Davenport Lyons advises on innovative funding structure for Angel Mining plc
30 Nov 2010
Davenport Lyons has advised the AIM-listed mining company Angel Mining plc (Angel) on a US$25m structured financing with Socius Capital Group, LLC (Socius). At the heart of the transaction was the establishment of a medium term note programme constituting up to US$25million of 10% loan notes each with a 10 year maturity (Notes). Angel intends to list the Notes issued by it on the Cayman Stock Exchange. Simultaneously, Angel entered into a programme agreement with a fund controlled and managed by Socius (Socius Fund) pursuant to which the Socius Fund committed to purchase, subject to the satisfaction of certain conditions, all of the Notes. In return for the Socius Fund’s commitment to purchase all of the Notes, Angel has agreed to issue to the Socius Fund options and warrants to subscribe for ordinary shares in Angel. The number of options and warrants that the Socius Fund may exercise is dependent on the number of Notes issued by Angel, and, at the time of the relevant issuance, the dollar/sterling exchange rate and the volume-weighted average price of the ordinary shares of Angel.
The first issue of Notes by Angel was completed on 15 October 2010 and resulted in the Socius Fund acquiring US$3,000,000 of Notes and being issued with 10,885,714 warrants and 47,897,142 options. Socius has since exercised all of its rights under the warrants and options.
The Davenport Lyons’ team was led by Max Gower (banking) and Jeanette Gregson (corporate), both assisted by Natasha Duffy-Jones. Gerald Montagu advised on tax. Max Gower commented, “This was a complex transaction from a corporate, tax and regulatory perspective with the challenge of adjusting the standard Socius investment model in order for it to comply with English law in a tight timeframe. We are pleased that the end result allowed both parties to achieve the economic goals that they had original aimed for.”
Talking about the arrangement with Socius, Nick Hall of Angel said: “Angel Mining is now in a position to meet its repayment obligations under its existing financing agreements, fund its own operations, strengthen its balance sheet and at the same time continue to develop its largest asset: the Black Angel zinc mine. The risk profile of the group has been dramatically reduced and our ability to succeed has been much enhanced.”
