MDW

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_________________

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report: June 22, 2015

(Date of earliest event reported)

 

MIDWAY GOLD CORP.
(Exact Name of Registrant as Specified in Charter)

 

British Columbia, Canada (State or Other Jurisdiction of Incorporation)

001-33894 (Commission File Number)

98-0459178 (IRS Employer Identification No.)

 

 

Point at Inverness, Suite 280 8310 South Valley Highway Englewood, Colorado (Address of principal executive offices)

80112 (Zip Code)

 

 

 

Registrant’s telephone number, including area code:   (720) 979-0900

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[_]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[_]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 1.03. Bankruptcy or Receivership

 

On June 22, 2015, Midway Gold Corp., a British Columbia corporation (the “Registrant”), and certain of its subsidiaries and affiliates, including, MDW Pan LLP, Midway Gold US Inc., MDW Pan Holding Corp., MDW-GR Holding Corp., MDW Mine ULC, GEH (BC) Holding Inc., GEH (US) Holding Inc., Midway Services Company, MDW Gold Rock LLP, RR Exploration LLC, Nevada Talon LLC, Midway Gold Realty LLC and Golden Eagle Holding Inc. (collectively, the “Subsidiaries” and together with the Registrant, the “Debtors”), filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Colorado (the “Bankruptcy Court”, and the filings therein, the “Chapter 11 Filings”).  The Debtors are seeking Bankruptcy Court authorization to administer the chapter 11 cases (the “Chapter 11 Cases”) under the caption “In re Midway Gold US Inc., et al.” Case No. 15-16835MER. The Debtors will continue to manage their properties and operate their businesses under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Registrant, MDW Mine ULC and GEH (BC) Holding Inc., each incorporated in British Columbia, are Debtors in the Chapter 11 Cases. In addition, Midway Gold US Inc., in its capacity as the proposed Foreign Representative, will seek ancillary relief in Canada on behalf of all Debtors, pursuant to the Companies’ Creditors Arrangement Act (Canada) R.S.C. 1985, c. C-36, as amended (the “CCAA”) in the Supreme Court of British Columbia (the “Canadian Court”) in Vancouver, British Columbia, Canada. The purpose of the ancillary proceeding is to request that the Canadian Court recognize the Chapter 11 Cases as “foreign main proceedings” under the applicable provisions of the CCAA in order to, among other things, protect the Debtors’ assets and operations in Canada.

Item 2.04 Triggering Events that Accelerate or Increase Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

 

The Debtors’ Chapter 11 Filings described in Item 1.03 above constitute an event of default that accelerated obligations of the Debtors under the following:

 

Commonwealth Bank of Australia

 

MDW Pan LLP, as borrower (“MDW”), under a credit agreement (as amended, the “Credit Agreement”) with Commonwealth Bank of Australia (“CBA”) and a group of initial lenders named in the Credit Agreement for the purpose of establishing an aggregate $53 million senior secured credit facility consisting of, (i) a $45 million project finance facility (“Project Finance Facility”) and (ii) a $10 million cost overrun facility (the “Overrun Facility” together with the Project Finance Facility is collectively referred to herein as, the “Debt Facilities”). The Debt Facilities are secured by substantially all of the assets of the Debtors, including MDW, which consists solely of the Debtors’ Pan gold project (the “Project”).

 

The Registrant and certain of its subsidiaries entered into a guaranty (the “Guaranty”) in favor of CBA, as administrative and collateral agent, whereby the Registrant and certain of its subsidiaries absolutely, unconditionally and irrevocably guaranteed the punctual performance and payment when due of all obligations of MDW under the Project Finance Facility.

 

The Registrant and certain of its subsidiaries entered into a security agreement (the “CBA Security Agreement”) by and between CBA, MDW, the Registrant and certain of its subsidiaries as grantors, pursuant to which the grantors granted to CBA for the benefit of the Secured Parties (as defined in the Credit Agreement) a security interest in the grantors’ right, title and interest in and the collateral identified in the CBA Security Agreement.

 

Midway Gold US Inc., MDW Pan Holding Corp., MDW-GR Holding Corp., MDW Mine ULC, GEH (BC) Holding Inc., Midway Gold Corp. and GEH (US) Holding Inc. each entered into pledge agreements (each a “CBA Pledge Agreement”) as pledgor for the benefit of CBA. Pursuant to the CBA Pledge Agreements, each pledgor agreed to grant CBA a security interest in the equity interests in the pledgor except MDW.

 

 

Hale Capital Partners, L.P., et al.

