IC Potash Corp. Enters into Agreement for Second Strategic Investment by Cartesian Capital Group
IC Potash Corp. (TSX:ICP; OTCQX:ICPTF) (“ICP” or the “Company”)
announced today that Cartesian Capital Group, LLC (“Cartesian”) has
agreed to make a second strategic investment of up to US$45 million in
ICP’s subsidiary, Intercontinental Potash Corp. (USA) (“ICPUSA”). ICPUSA
owns the Company’s sulphate of potash mining and processing project (the
“Ochoa Project”) located in Lea County, New Mexico.
Mr. Randy Foote, President and Chief Executive Officer of ICP, stated, “We
are extremely pleased that IC Potash and the Ochoa Project have received
a second vote of confidence from Cartesian Capital Group. This strategic
investment will allow ICP to move the project to the start of
construction and also create the opportunity for ICP, working with
Cartesian, to move forward to find a strategic partner to assist in
funding the construction of the project.”
Mr. Peter Yu, Founder and Managing Partner of Cartesian, noted, “The
Ochoa Project is a unique and valuable resource that should become a
leading producer of a preferred fertilizer. We are proud to
expand our cooperation with ICP in the development of this important
project.”
Closing of Tranche 1 of the investment is subject to customary closing
conditions including final agreement between the parties on the Tranche
1 use of proceeds, confirmatory due diligence, final approval by
Cartesian’s investment committee, negotiation and execution of customary
definitive legal documentation. It is anticipated that closing of
Tranche 1 will take place in mid-January, 2016.
The transaction (the “Transaction”) will comprise two tranches. The
first tranche will consist of US$5 million of new convertible Series B
Preferred Shares of ICPUSA and $5 million in secured debt issued by
ICPUSA. The second tranche will consist of up to US$35 million in new
convertible Series C Preferred Shares of ICPUSA. In addition, certain
amendments will be made to the existing Series A Preferred Shares of
ICPUSA held by Cartesian.
The new convertible non-dilutive Series B Preferred Shares, which bear a
12% dividend rate, will have substantially the same features and rights
as the existing Series A Preferred Shares of ICPUSA (as modified), will
have a term ending 24 months from the initial funding of the Tranche 1
securities (“Tranche 1 Maturity”) and will be convertible into a
non-dilutive 21.1% of the common shares of ICPUSA. The $5 million in
secured debt will mature on the Tranche 1 Maturity, will bear interest
at 11% per annum and will be secured by the assets of ICPUSA including
ICPUSA’s interests and rights in the Ochoa Project. The existing Series
A Preferred Shares will be amended to change the maturity date from
November 21, 2016 to the Tranche 1 Maturity Date and to change the
dividend yield from 12% to 15% and to provide in certain circumstances
for the exchange of the direct or indirect interest in these securities
for secured debt of ICPUSA.
The proceeds from Tranche 1 will be advanced over a six-month period and
are intended to be used to complete or refresh certain preliminary
matters on the project.
The second tranche is to consist of $35 million Series C Preferred
Shares. The Series C Preferred Shares would be issuable following the
successful completion of the work funded by the Tranche 1 investment and
approval by a majority of ICP (USA)’s Board (including at least one
representative of each of ICP and Cartesian). The Series C Preferred
shares will pay dividends of 8% per annum, payable in kind, have a
maturity date of 24 months following the initial date of issue, and be
convertible at the option of the holder into common shares of ICPUSA at
the greater of (1) a 15% premium to the pre-money equity valuation of
ICP (USA) implied by ICP Canada’s market valuation calculated on a
60-day VWAP for the period ending on the day of the ICP (USA) Board’s
initial consideration of the funding of Tranche 2 and (2) C$0.115 per
share. Each of Cartesian and ICP Canada will receive, pro rata on an
as-converted basis, rights to acquire the Series C Shares with priority
over any other equity capital sources of ICPUSA. Cartesian has agreed
that it will subscribe for at least its pro rata share of Series C
Shares and if ICP Canada is not able to (or chooses not to) fund the
remaining balance, Cartesian has agreed to subscribe for the remainder
on the same terms as its pro rata share.
In connection with the approval of the transaction, the current
financial advisor to the Ochoa Project, Mitsubishi UFJ Financial Group,
acting through its wholly-owned banking subsidiaries, the Bank of
Tokyo-Mitsubishi UFJ, Ltd. and Union Bank, N.A. (collectively “MUFG”),
provided strategic advice to ICP and its board of directors with respect
to the investment as part of the process of moving the Ochoa Project
closer to project financing and development. In addition, Paradigm
Capital Inc has provided an opinion that the terms and conditions of the
Transaction are within what would be considered acceptable market terms
in the context of the current market environment, and is therefore fair
to ICP from a financial point of view.
About IC Potash Corp.
ICP has demonstrated a low-cost method to produce sulfate of potash
(“SOP”) from its Ochoa polyhalite deposit in southeast New Mexico and
seeks to become a primary, long-term producer of SOP. SOP is a
non-chloride potash fertilizer widely used in the horticultural industry
and for high value crops, such as fruits, vegetables, tobacco and
potatoes. It is applicable for soils where there is substantial
agricultural activity, high soil salinity, and in arid regions. The
Ochoa Project has access to excellent local labor resources, low-cost
electricity and natural gas, an approved non-potable water source, rail
lines, and the Port of Galveston, Texas. ICP’s land holdings consist of
approximately 98,500 acres of federal preference right potassium leases,
federal subsurface potassium prospecting permits and State of New Mexico
potassium mining leases. For more information, please visit www.icpotash.com.
About Cartesian Capital Group
Cartesian Capital Group, LLC is a global private equity firm with proven
expertise in assisting closely-held companies to expand. Cartesian
manages more than $2 billion in capital and has offices in New York, Sao
Paulo, Shanghai, Warsaw, and Bermuda.
Forward-Looking Statements
Certain information set forth in this news release may contain
forward-looking statements that involve substantial known and unknown
risks and uncertainties and other factors which may cause the actual
results, performance or achievements of ICP to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Forward-looking statements
include statements that use forward-looking terminology such as “may”,
“will”, “expect”, “anticipate”, “believe”, “continue”, “potential” or
the negative thereof or other variations thereof or comparable
terminology. Such forward-looking statements include, without
limitation, satisfaction of the closing conditions and the timing of
closing of each tranche of the investment, the use of proceeds from each
tranche of investment and other statements that are not historical
facts. These forward-looking statements are subject to numerous risks
and uncertainties, certain of which are beyond the control of ICP,
including, but not limited to, risks associated with hiring and
retaining personnel, mineral exploration and mining activities, the
impact of general economic conditions, industry conditions, dependence
upon regulatory approvals, the uncertainty of obtaining additional
financing, and risks associated with turning reserves into product.
Readers are cautioned that the assumptions used in the preparation of
such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements.
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