court file no.cv -14-1 0686-00cl - kpmg · c) increasing the aggregate amount that the receiver is...
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Court File No.CV -14-1 0686-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
IN THE MATTER OF SEAFIELD RESOURCES LTD. OF THE CITY OF TORONTO
IN THE PROVINCE OF ONTARIO
SECOND REPORT TO THE COURT SUBMITTED BY KPMG INC.,
RECEIVER
February 17, 2016
12
Table of Contents
I INTRODUCTION AND PURPOSE OF REPORT ......................................................................... 2
2 UPDATE REGARDING THE COMPANY'S AFFAIRS (INCLUDING MINERA) AND THESE PROCEEDINGS ..............................................................•............................................................... 5
3 RESULTS OF THE SALE AND INVESTOR SOLICITATION PORCESS AND CREDIT BID OFRMB .......................................................................................................................................... 9
4 FINAL STATEMENT OF RECEIPTS AND DISBURSEMENTS .............................................. 15
5 APPROVAL OF THE FEES AND EXPENDITURES OF THE RECEIVER AND ITS COUNSEL ..................................................................................................................................... l6
6 RECEIVER'S DISCHARGE ......................................................................................................... 18
7 RECOMMENDATIONS ............................................................................................................... l9
13
Listing of Appendices Appendix A
Appendix B
Appendix C
Appendix D-
Appendix E-
AppendixF-
Appendix G-
Appendix H-
Appendix!-
AppendixJ-
Order of Justice Newbould dated September 9, 2014 (the Receivership Order)
First Report of the Receiver to the Court, dated May 11, 2015 and the
Supplement to the First Report, dated May 18, 2015 (both without exhibits)
Order of Justice Wilton-Siegel dated May 20,2015 (the SISP Approval Order)
Assignment for the General ·Benefit of Creditors of Seafield Resources Ltd.
(Bankruptcy and Insolvency Act, Form 21)
Updated Chronology of Events in Colombia
Advertisements in The Canadian Mining Journal and Mining Journal
Summary of Non-Binding Indications oflnterest (confidential)
Bidder revised offer (confidential)
Share Purchase Agreement
Summary schedule of Receiver and Receiver's counsel professional fees
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1 INTRODUCTION AND PURPOSE OF REPORT
1.1 Introduction
1.1.1 Seafield Resources Ltd. ("Seafield" or the "Company") is a company incorporated pursuant to
the Ontario Business Corporations Act with a registered office at 36 Toronto Street, Suite 1000,
Toronto, Ontario. Seafield is a development stage gold company with its principal asset being the
shares of its wholly-owned subsidiary, Minera Seafield S.A.S ("Minera"), a Colombian
company. Minera is 100% owner of 15 mining concessions covering an area of6,042.8 hectares
located in the Municipality of Quinchia, Department ofRisaralda, Republic of Colombia.
1.1.2 By order of the Honourable Justice Newbould of the Ontario Superior Court of Justice (the
"Court") made on September 9, 2014, KPMG Inc. ("KPMG") was appointed as the Receiver of
Seafield (the "Receivership Order"). A copy of the Receivership Order is attached as Appendix
"A".
1.1.3 Background information summarizing Seafield's receivership proceedings to May 18, 2015 is
included in the Receiver's First Report to the Court dated May II, 2015 and the Supplement to
the First Report dated May 18, 2015 (collectively, the "First Report") both of which are
attached, without appendices, as Appendix "B".
1.1.4 On May 20, 2015, the Court granted an Order (the "SISP Approval Order"):
a) Approving the sale and investor solicitation procedures (the "SISP"), and authorizing and
directing the Receiver to carry out the activities prescribed .in the SJSP;
b) Authorizing the Receiver to assign Seafield into bankruptcy if it reasonably determines
that such a step is necessary to preserve any rights to challenge the Labour Agreement
Amendments (as defined further herein) and any other reviewable transactions
undertaken by Seafield or any other person; and,
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c) Increasing the aggregate amount that the Receiver is empowered to borrow from CAD
$750,000 to USD $3,000,000.
1.1.5 The SISP Approval Order is attached as Appendix "C".
1.1.6 Capitalized terms not expressly defined in this second report (the "Second Report") shall have
the same meaning as those terms specifically defined in the Receivership Order, the First Report
or the Supplement to the First Report.
1.1.7 All court-filed materials in connection with these receivership proceedings can be obtained from
the Receiver's website established at www.kpmg.ca/seafieldresources.
1.2 Terms of Reference
1.2.1 In preparing this Second Report, the Receiver has relied upon unaudited financial information,
company records, certain information prepared by or provided by the Company and Minera and
discussions with management of the Company and Minera. Unless otherwise expressly stated
herein, the Receiver has not performed an audit, review or other verification of such information.
1.3 Purpose of the Receiver's Second Report
1.3.1 The purpose of this Second Report is to provide this Honourable Court with information
regarding the following:
a) the Company's affairs (including those ofMinera), and these proceedings;
b) the activities of the Receiver since the date of the First Report, including the results of the
SISP;
c) the Receiver's request for approval of a credit bid by Seafield's secured lender to acquire
the shares of Min era;
d) the Receiver's final statement of receipts and disbursements and the Receiver's request
for approval of the final statement of receipts and disbursements;
e) the Receiver's request for approval of its fees and those of its counsel; Page 13
16
f) the Receiver's request for its proposed discharge from these proceedings and the release
of KPMG as Receiver of Seafield upon the Receiver filing with the Court the discharge
certificate confirming that the Receiver has attended to certain remaining matters; and,
g) the Receiver's recommendations.