 

MDW, as borrower, under a subordinated credit agreement (the “HCP Credit Agreement”) by and among MDW, Hale Capital Partners, L.P. (“HCP”), as administrative agent and collateral agent, HCP-MID, LLC,

as a lender, and INV-MID, LLC, as a lender, for the purpose of establishing a subordinated secured non-revolving term credit facility in favor of MDW in the aggregate amount of $10,500,000 (“Subordinated Debt Facility”).

 

The Registrant and certain of its subsidiaries entered into a guaranty (the “HCP Guaranty”) in favor of HCP, as administrative and collateral agent, whereby the Registrant and certain of its subsidiaries (collectively, the “Guarantors”) absolutely, unconditionally and irrevocably guaranteed the punctual performance and payment when due of all obligations of MDW under the Subordinated Debt Facility.

 

The Registrant and certain of its subsidiaries entered into a subordination agreement (the “Subordination Agreement”) by and between HCP, CBA, the Registrant and certain of its subsidiaries pursuant to which each of the Obligors (as defined in the Subordination Agreement), covenants and agrees that the payment of any and all of the Junior Debt (as defined in the Subordination Agreement) is subordinate and subject in right of payment to the prior full payment of the Senior Debt (as defined in the Subordination Agreement).

 

The Registrant and certain of its subsidiaries entered into a security agreement (the “HCP Security Agreement”) and certain pledge agreements (each, a “HCP Pledge Agreement”), subject at all times to the Subordination Agreement, each of the Grantors (as defined in Security Agreement) granted to HCP for the benefit of the Secured Parties (as defined in the HCP Credit Agreement) a security interest in each Grantor’s right, title and interest in and the collateral identified in the HCP Security Agreement.

 

 

The Debtors believe any efforts to enforce such payment obligations under the Credit Agreement and the HCP Credit Agreement (together, the “Debt Documents”) are automatically stayed as a result of the Chapter 11 Filings and the creditors’ rights of enforcement in respect of the Debt Documents are subject to applicable provisions of the Bankruptcy Code.

 

The Registrant has previously filed Current Reports on Form 8-K containing descriptions of the obligations and exhibits containing copies of agreements described in this Item 1.03 of this Current Report on Form 8-K on Form 8-K filed on July 24, 2014, October 8, 2014, December 3, 2014, April 21, 2015 and May 26, 2015. The description of the obligations and agreements contained in this Item 1.03 is a summary of the material terms of such obligations and agreements, and the description is qualified in its entirety by reference to the full text of the referenced agreements previously filed as Exhibits.

 

 

Item 7.01. Regulation FD Disclosure.

On June 22, 2015, the Registrant issued the press release announcing that the Debtors filed voluntary petitions for relief under chapter 11 of title 11 of the Bankruptcy Code. In accordance with General Instruction B.2 of Form 8-K, the information set forth herein and in the press release attached hereto is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended.  The information set forth in Item 7.01 of this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.

 

 

Item 9.01. Exhibits.

 

 

Exhibit	Description
99.1*	Press Release, Dated June 22, 2015

*The exhibit relating to Item 7.01 is intended to be furnished to, not filed with, the SEC pursuant to Regulation FD.

 

Forward Looking Statements

 

This Current Report on Form 8-K contains “forward-looking statements.”  These statements about the Registrant’s expectations, beliefs, plans, objectives, assumptions and future events are not statements of historical fact and reflect only the Registrant’s current expectations regarding these matters.  The Registrant’s actual actions

and results may differ materially from what is expressed or implied by these statements due to a variety of factors, including (i) the potential adverse impact of the Chapter 11 Filings on the Registrant’s liquidity or results of operations, (ii) changes in the Registrant’s ability to meet financial obligations during the chapter 11 process or to maintain contracts that are critical to Registrant’s operations, (iii) the availability of debtor in possession financing, (iv) the effect of the Chapter 11 Filings the Registrant’s relationships with third parties, regulatory authorities and employees, (v) proceedings that may be brought by third parties in connection with the chapter 11 process, (vi) the Bankruptcy Court approval or other conditions or termination events in connection with the proceedings, (vii) the increased administrative costs related to the chapter 11 process; (viii)  the Registrant’s ability to maintain adequate liquidity to fund operations during the chapter 11 process and thereafter and (ix) other factors listed from time to time in the Registrant’s filings with Securities and Exchange Commission. Forward-looking statements in this Current Report on Form 8-K speak only as of the date on which they are made and the Registrant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	MIDWAY GOLD CORP.
DATE:  June 22, 2015		By: /s/ William M. Zisch William M. Zisch President & Chief Executive Officer

 

 

 

EXHIBIT INDEX

 

 

 

Exhibit	Description
99.1*	Press Release, Dated June 22, 2015

*The exhibit relating to Item 7.01 is intended to be furnished to, not filed with, the SEC pursuant to Regulation FD.

