Nemaska Lithium Inc. intends to cancel a senior secured bonds offering of US$350 million due to a delay in the completion of the Whabouchi lithium project and the Shawinigan electrochemical plant in Quebec.
In May 2018, the company priced and closed the books on the offering of bonds, with a five-year term and an interest rate of 11.25% per annum, after launching the offering in the previous month.
Nemaska Lithium said Sept. 17 that it filed an application with the Superior Court of Quebec seeking the discharge of the security which secured the bonds.
The move comes after the company revealed in an updated National Instrument 43–101-compliant technical report that the projects' completion timeline will extend beyond June 2021. As the delay is outside of the defined bond terms, it triggered a project completion cutoff event.
As a result, the company said any remaining bond proceeds held in the escrow account shall be set-off against and used to prepay the bonds within 45 days.
Nemaska Lithium expects to save money in the short term, as the move will decrease interest payments. It plans to use these savings, together with about C$128 million in cash and equivalents on hand as of June 30 and C$40 million deposited in an account required under the bond terms, to advance the project while it continues project financing discussions.
The company noted that, despite the development, The Pallinghurst Group expressed willingness to proceed with due diligence for its planned C$600 million investment. The parties are undertaking exclusive discussions until Oct. 19, unless extended.
