(Sharecast News) - Natural resource opportunities investor Metal Tiger announced on Tuesday that, following the receipt of 6,296,990 new ordinary shares in Sandfire Resources as announced on 23 October, it has entered into an equity derivative collar financing arrangement with an unnamed global investment bank, under an equity option and loan facility.
The AIM-traded firm said the financing arrangement was secured over 1,675,125 of the ordinary shares in the capital of Sandfire held by Metal Tiger, representing around 0.9% of Sandfire's issued share capital.
Under the terms of the arrangement, Metal Tiger said it had entered into a stock lending arrangement with the lender, under which the lender could borrow up to 1,675,125 Sandfire Shares from Metal Tiger.
It also obtained the right, but not the obligation, to sell 1,675,125 Sandfire Shares to the lender in three years, at 80% of the reference price, being AUD 6.10, subject to customary adjustments.
Metal Tiger said it also granted the lender the right, but again not the obligation, to buy 1,675,125 Sandfire Shares from it in three years, at an agreed premium of 145% of the reference price.
The company borrowed AUD 8,174,610 from the lender, secured with a maturity date of 16 December 2022.
Metal Tiger said it had the right to elect to settle the put and the call by way of physical delivery of Sandfire shares, or by way of a cash payment reflecting the value of the put and call at the time.
Costs of around AUD 0.675m, associated with the financing arrangements and inclusive of all interest obligations and the net cost of the equity derivative collar for the term of the initial financing arrangement, had been deducted from the loan proceeds of around AUD 8.175m, to leave Metal Tiger with AUD 7.5m of cash proceeds to fund its proposed share buy back, as announced on 15 October and approved by its shareholders at a general meeting on 6 November.
It would also fund Metal Tiger's participation in the Cobre IPO, as per its announcement on 20 November, as well as existing and new public and private investments, and general working capital requirements.
Metal Tiger said it could agree with the lender to utilise the balance of Sandfire shares it held, to increase the size of the financing arrangement at a later date.
If the total loan balance outstanding on 30 June 2020 was less than AUD 20m, Metal Tiger would be required to pay a commitment fee to the lender, up to a maximum of AUD 118,254.
"Metal Tiger has been very pleased with its investment initially in MOD Resources and now Sandfire Resources," said chief executive officer Michael McNeilly.
"We look forward to executing on our strategy of investing in strategic natural resource opportunities by way of the cash raised through this financing facility and note that the financing is not only cost effective but importantly does not include any share price based triggers."
At 1009 GMT, shares in Metal Tiger were up 4.38% at 1.25p.
31 May 2016 09:50