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Alita Resources refinances debt with A$70m loan from prospective Chinese buyer
CATALIST-LISTED lithium miner Alita Resources has obtained a A$70 million (S$65.3 million) loan from China Hydrogen Energy Limited (CHE), and has used the proceeds to fully repay a defaulted A$40 million loan from Galaxy Resources.
CHE is a special purpose vehicle for an unidentified Chinese party looking to acquire Alita's assets, according to Alita's voluntary administrators KordaMentha.
The new loan provides short-term bridging finance for the company before CHE submits a deed of company arrangement (DOCA) proposal for the acquisition, KordaMentha said in a bourse filing on Thursday.
This proposal will be submitted for consideration by KordaMentha and Alita's creditors at a meeting to be held in the week of Dec 16.
KordaMentha will prepare a detailed report to Alita's creditors, to be released next week, on the DOCA process and KordaMentha's recommendations for Alita's future.
Having repaid the Galaxy loan, Alita may also use the balance of the new A$70 million CHE loan for working capital purposes, subject to CHE's consent.
KordaMentha said that the new loan brings benefits to Alita and its creditors, such as an improved interest rate of 5 per cent versus the previous variable interest rate of 14 to 16 per cent under the Galaxy loan.
The new loan also reduces ongoing external administration costs and facilitates a DOCA proposal.
KordaMentha believes that CHE's DOCA proposal, based on discussions with CHE and an indicative non-binding term sheet, will deliver a "superior outcome" for Alita's creditors, compared to other proposals KordaMentha has received or an insolvent winding up of the group.
If the CHE DOCA proposal is approved by creditors at the upcoming meeting in the week of Dec 16, the A$70 million loan is to be repaid on the earlier of either Feb 13, 2020, or two business days after KordaMentha or Alita is funded to repay outstanding amounts. However, if CHE's proposal is not approved, the loan is due two business days after the meeting.
On Thursday, KordaMentha also said that KPMG has retired as the receivers and managers, following the repayment of the Galaxy loan and the discharge of the related security. KordaMentha will remain in control of Alita and its operations.
Alita suspended trading of its shares on Sept 3, after going into voluntary administration. The counter last traded at 7.8 Singapore cents on Aug 8.