After completing a sale or investor solicitation process (SISP) under the Companies' Creditors Arrangement Act (CCAA), Nemaska Lithium has ultimately accepted a sale proposal, structured as a credit bid, from Orion Mine Finance (its largest secured creditor), Investissement Quebec and the Pallinghurst Group.
As part of the bid, Nemaska would be reorganized into a new entity that would hold specific excluded assets and liabilities of Nemaska, Residual Nemaska Lithium, with Nemaska shares exchanged for the units in the residual company.
Pallinghurst and Investissement Quebec would then acquire, on a 50-50 basis, the shares of Residual Nemaska Lithium, which would then be amalgamated with the unit controlled by Orion to form New Nemaska Lithium.
New Nemaska Lithium would assume at least $146.5 million of liabilities, which includes secured claims held by Orion and Johnson Matthey Battery Materials.
Nemaska employees would move over to New Nemaska Lithium, and the company's obligations under the Chinuchi agreement with the Cree Nation of Nemaska, the Grand Council of the Crees (Eeyou Istchee) and the Cree Nation Government would be assumed by New Nemaska Lithium.
Pallinghurst and Investissement Quebec intend to invest up to $600 million in New Nemaska Lithium (including amounts paid to Orion) for the lithium mine and electrochemical plant, after closing and once required approvals are in place.
This bid is conditional upon approval under Canada's Competition Act and court approval. If the approval goes ahead, closing would be expected by Oct. 15.
Nemaska filed for creditor protection under the CCAA in December of 2019.
After closing, Residual Nemaska Lithium would present a plan to its creditors regarding the residual cash and assets held by the entity.
Based on the terms of the bid, "holders of the corporation's common shares will not receive any payments for, or distributions on, their common shares in connection with the CCAA proceedings, nor will they hold any interest in New Nemaska Lithium following the completion of the plan of compromise or arrangement."
- This article first appeared in The Canadian Mining Journal.