MONTREAL, Sept. 09, 2019 (GLOBE NEWSWIRE) — Osisko Gold Royalties Ltd (“Osisko” or the “Company”) (TSX & NYSE: OR) announces today that it has entered into a letter of intent (“LOI”) with Stornoway Diamond Corporation and certain of its subsidiaries (“Stornoway”) alongside other secured creditors under the bridge financing agreement entered into with Stornoway on June 10, 2019, including Diaquem Inc., a wholly-owned subsidiary of Ressources Québec Inc. (“Diaquem”) (collectively the “Secured Creditors”).
Under the terms of the LOI, Osisko and the Secured Creditors have confirmed their intention to form an entity which will acquire by way of a credit bid transaction all or substantially all of the assets and properties of Stornoway, and assume the debts and liabilities owing to the Secured Creditors as well as the ongoing obligations relating to the operation of the Renard mine, subject to certain limited exceptions (“Credit Bid Transaction”).
Pursuant to the Credit Bid Transaction, Osisko will maintain its 9.6% diamond stream on the Renard mine and will continue to receive stream deliveries, and has agreed to reinvest its proceeds from the stream for a period of 1 year from the date of closing of the Credit Bid Transaction.
In connection with the Credit Bid Transaction, Stornoway has applied today to the Superior Court of Quebec (Commercial Division) for protection under the Companies’ Creditors Arrangement Act in order to restructure its business and financial affairs. Stornoway continues to operate during the restructuring.
Concurrently with entering into the LOI, Osisko and certain of the Secured Creditors have entered into a definitive and binding working capital facility agreement with Stornoway providing for a working capital facility in an initial amount of $20 million, which facility is secured by a priority charge over the assets of Stornoway and can be increased for additional amounts at the option of the Secured Creditors. Osisko’s attributable portion of the working capital facility will be approximately $7 million, of which $2.46 million is expected to be advanced today. The working capital facility provides the financing and liquidity required to ensure that the Renard mine continues to operate in an uninterrupted manner.