Banro Corp. and its Barbados-based subsidiaries started restructuring proceedings following a Dec. 22 initial order granted by the Ontario Superior Court of Justice.
The order provides protection to the company from its creditors for an initial period until Jan. 19, 2018, and approval for interim financing of up to US$20 million to continue operations.
According to the Dec. 22 release, over 74% of the company's creditors have agreed to support a recapitalization plan, to be implemented by the end of March or mid-April 2018.
The recapitalization plan will be implemented in case a "superior" restructuring process is not kicked off on Jan. 22, 2018.
Banro disclosed significant challenges in mid-November, including liquidity constraints, and said it needs to secure funding and meet upcoming debt servicing and working capital requirements.
The recapitalization plan includes an exchange of certain parity-lien debt for all of the equity of Banro post restructuring. The debt includes the US$197.5 million 10.00% secured notes due March 1, 2021, the US$10 million dore loan, and the US$20 million gold forward sales from output at the Namoya mine.
The plan also covers amending the priority-lien debt and streaming obligations held by Baiyin International Investment Ltd. and Gramercy Funds Management LLC, conceding certain unsecured claims at Banro for nominal consideration and canceling all existing equity of Banro and all of the equity related claims.
Banro's operations in the Democratic Republic of the Congo will continue as usual and obligations toward all related parties will be met on normal terms.
The gold deliveries toward Baiyin and Gramercy will be further deferred until June 30, 2019, which will provide US$30.9 million of liquidity relief to the company through mid-2019.
Additionally, for the first 200,000 ounces delivered at the Twangiza and Namoya gold mines from Jan. 1, 2018, the company will receive the then prevailing gold price, instead of the previously agreed US$150 per ounce, in exchange for up to 8% of the fully diluted equity of reorganized Banro.
It will allow the company to drop over US$42.5 million of obligatory deliveries through mid-2019, before the deliveries revert to US$150 per ounce.
An additional about US$8.9 million of previously deferred stream deliveries will be further deferred to late 2019.
The US$20 million facility is expected to be available by the third week of January 2018, securing liquidity for the company.
Interested parties may also be able to acquire the company for the outstanding amount of the loan facility, the priority debt, 75% of the affected parity-lien debt, and enough cash to repay all amounts due under the stream agreements.
Banro will retain its management team and board.