Itafos Announces Amended and Restated Credit and Guaranty Agreement

TORONTO, Dec. 31, 2019 (GLOBE NEWSWIRE) -- Itafos (TSX VENTURE: IFOS) (the “Company”) announced today that it has executed an amended and restated credit and guaranty agreement (the “A&R Credit Agreement”). The A&R Credit Agreement replaces the existing credit and guaranty agreement dated May 18, 2018, including prior amendments, and further amends certain terms to provide the Company with additional financial flexibility including deferring the testing of financial covenants and reducing cash interest payable in 2020.

The key further amended terms of the A&R Credit Agreement are as follows:

• delayed testing of financial covenants until September 30, 2020 and re-sculpted financial covenants thereafter considering the Company’s business plan;
• reallocated interest of 12% per annum from 9% payable in cash and 3% payable in kind to 5% payable in cash and 7% payable in kind until December 6, 2020 or certain conditions have been met;
• eliminated additional interest of 1% per annum payable in cash for each quarter that the Company’s Consolidated Secured Leverage Ratio is equal to or greater than 4.00:1.00 at the end of such quarter;
• reduced minimum cash requirement from US$2.5 million to US$1.0 million; and
• other terms and conditions customary for similar agreements.

In exchange for eliminating additional interest of 1% per annum payable in cash for each quarter that the Company’s Consolidated Secured Leverage Ratio is equal to or greater than 4.00:1.00 at the end of such quarter, the Company intends to issue five million shares (the “Shares”) to lenders to the A&R Credit Agreement, subject to approval from the TSX Venture Exchange. Until the issuance of the Shares is approved by the TSX Venture Exchange and such Shares have been issued to the lenders to the A&R Credit Agreement, the Company would be subject to additional interest of 1.25% per annum payable in kind for each quarter that the Company’s Consolidated Secured Leverage Ratio is equal to or greater than 4.00:1.00 at the end of such quarter.

Lenders to the A&R Credit Agreement include funds managed by BlackRock and a syndicate of other lenders including CL Fertilizers Holding LLC (“CLF”). CLF is a “related party” to the Company under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”) by virtue of its shareholding being in excess of 10% of the Company’s issued and outstanding share capital. Accordingly, the A&R Credit Agreement constitutes a “related party transaction” under MI 61-101. The A&R Credit Agreement is exempt from (i) the formal valuation requirements under Section 5.4 of MI 61-101 pursuant to Subsection 5.5(b) of MI 61-101; and (ii) the minority approval requirements under Section 5.6 of MI 61-101 pursuant to Subsection 5.7(1)(a) and 5.7(1)(f).