CMQ ANNOUNCES RIGHTS OFFERING AND EXECUTION OF FUNDING AND FORBEARANCE AGREEMENT
20 Diciembre 2010 - 8:25AM
PR Newswire (Canada)
CALGARY, Dec. 20 /CNW/ -- NOT FOR DISTRIBUTION TO UNITED STATES
NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
CALGARY, Dec. 20 /CNW/ - CMQ Resources Inc. ("CMQ") (TSXV:NV)
hereby announces that in order to provide CMQ with the capital
required to continue its ongoing Nevada exploration program, the
board of directors of CMQ (the "Board") has approved CMQ's intent
to proceed with an offering of rights (the "Rights Offering") to
purchase common shares of CMQ ("Common Shares"). CMQ intends
to raise up to $5,000,000 in connection with the Rights
Offering. The independent members of the Board have also
approved the entering into of a funding and forbearance agreement,
the details of which are provided below. The proposed Rights
Offering is subject to regulatory approval, including that of the
TSX Venture Exchange (the "TSXV") and is expected to be conducted
by way of prospectus. CMQ expects that a preliminary
prospectus in respect of the Rights Offering will be filed in
mid-to-late January, 2011. Pursuant to the Rights Offering, each
holder of Common Shares who is resident in Canada as of a record
date to be determined will be entitled to receive one right (a
"Right") for each Common Share held as of the record date.
Shareholders resident outside of Canada may participate in the
Rights Offering if they are able to establish, to the satisfaction
of CMQ and its transfer agent that the issuance of Common Shares
pursuant to the Rights Offering to such shareholders would not be
in violation of the securities laws of their jurisdiction of
residence or other applicable jurisdiction. Each whole Right
will entitle the holder thereof to subscribe for a set number of
Common Shares at a price per Common Share equal to a 25% discount
to the market price of the Common Shares on the TSXV, at the time
of filing the final long form prospectus in respect of the Rights
Offering (the right to subscribe for Common Shares is referred to
as the "Basic Subscription Privilege"). The Rights Offering will
include an additional subscription privilege (the "Additional
Subscription Privilege"). Pursuant to the Additional Subscription
Privilege, holders of Common Shares who have exercised their Rights
to subscribe for Common Shares in full under the Basic Subscription
Privilege shall be entitled to subscribe for additional Common
Shares, if available. Availability of such additional subscriptions
will be determined based on the number of Common Shares not
otherwise subscribed for on the initial exercise of Rights under
the Basic Subscription Privilege. The independent members of the
Board have also approved the entering into of a stand-by commitment
agreement (the "Stand-by Agreement") with Matco Investments Ltd.
("Matco"), an insider and principal creditor of CMQ, who will agree
to purchase, at a price equal to the subscription price under the
Rights Offering, such number of Common Shares not otherwise
purchased pursuant to the Basic Subscription Privilege and the
Additional Subscription Privilege so as to provide gross proceeds
from the Rights Offering to the Corporation of not less than
$2,500,000. CMQ also hereby announces that on December 19, 2010,
CMQ and Matco entered into an agreement (the "Funding and
Forbearance Agreement") whereby Matco has agreed to lend to CMQ up
to $700,000 at a simple interest rate equal to 9% per annum,
calculated and compounded monthly, pursuant to an unsecured bridge
loan facility (the "Loan"). Additionally, pursuant to the
Funding and Forbearance Agreement, Matco has agreed that it will,
for a period of ten (10) months from the date of the Loan, forbear
from enforcing its rights and remedies against CMQ (the
"Forbearance") in respect of all amounts in which CMQ was, prior to
the Loan, already indebted to Matco (the "Outstanding
Indebtedness") and in respect of any amounts advanced under the
Loan. CMQ intends to use the Loan to pay outstanding accounts
to third parties and to fund expenses incurred in connection with
the Rights Offering. As an inducement to Matco for agreeing
to provide the Loan and the Forbearance and for extending the term
for repayment of all Outstanding Indebtedness, immediately
following the closing of the Rights Offering, Matco will be
entitled to receive 12,000,000 Common Share purchase warrants
("Warrants") on a post-Rights Offering basis. The Warrants
shall be subject to certain restrictions on exercise and a portion
shall be subject to cancellation in accordance with the terms and
conditions of the Funding and Forbearance Agreement and the
policies of the TSXV. Each Warrant will be exercisable at a
price of $0.12 per Warrant for a period of two years from the date
of issuance. The Warrants will be issued by way of private
placement pursuant to exemptions in Canada under National
Instrument 45-106. Matco is currently an insider of CMQ, holding
approximately 1,195,493 Common Shares, constituting 18.3% of the
currently issued and outstanding shares of CMQ. As a result
of the Stand-by Agreement and the issuance of the Warrants it is
expected that Matco will become a control person of CMQ following
the Rights Offering and that Matco, together with other insiders,
may hold up to 80% of the issued and outstanding Common Shares,
