Nemaska Lithium (TSX: NMX) has reached a conclusion in its ongoing CCAA proceedings, with the result being that shareholders, unsurprisingly, are left with nothing. The company announced that it has accepted a sales proposal, with its main assets being purchased by a group that consists of the firms largest secured creditor, Orion Mine Finance, Investissement Québec, and the Pallinghurst Group.
While the news release put out by the company this morning is rather complex, the short of it comes down to the fact that current shares in Nemaska will be exchanged for what is referred to as “Residual Nemaska Lithium”. The assets remaining will consist of certain cash amounts, which will largely be used to enable a plan of compromise or arrangement with the firms remaining creditors. The Residual Nemaska Lithium will continue as the reporting issuer following the asset purchase.
On the operations side of things, the group will acquire the Nemaska entities and assets through what is referred to as a reverse vesting order. The sponsors, whom are Investissement Québec and The Pallinghurst Group, will each own a 50% stake in a new entity that will be acquiring the entities and assets of Nemaska. This entity, once out of CCAA proceedings, will then amalgamate with an entity controlled by Orion Mine Finance, to form what is referred to as “New Nemaska Lithium.” The sponsors will then invest up to $600 million in the project to push it forward.
The New Nemaska will then assume at least $146.5 million worth of liabilities, including current secured claims by Orion and Johnson Matthey Battery Materials, from the current public issuer. Current cash on hand with the public vehicle will remain, subject to certain undisclosed adjustments. It should also be noted that the New Nemaska will retain substantially all current employees of the public issuer.
The result of this however, is that New Nemaska Lithium will not be a reporting issuer within Canada – meaning current shareholders no longer receive exposure to it.
If approved by the courts, the transaction is expected to close by October 15, 2020.
Nemaska Lithium remains halted as a result of the ongoing bankruptcy proceedings.
Information for this briefing was found via Nemaska Lithium. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
