Prior to publication, certain information contained within
this announcement was deemed by the Company to constitute inside
information for the purposes of Regulation 11 of the Market Abuse
(Amendment) (EU Exit) Regulations 2019/310. With the publication of
this announcement, this information is now considered to be in the
public domain.
13 May 2024
Bens Creek Group
plc
("Bens Creek" or the "Company" or
the "Group")
Update on the Group's Chapter
11 cases
and
Interim DIP Loan from
Avani
Further to the Company's
announcement released on 9 May 2024, Bens Creek Group plc
(AIM:BEN), the owner of a metallurgical coal mine in North America
supplying the steel industry, announces that the United States of
America ("US") Bankruptcy
Court for the Southern District of West Virginia (the "Court") has approved the Company's
wholly owned US subsidiaries, Ben's Creek Operations WV LLC, Ben's
Creek Carbon LLC and Ben's Creek Land WV LLC (together, the
"Chapter 11 Companies" or
the "Debtor"), entering
into an interim debtor-in-possession financing loan from Avani
Resources Pte Ltd ("Avani"
or the "Lender"), the
Company's largest shareholder, for US$2.0 million (the
"Interim DIP
Loan").
Terms of the
Interim DIP Loan
The order of the Court has authorised Avani to
lend to the Chapter 11 Companies up to US$2.0 million of further
funds with an interest rate of 10.5% per annum.
The proceeds of the Interim DIP Loan shall be used by
the Chapter 11 Companies for the purposes identified in the
approved budget by the Court including to:
(i)
pay expenses to preserve, maintain and operate the Debtors'
businesses;
(ii)
pay certain professional fees;
(iii) conduct
and pursue a sale and liquidation process of the Chapter 11
Companies' assets to be completed pursuant to section 363 of the
Bankruptcy Code (the "Section 363
Sale");
(iv)
pay other essential emergency expenses of the Chapter 11 Companies;
and
(v) pay wages
owed to current and former employees of the Chapter 11
Companies.
Provided that Avani advances the Interim DIP Loan,
Avani will be, pursuant to the US Bankruptcy Code, granted a
superpriority administrative expense claim in the amount of the
Interim DIP obligations.
Update on Chapter 11
and further Court hearing
A further court hearing will be held on 6 June 2024
to consider the terms of a final debtor-in-possession financing
loan from Avani (the "Avani DIP
Facility") which is expected to be in the quantum of
US$8.865 million inclusive of the Interim DIP Loan. The intention
is for the proceeds of the Avani DIP Facility, should it be
approved by the Court, to be used to see the Chapter 11 Companies
through to the Section 363 Sale. A term sheet for the Avani DIP
Facility has been filed with the Court. Alternative
debtor-in-possession financing proposals would, if received, also
be considered by the Court prior to the hearing on 6 June 2024.
A sale of the Chapter 11 Companies' assets, should
this be consummated, would constitute a fundamental change of
business for the Group pursuant to Rule 15 of the AIM Rules of
Companies. Any such disposal is expected to result in the Company
becoming an AIM Rule 15 cash shell.
Update on second
debtor-in-possession financing proposal
An alternative debtor-in-possession financing
proposal for $4 million (the "Integrity DIP Motion") was received
from Integrity Coal Sales, Inc ("Integrity"). However, due to the Debtor
requiring a budget of $6.5 million to carry the Chapter 11
Companies through to the Section 363 Sale, which is
the Debtors' plan, and with Integrity unwilling to increase the
Integrity DIP Motion beyond $4 million, the Debtor decided to
reject the Integrity DIP Motion. The decision to reject the
Integrity DIP Motion was sustained by the Court. The Court sustains
the Debtors' decision and finds that the Integrity DIP Motion was
not a viable decision because the Debtor would run out of money
prior to the Section 363 Sale.
Related party transaction
The drawdown of up to US$2.0 million
of the Interim DIP Loan by the Chapter 11 Companies is deemed to be
a transaction with a related party pursuant to rule 13 of the AIM
Rules for Companies by virtue of Avani being a 29.86% shareholder
of the Company. The directors of the Company (except for Rajesh
Johar who represents Avani on the Company's board) consider, having
consulted with the Company's nominated adviser, Allenby Capital
Limited, that the terms of the Interim DIP Loan are fair and
reasonable insofar as the Company's shareholders are
concerned.
A copy of the filing made at the
Court in relation to the Interim DIP Loan, as well as the other
filings lodged in relation to the Group's Chapter 11 cases, can be
accessed here: https://ecf.wvsb.uscourts.gov/ .
Further announcements will be made
at the appropriate time.
For
further information please contact:
Bens Creek Group plc +44
(0) 204 558 2300
Adam Wilson, CEO
Peter Shea, Chief of Staff
Allenby Capital Limited (Nominated Adviser and Joint
Broker) +44
(0) 203 328 5656
Nick Athanas / Nick Naylor / George Payne (Corporate Finance)
Kelly Gardiner / Guy McDougall (Sales and Corporate
Broking)
WH
Ireland Limited (Joint Broker)
Harry Ansell / Katy Mitchell
+44
(0) 207 220 1666