Hudson Resources Inc. [HUD-TSXV; HUDRF-OTC] has closed its debt restructuring transaction with its existing lenders, Cordiant Capital Inc. and its affiliates and Romeo Fund Flexi and its affiliates, after receiving shareholder approval and approval from the government of Greenland. Hudson had a 100% interest in a producing anorthosite industrial mineral mine is west-central Greenland.
Pursuant to the transaction, the company, among other things, cancelled the intercompany debt owed by the company’s subsidiary, Hudson Greenland AS, to the company and converted approximately US$13.7-million of the existing debt of US$43-million owed to the lenders pursuant to existing loan facilities into preferred shares of Hudson Greenland, thereby reducing the company’s interest payments substantially.
Hudson Greenland also issued a convertible debenture in the amount of US$10-million to the lenders to provide financing directly into Hudson Greenland to ensure sufficient working capital to get the White Mountain anorthosite mine back into operation. The debenture has a maturity date of five years from the date of issuance and will be convertible into preferred shares in the capital of Hudson Greenland. The debenture will not bear interest and will not confer voting rights on the lenders until conversion of the debenture, in accordance with its terms.
Hudson Greenland will use the proceeds of the debenture for working capital to put the White Mountain mine back into production and for general corporate purposes, as approved by Hudson Greenland’s board of directors. The company notes that the new structure and the capital injection do not dilute the number of shares in Hudson Resources. The company retains the right to buy back 100% of the White Mountain mine for the next five years.
In accordance with the policies of the TSX Venture Exchange and as a condition to completing the transaction, the company obtained written shareholder approval of more than 50% of the holders of the company’s common shares to complete the transaction.
The mineral licence and safety authority of Greenland has also approved the debt transaction as it relates to a change of control in the licence that holds the White Mountain mine.
Jim Cambon, President, commented: “We are pleased to have concluded the debt restructuring, which will allow operations at the White Mountain mine to move forward so we can ship product to customers. The team on site has recommenced operations, and we have already shipped a 26-tonne sample, which will be utilized for commercial trials for potential paints and coatings customers in North America and Europe.”
The company now owns approximately 31% of the White Mountain anorthosite mine through its subsidiary, Hudson Greenland. This percentage may decrease to approximately 21% should the debenture be converted into preferred shares of Hudson Greenland.
The company also holds the Sarfartoq rare earth element (REE) and niobium/tantalum exploration licence in Greenland. Activities have commenced on the high-grade niobium project, on which the company will provide an update shortly.