Banro closes recapitalization led by Resource FinanceWorks

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By Ted Liu

Banro Corporation (TSX/NYSE MKT: BAA) has completed its previously announced recapitalization.

The recapitalization has resulted in, among other things:

  1. the refinancing of the maturing US $175 million senior secured 10% notes due March 1, 2017 and US $22.5 million loan with new US $197.5 million secured notes with a 4-year maturity and new common shares;
  2. the conversion of the outstanding exchangeable preferred shares of each of Twangiza (Barbados) Limited and Namoya (Barbados) Limited, gold-linked preferred shares of Banro Group (Barbados) Limited and Series A Preference Shares of Banro into common shares (the Series B Preference Shares of Banro have been cancelled for no consideration);
  3. the execution of a gold forward sale agreement raising US $45 million to be used for working capital and general corporate purposes, including to fund transaction costs and repay a US $6.5 million interim loan facility recently obtained; and
  4. the extension of the maturity dates on an existing US $10 million loan from July 15, 2018 and September 1, 2018 to February 28, 2020.

In addition, certain stock options of the Banro with an exercise price equal to or in excess of CDN $0.80 per share have been cancelled for no consideration. Certain holders of the Existing Notes holding US $6,272,000 in principal amount elected to participate in the cash election.

Following the closing of the recapitalization, Resource FinanceWorks Limited (RFW) increases its shareholding from 16.48% to 32.21%, Gramercy Funds Management LLC increases its shareholding from 2.73% to 30.41%, and BlackRock Investment Management (UK) Limited from 6.07% to 13.70%.

The new Banro board of directors is now comprised of Jiongjie Lu (an incumbent director and the director acceptable to RFW), Robert L. Rauch (the director acceptable to Gramercy), John Clarke (an incumbent director and President & CEO of Banro) and the following individuals acceptable to all of the requisite consenting parties: Richard Brissenden (an incumbent director), Derrick Weyrauch (an incumbent director), Peter Cowley (an incumbent director), Robert Alexander Rorrison, and Michael Hankin Li.

Banro is a Canadian gold mining company focused on production from the Twangiza mine, which began commercial production September 1, 2012, and on production at its second gold mine at Namoya, where commercial production was declared effective January 1, 2016. The Company’s longer term objectives include the development of two additional major, wholly-owned gold projects, Lugushwa and Kamituga. The four projects, each of which has a mining license, are located along the 210 kilometre long Twangiza-Namoya gold belt in the South Kivu and Maniema provinces of the Democratic Republic of the Congo.