convertible loan facility from RCF IV (the "RCF IV Convertible Facility"), the US$5 million loan from RCF V and the US$5 million loan from West Face (collectively the "Shareholder Loans") will be extended to March 31, 2015. As a result of the extension of maturity dates of the Shareholder Loans, additional interest will be payable to such related parties, which may, in accordance with the terms of the respective Shareholder Loans, be payable in cash or, at the election of the applicable lender, in Common Shares. The number of Common Shares issuable in satisfaction of interest on calculated on the basis of the formula within each applicable loan agreement. All of the interest owing under the loans with RCF V and West Face, which bear interest at an annual rate of 12%, will be pre-paid by the Company in Common Shares, calculated on the basis of $0.05 per Common Share, less a 12% discount rate.
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