Harte Gold stay period extended, DIP lifted, sale process approved

By Sarah Lizee

Olympia, Wash., Dec. 20 – Harte Gold Corp. has received further court approval to increase the amount it may borrow under its debtor-in-possession facility to C$10.8 million from $2.5 million and has also received another extension of its stay period to Jan. 31 from Dec. 21, according to a press release issued Monday.

As previously reported, the company filed an application to the Ontario Superior Court of Justice for an initial order under the Companies' Creditors Arrangement Act on Dec. 7.

In conjunction with the CCAA proceedings, Harte Gold entered into a subscription agreement with investor 1000025833 Ontario Inc., a wholly owned indirect subsidiary of Silver Lake Resources Ltd. The investor is also the lender to Harte Gold under the amended and restated credit agreement dated Aug. 28, 2020 with BNP Paribas.

If 1000025833 Ontario is the successful bidder at the conclusion of the sale and investment solicitation process, it would become the sole shareholder of the company in a transaction that provides for the continuation of its business and operations as a going concern.

The court also granted an order authorizing the company to conduct the sale and investment solicitation process on Monday. It also approved entry into the subscription agreement with 1000025833 Ontario and authorized the agreement as a stalking horse bid.

All competing bids must be submitted to the monitor by no later than 5 p.m. ET on Jan. 14.

Also previously reported, Harte Gold and the investor entered into an agreement providing for the DIP loan of up to C$10.8 million to fund operations and the CCAA proceedings.

The DIP financing agreement will provide Harte Gold with the liquidity required to continue the operations of Sugar Zone Mine until closing of a transaction.

The subscription agreement is a credit bid which provides for payment in full of all claims ranking in priority to, or pari passu with, the amounts owed under the credit agreement; payment in full of the properly perfected and secured obligations owing to AHG (Jersey) Ltd. under the Appian facility agreement dated Aug. 28, 2020; and the assumption of up to $7.5 million in trade accounts payable.

The subscription agreement provides no recovery for other stakeholders ranking subordinate to the Appian facility, including holders of existing equity interests in the company.

Unless the successful bid at the conclusion of the process provides for significantly higher value than the subscription agreement, there will be no recovery for holders of existing equity interests in the company.

The company said execution of the subscription agreement and the DIP financing agreement is the culmination of the strategic review process undertaken by the company over several months.

Harte Gold is a gold exploration company based in Toronto.

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