 

 

 

MIDWAY GOLD CORP. ANNOUNCES FILING OF VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 OF THE BANKRUPTCY CODE TO IMPLEMENT RESTRUCTURING

DENVER, CO – June 22, 2015 – Midway Gold Corp. (TSX and NYSE-MKT: MDW) (the “Company” or “Midway”) today announces that the Company and certain of its direct and indirect subsidiaries (the “Debtors”) will file voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Colorado (the “Bankruptcy Court”). Midway will seek ancillary relief in Canada pursuant to the Companies’ Creditors Arrangement Act in the Supreme Court of British Columbia in Vancouver, Canada.

The Company intends to restructure its business by attempting to sell non-core assets and resolving various challenges relating to Midway’s main asset, the Pan Mine project. The Debtors believe that additional time and resources are necessary to successfully maximizing value at the Pan mine. In its restructuring, Midway will be able to explore alternatives to strengthen the company, while addressing the challenges Midway has faced.

Midway will continue to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

The Company and its lenders have negotiated terms that should allow for the consensual use of the Company’s cash which will allow the Company to maintain business-as-usual operations during the restructuring process. The Company believes its current and anticipated cash resources will be sufficient to pay its ongoing expenses and maintain its business operations during the pendency of its chapter 11 cases.

 

The Company will file customary “First Day Motions” with the Bankruptcy Court, which, if granted, will help ensure a smooth transition to chapter 11. The motions are expected to be addressed promptly by the Bankruptcy Court.

Midway’s legal counsel is Squire Patton Boggs (US) LLP and Sender Wasserman Wadsworth P.C. Its financial advisor is FTI Consulting, Inc. and its investment banker is RBC Dominion Securities Inc.

Additional information and other materials related to the restructuring can be found on our website at www.midwaygold.com. In addition, documents related to the chapter 11 filing are available at http://dm.epiq11.com/MidwayGold.

Additional details of the Company’s business, finances, appointments and agreements can be found as part of the Company’s filings as a reporting issuer with the SEC, available at www.sec.gov and as filed with Canadian securities regulators and available at www.sedar.com.

 

Midway Gold Corp.

Investor Relations phone: 720-979-0900

www.midwaygold.com

Neither the Toronto Stock Exchange, its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) nor the NYSE MKT accepts responsibility for the adequacy or accuracy of this release.

This press release contains forward-looking statements about the Company and its business. Forward looking statements are statements that are not historical facts and include, but are not limited to, statements about the Company seeking ancillary relief in Canada pursuant to the Companies’ Creditors Arrangement Act, restructuring its business by selling non-core assets, resolving challenges involving the Pan Mine, ability to maximize the value of the Pan Mine as part of a restructuring, ability to strengthen the company and address challenges through restructuring, ability to operate as a debtor in possession, ability to use cash, sufficiency of cash to pay and maintain expenses during the chapter 11 cases, expectation that first day motions will be granted and other statements, estimates and expectations. Forward-looking statements are typically identified by words such as: “plan", "expect", "anticipate", "intend", "estimate", “budgeted” and similar expressions or the negative of such

 

expressions or which by their nature refer to future events. The forward-looking statements in this press release are subject to various risks, uncertainties and other factors that could cause the Company's actual results or achievements to differ materially from those expressed in or implied by forward looking statements. These risks, uncertainties and other factors include, without limitation, risks related to the timing and completion of the Company's intended work plans, risks related to fluctuations in gold prices; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company's properties; uncertainties involved in the interpretation of drilling results, modelling, engineering and other analysis; risk of inaccurate estimation of gold resources and reserves; the possibility that the estimated recovery rates and grades may not be achieved as modelled or projected; the possibility that capital and operating costs may be higher than currently estimated and may render operations uneconomic; risk of accidents, equipment breakdowns and labor disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; inherent, unanticipated and unknown risks associated with production activities; the possibility that required permits may not be obtained on a timely manner or at all; changes in interest and currency exchanges rates; local and community impacts and issues; environmental costs and risks; and other factors identified in the Company's SEC filings and its filings with Canadian securities regulatory authorities. Forward-looking statements are based on the beliefs, opinions and expectations of the Company's management at the time they are made, and other than as required by applicable securities laws, the Company does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances, should change. Although the Company believes that such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. For the reasons set forth above, investors should not attribute undue certainty to or place undue reliance on forward-looking statements.