including any Common Shares issuable on exercise of Warrants. At
CMQ's Annual and Special Meeting of Shareholders held January 19th,
2010, shareholders of CMQ had previously approved Matco becoming a
control person of CMQ on a "majority of the minority" basis, as
required by the TSX Venture Exchange and applicable securities
regulations. In the event that no parties other than Matco
participated in the Rights Offering, Matco acquired Common Shares
under the Rights Offering in accordance with its commitment under
the Stand-by Agreement and assuming a price per Common Share under
the Rights Offering equal to $0.13, Matco would hold 20,426,262
Common Shares, representing 79.3% of the issued and outstanding
Common Shares, on a post-Rights Offering basis and would be
restricted from exercising any of the Warrants. The Funding and
Forbearance Agreement has been entered into subject to and is
conditional upon receipt of regulatory approval, including that of
the TSXV. Pursuant to the Funding and Forbearance Agreement, CMQ
shall use the aggregate gross proceeds realized from the Rights
Offering as follows: (i) the initial $700,000 raised shall be used
to repay all advances under the Loan made prior to the completion
of the Rights Offering, payment of outstanding and overdue accounts
to third parties and for the funding of the expenses associated
with the Rights Offering; (ii) an amount not to exceed $1,800,000
for drilling and exploration activities, funding work commitments
in respect of CMQ's Nevada mining projects and properties and for
general and administrative expenses; (iii) additional amounts
received shall be applied to repayment of additional Outstanding
Indebtedness with the unsecured portion of the Outstanding
Indebtedness to be paid in priority to the secured indebtedness;
and (iv) any remaining proceeds shall be used for other purposes as
CMQ may see fit. Independent directors of CMQ, free from any
interest in the Rights Offering or Funding and Forbearance
Agreement, have recommended proceeding with the Rights Offering and
Funding and Forbearance Agreement. Based on the recommendation of
such directors, their belief that CMQ is in serious financial
difficulty and their belief that the Rights Offering and Funding
and Forbearance Agreement will improve CMQ's financial situation,
the board of directors of CMQ believes that the Rights Offering and
Funding and Forbearance Agreement are reasonable in the
circumstances and that the Rights Offering and Funding and
Forbearance Agreement are exempt from the valuation and shareholder
approval requirements that may otherwise be applicable pursuant to
Multilateral Instrument 61-101. CMQ currently has 6,534,670 Common
Shares issued and outstanding. The TSXV does not accept
responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements This press release contains certain
forward-looking statements and forward-looking information
(collectively referred to herein as "forward-looking statements")
within the meaning of Canadian securities laws. All statements
other than statements of historical fact are forward-looking
statements. Forward-looking statements typically contain statements
with words such as "anticipate", "believe", "plan", "continuous",
"estimate", "expect", "intend", "may", "will", "shall", "project",
"would", "should", or similar words suggesting future outcomes.
Undue reliance should not be placed on forward-looking statements,
which are inherently uncertain, are based on estimates and
assumptions, and are subject to known and unknown risks and
uncertainties (both general and specific) that contribute to the
possibility that the future events or circumstances contemplated by
the forward-looking statements will not occur. There can be no
assurance that the plans, intentions or expectations upon which
forward-looking statements are based will in fact be realized.
Actual results will differ, and the difference may be material and
adverse to CMQ and shareholders. Forward-looking statements are
based on management's current beliefs as well as assumptions made
by, and information currently available to, management. Though
management considers these assumptions to be reasonable based on
information currently available to it, they may prove to be
incorrect. By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific, and
risks that forward-looking statements will not be achieved. The
forward-looking statements contained in this press release are made
as of the date hereof and CMQ does not undertake any obligation to
update publicly or to revise any of the included forward-looking
statements, except as required by applicable law. The
forward-looking statements contained herein are expressly qualified
by this cautionary statement. This press release is not an offer to
sell securities in the United States. Securities may not be offered
or sold in the United States in the absence of registration or an
exemption from registration. To view this news release in HTML
formatting, please use the following URL:
http://www.newswire.ca/en/releases/archive/December2010/20/c6594.html
pon CMQ visit CMQ website at (a
href="http://www.cmqresources.com"iwww.cmqresources.com/i/a) or
please contact: Ryan Jennings, CMQ Resources Inc., telephone
number (403) 294-6496/p
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