MBAC Announces Filing Under Companies' Creditors Arrangement Act in Connection With the Previously Announced Recapitalization Transaction

TORONTO, ON--(Marketwired - August 04, 2016) - MBAC Fertilizer Corp. (TSX VENTURE: MBC) (MBAC or the Company) announces that the Company and its wholly-owned subsidiary, MBAC Opportunities and Financing Inc. (together with MBAC, the Applicants), have filed this morning an application for protection under the Companies' Creditors Arrangement Act (the CCAA) with the Superior Court of Justice in Ontario in connection with the implementation of a transaction on similar terms to those described in its previously announced support agreement with Zaff LLC to effect a recapitalization of the Company (the Recapitalization) that will significantly reduce debt and increase financial flexibility. The terms of the Recapitalization are described in an amended and restated support agreement (the A&R Support Agreement) between the Company and Zaff LLC (Zaff).

As part of the CCAA Proceeding, the Applicants are seeking the appointment of Ernst & Young Inc. as monitor to monitor the business and affairs of the Applicants during the CCAA process.

The operations of MBAC and its subsidiaries are intended to continue as usual and obligations to employees and suppliers during the restructuring process are expected to be met in the ordinary course. MBAC management will remain responsible for the day-to-day operations of the Company.

Under the A&R Support Agreement, the Company has agreed to pursue the completion of the Recapitalization pursuant to a plan of compromise or arrangement under the CCAA (the CCAA Proceeding) and a parallel extrajudicial restructuring proceeding in Brazil under The Bankruptcy Law (11,101/2005) (the Brazilian Proceeding).

The Recapitalization contemplates the following key elements:

• Zaff is the owner of substantially all outstanding secured and guaranteed funded debt of the Company and its Brazilian subsidiaries (other than guaranteed funded debts of Itáfos Mineração Ltda. to Banco Modal S.A.), as well as certain outstanding unsecured debts of the Company and of the Company's Brazilian subsidiaries that are not guaranteed by the Company (collectively, the Acquired Debt), which claims, together with the claims of other secured and unsecured creditors of MBAC and its subsidiaries, will be compromised through the CCAA Proceeding and the Brazilian Proceeding.

• As a result of the CCAA Proceeding, unsecured creditors of the Company will receive either a combination of (i) restructured debt of MBAC; and (ii) common shares of MBAC or, in the alternative, 5.5% of their claim in cash. Creditors may also elect to receive the lesser of the full value of their claim against MBAC or $10,000 in full satisfaction of such claims against MBAC.

• As a result of the Brazilian Proceeding, certain unsecured creditors of the Brazilian subsidiaries of the Company will receive either a combination of (i) restructured debt of the respective MBAC Brazilian subsidiary; and (ii) warrants convertible into common shares of MBAC or, in the alternative, cash.

• Upon completion of all transactions contemplated by the Support Agreement, Zaff will receive securities representing up to approximately 73.8% of the common equity of reorganized MBAC in exchange for the compromise of the Acquired Debt and the separate settlement of secured interim working capital financing that has been provided or will be provided by Zaff to the Company or its subsidiaries pursuant to the CCAA Proceeding and the Brazilian Proceeding.

• In connection with implementation of the CCAA plan, MBAC will indirectly acquire all of the shares of GB Minerals Ltd. (GBL) and Stonegate Agricom Ltd. (Stonegate) beneficially held by Zaff in return for common shares of MBAC at a ratio of 2.5 shares of MBAC for each share of GBL and 1 share of MBAC for each 1.5 shares of Stonegate so acquired. This is expected to result in the acquisition by Zaff of an additional 20.1% of the common shares of the Company.

• Subject to certain conditions, Zaff will fund MBAC's and its subsidiaries' funding requirements during the term of the A&R Support Agreement, up to a maximum of US$4 million, with any additional amounts to be agreed by Zaff and MBAC, which will include funding of the costs of the CCAA Proceeding and the Brazilian Proceeding.

• MBAC will use its best efforts to the extent possible under applicable laws to maintain a listing on a Canadian stock exchange and its status as a reporting issuer under Canadian securities laws.

Other changes contemplated in connection with implementation of the CCAA plan include a reconstituted board of MBAC, the size and composition of which will be satisfactory to Zaff, and the continuation of the Company into the Cayman Islands.