SouthGobi Resources Ltd.: Update on interest payment obligations to CIC
VANCOUVER, British Columbia, Nov. 22, 2017 (GLOBE NEWSWIRE) -- SouthGobi Resources Ltd. (TSX:SGQ)(HK:1878) (“SouthGobi” or the “Company”) announces today that pursuant to the convertible debenture between China Investment Corporation (“CIC”) and the Company signed in November 2009 (the “Convertible Debenture”) and the deferral agreement between CIC and the Company executed on June 12, 2017 (the “June 2017 Deferral Agreement”), the total cash interest payments and associated fees which were due and payable to CIC on November 19, 2017 amounted to US$17.8 million (“November 2017 Cash Interest Payable”). Pursuant to the Convertible Debenture, the Company is also obliged to issue US$4.0 million worth of PIK interest shares to CIC on November 19, 2017 (“November 2017 PIK Interest Payable”).
As of the date of this announcement, the Company has neither paid the November 2017 Cash Interest Payable nor issued the PIK interest shares to CIC within the cure period provided for in the Convertible Debenture or agreed upon a repayment plan for such amounts with CIC. Accordingly the principal amount outstanding and all accrued and unpaid interest and other amounts owing under the Convertible Debenture and the June 2017 Deferral Agreement would immediately become due and payable in the event that CIC provides notice to the Company.
The Company is in discussions with CIC for a repayment plan for the November 2017 Cash Interest Payable and November 2017 PIK Interest Payable. While the Company believes that an agreement will be reached, there is no assurance that an agreement will be concluded on terms favourable to the Company or at all. In such event, the value of the Company’s common shares could be materially and negatively affected. As a result, shareholders of the Company and potential investors are advised to exercise caution when dealing in securities of the Company.
The Company will provide further updates of the status of the interest payment obligations as appropriate.
About SouthGobi
SouthGobi, listed on the Toronto and Hong Kong stock exchanges, owns and operates its flagship Ovoot Tolgoi coal mine in Mongolia. It also holds the mining licences of its other metallurgical and thermal coal deposits in South Gobi Region of Mongolia. SouthGobi produces and sells coal to customers in China.
Contact: Investor Relations Kino Fu Office: +852 2156 7030 Email: kino.fu@southgobi.com Website: www.southgobi.com