Date Closed

October 16, 2017

Lead Office

Québec City

Value

300.00 Million CAD

On October 16, 2017, Champion Iron Limited (ASX: CIA) (TSX: CIA) (“Champion” or the “Corporation”) announced the completion of a series of financing arrangements, raising approximately C$300 million towards the restart of the operations of the Bloom Lake iron ore mine located near Fermont, Québec (“Bloom Lake”).

Debt Financings

 

The Corporation, through its subsidiary Québec Iron Ore Inc. (“QIO”), entered into definitive agreements in connection with (i) a 5-year senior secured loan in the aggregate amount of US$80 million provided by Sprott Private Resource Lending (Collector), LP (“Sprott”) and carrying interest at a rate of 7.5% plus the greater of US dollars 3 month LIBOR and 1% per annum; and (ii) a 7-year subordinated loan in the aggregate amount of US$100 million provided by CDP Investissements Inc., a wholly-owned subsidiary of Caisse de dépôt et placement du Québec (“Caisse”) and carrying interest at a rate of 12% for the first year and thereafter at an interest rate linked to the price of iron ore for subsequent years (collectively, the “Debt Financings”).

 

Convertible Debenture

 

Champion completed the sale of a C$31.2 million subordinated unsecured mandatory convertible debenture (the “Debenture”) to Glencore International AG (“Glencore”) on a private placement basis. The Debenture has a term to maturity of eight years and bears interest at a rate of 12% for the first year and thereafter will bear interest at the same rate as the subordinated debt committed by CDP Investissements Inc., a wholly-owned subsidiary of Caisse.

 

In connection with the closing of the Debenture, QIO, has entered into an off-take agreement with Glencore pursuant to which Glencore secures global off-take rights for life-of-mine of Bloom Lake with fixed commercial terms for a 10-year period for all tonnes of future iron ore production at Bloom Lake not sold in Japan under the existing off-take agreement with Sojitz Corporation.

 

Fonds Capital Mines Hydrocarbures (CMH)

 

Concurrently with the closing of the Debt Financings, the Fonds Capital Mines Hydrocarbures (“CMH”), managed by Ressources Québec Inc., funded its C$26.2 million equity contribution to QIO.

 

Subscription Receipt Offering

 

Further to the completion of the Debt Financings, the sale of the Debenture and the funding of the contribution of CMH, the conditions precedent to the release of the net proceeds of the public offering of subscription receipts (the “Subscription Receipts”) completed in September 2017 (the “Offering”) were met. Accordingly, the net proceeds of the Offering, in an amount of C$18.3 million have been released to the Corporation and the 21,033,508 Subscription Receipts issued by the Corporation were automatically exchanged in accordance with their terms on a one-for-one basis for ordinary shares of Champion, effective as of October 16, 2017.

 

McCarthy Tétrault LLP advised Champion with a team led by Marc Dorion that included Louis-Nicolas Boulanger, Philippe Fortier, Philippe Leclerc, Gary Litwack, Christopher Langdon, Charles-Antoine Soulière, Myreille Gilbert, Louis-Philippe Samson, Charles-Alexandre Jobin, Konstantin Sobolevski, Dominique Amyot-Bilodeau and Annie Poirier-Simard (debt, equity and corporate matters), Marie-Soleil Landry and Andrew Haikal (tax), and Danielle Drolet (real property).