Bravada Gold Corp. announced it has signed a Letter of Intent with a private equity firm to sell all issued and outstanding shares of the Company's two subsidiary companies for CDN$6.8 million.
In a release on Feb. 20, the Company said the transaction is subject to several conditions precedent including, a 45-day due diligence period by Purchaser, approval by Bravada's shareholders, and a capital consolidation of Bravada's common shares.
Purchaser will provide to Bravada a CDN$250,000 senior secured convertible credit facility, to be repaid from Sale Proceeds upon closing of the Transaction. Funds from the Facility will be utilized by Bravada in payment of property expenses of its subsidiaries and transactional costs related to the acquisition of requisite approvals for the Transaction. The two subsidiary companies hold rights to mineral assets in Nevada. Bravada's Directors have resolved to approve the Transaction; to convene a Meeting of shareholders to consider approval of the Transaction; and have agreed to deposit proxies with respect to their respective shares voting in favour of the Transaction.
Bravada's Board of Directors has approved a capital consolidation on the basis of one new share for each ten old shares of the Company to allow compliance with the TSX Venture Exchange's definition of "Discounted Market Price" for equity financing purposes. The consolidated shares (CUSIP #10567D204) are expected to begin trading on or about Feb. 28. Upon completion of the capital consolidation, the Company will have 11,970,342 shares issued and outstanding of which, approximately 9.7 percent are held by Homestake Resource Corp. (HSR.V). The Company's name will not be changed in connection with this consolidation. The consolidation is subject to acceptance by the TSX Venture Exchange.
President Joe Kizis said: "For some considerable period of time in difficult markets, the Company endeavored to attract equity capital or joint-venture partners to fund continued exploration on its mineral properties. Sale of these assets represents a significant premium to the market valuation of the Company, provides immediate and certain value to the Company's shareholders together with a risk mitigation strategy to shareholders in volatile market conditions and uncertain commodity prices, and an opportunity to utilize net working capital in the approximate amount of $5.2 million in acquisition and exploration of mineral properties to be identified and explored with exploration and development expertise of Bravada's experienced personnel."
((Comments on this story may be sent to email@example.com))