Marret Asset Management Announces Proposed Sale of New Elk Coal Company, LLC by Cline Mining Inc., Part of the Private Portfolio of Marret High Yield Strategies Fund and Marret Multi-Strategy Income Fund
July 15, 2019 - Marret Asset Management Inc. ("Marret") today announced that Cline Mining Inc. ("Cline") has entered into a conditional term sheet ("Term Sheet") for the proposed sale by Cline to Allegiance Coal Limited ("Allegiance") of all the shares in New Elk Coal Company, LLC ("NECC"). NECC owns the New Elk Coal hard coking coal mine ("Mine"), located in southeast Colorado . The main asset of Marret High Yield Strategies Fund ("MHY") (CSE: MHY.UN) and Marret Multi-Strategy Income Fund ("MMF") (CSE: MMF.UN) is senior secured debt and equity issued by Cline.
The principal terms of the proposed sale are as follows:
- The purchase price for the shares in NECC will be USD $1 , plus the assumption of certain obligations owed by NECC to Cline, equal to the balance owed on the Cline senior secured indebtedness of CDN $55 million ("Debt").
- Completion of the purchase must take place before 14 July 2020 ("Completion"). The parties hope to complete significantly earlier.
- The Term Sheet provides that the Debt will be repaid by NECC to Cline as follows:
The Term Sheet also provides that Allegiance will have exclusivity to acquire NECC for 12 months in consideration for Allegiance contributing USD $150k per month to Mine care and maintenance costs.
Infor Financial Inc. is acting as financial advisor to Cline and NECC in respect of the transaction.
About Allegiance
Allegiance is a publicly listed (AHQ.AX) Australian company advancing a metallurgical coal mine into production in British Columbia, Canada .
The full text of the Allegiance press release which provides more detail on the transaction can be found at https://www.allegiancecoal.com.au/irm/content/asx-announcements.aspx?RID=8.
About Marret Asset Management Inc
Marret specializes in fixed income and particularly in high-yield debt strategies. The experienced team of investment professionals is led by Barry Allan , President and Chief Investment Officer. He founded Marret in 2000, following a career at Altamira, Nesbitt Thomson and a Canadian chartered bank, and has over 30 years of experience in credit and fixed-income markets.