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2 UPDATE REGARDING THE COMPANY'S AFFAIRS (INCLUDING MINERA) AND THESE PROCEEDINGS
2.1 The Company's Assets
2.1.1 As discussed prior and in the First Report, the Company's assets consist primarily of:
a) Its ownership of 100% of the shares ofMinera (the "Minera Shares");
b) Its 100% registered and beneficial interest in the Elora Property in Ontario, Canada (the
details of which were set out in the First Report); and,
c) A small amount of cash in its bank accounts, which the Receiver transferred into the
receivership estate bank account on the date of the Receivership Order.
2.2 Obligations Owing to RMB
2.2.1 As set out in more detail in the First Report, the Company's senior secured lender, and by far
most significant creditor, is RMB Australia Holdings Ltd. ("RMB" or the "Secured Lender"),
which is owed approximately CAD $19.2 million from Seafield in principal and interest. These
amounts were borrowed by Seafield pursuant to a facility agreement between RMB and Seafield
dated February 21, 2013 (the "Facility Agreement"). Seafield, as borrower under the Facility
Agreement, and Minera, as guarantor of Seafield's obligations under the Facility Agreement,
each granted RMB security over all their respective assets, undertakings and property, including
but not limited to (in the case of Seafield) the Minera Shares. The total debt owed by Seafield to
RMB provided for in its loan instrument, including fees in this receivership, total $22,010,268.64
as of February I, 2016.
2.3 Review of RMB's Security
2.3.1 As also discussed in the First Report, KPMG retained McMillan LLP ("McMillan") as
independent Canadian counsel. McMillan provided the Receiver with an opinion that, subject to
the usual assumptions and qualifications, RMB has valid and enforceable security over Seafield's
personal property (other than the Minera Shares) in accordance with the terms ofRMB's security
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documents. McMillan informed the Receiver that due to the operation of the conflict of law
provisions of the Personal Property Security Act (Ontario), the validity of the RMB's contractual
security over the Minera Shares would have to be determined by Philippi, Prietocarrizosa & Uria
("PPU"), the Receiver's independent Colombian counsel, in accordance with the laws of
Colombia. This process was commenced by PPU, but no formal legal opinion was ultimately
issued to the Receiver for the reasons discussed below.
2.3.2 The Receiver and the Trustee (as defined further herein) are of the view that further work by PPU
regarding the validity of RMB's security over the Minera Shares is unnecessary in order to
finalize RMB's credit bid (as detailed in Section 3 of this report). This is because, as stated
further herein, RMB is the sole beneficiary of the Receiver's Borrowings Charge, as defined in
the Receivership Order, in the amount of $2,376;697, which is a valid and enforceable charge
over the Minera Shares in the bankruptcy of Seafield. No binding bids were received in the SISP
for amounts that exceeded the amount of the Receiver's Borrowings Charge, and RMB has
elected to simply utilize the Court-ordered charge as part of its consideration to acquire the
Minera Shares to avoid further delay and expense.
2.4 Bankruptcy of Seafield
2.4.1 Pursuant to the SISP Approval Order, the Receiver was authorized to assign Seafield into
bankruptcy to preserve any rights to challenge certain amendments to the labour agreements of
Messrs. Prins and Ortiz (both as identified in the First Report) with Minera (the "Labour
Agreement Amendments") and any other reviewable transactions undertaken by Seafield or any
other person. The Receiver learned that the Labour Agreement Amendments were adopted by
Minera following a resolution of the former board of directors of Seafield made shmtly prior to
the Receivership Order, at a time that Seafield was encountering significant cash flow problems
and was in default under the RMB Facility Agreement. As also discussed in the First Report, it is
the Receiver's understanding that the Labour Agreement Amendments may have the effect of
giving Messrs. Prins and Ortiz a priority over the creditors of Minera in an insolvency proceeding
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under Colombian law and therefore may have a detrimental effect on the recoveries of the
creditors of Seafield. It should be noted that Mr. Ortiz waived any rights and benefits that were
conferred on him under the Labour Agreement Amendments.
2.4.2 On August 24, 2015, the Receiver executed an assignment in bankruptcy of the Company (the
"Assignment") in its capacity as Receiver, and KPMG Inc. was appointed trustee (the
"Trustee"). A copy of the Assignment is attached hereto as Appendix "D". Although not a
creditor on the books and records of the Company as at the date of bankruptcy, Mr. Prins was
provided full information with respect to Seafield's bankruptcy proceedings.
2.4.3 On September 14, 2015 the Trustee chaired the first meeting of creditors (the "First Meeting")
with RMB representing the only creditor filing a proof of claim and attending the meeting.
2.4.4 Subject to obtaining funding from any creditors, the Trustee is prepared to review the details of
the Labour Agreement Amendments with the estate inspector to consider if the Labour
Agreement Amendments did in fact diminish the value that would have otherwise been received
by Seafield for the Minera Shares and if so, what next steps, if any, should to be taken in this
regard. As of the date of this Second Report, no funding has been provided to the Trustee for this
purpose.
2.4.5 Based on the results of the SISP (as further described herein), there are no realizations expected
in the bankruptcy estate and therefore there will be no funds available for distribution to creditors.
2.5 Proceedings in Columbia
2.5.1 On or about July 8, 2015, Mr. Prins filed a labour law suit against Minera in the Colombian court
(the "Labour Suit").
2.5.2 As part of the Labour Suit, Mr. Prins requested that the Columbian court issue interim
precautionary measures in order to guarantee the fulfillment of labour obligations by Minera (the
"Precautionary Measures"), including under the Labour Agreement Amendments. The
Receiver understands from the Receiver's Colombian counsel that Precautionary Measures, if
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ordered, would be directed at the mining titles of Minera so that their sale, transfer or assignment
would be suspended by the Colombian National Mining Agency ("ANM") pending resolution of
the Labour Suit. Importantly, the Receiver has been advised by its Colombian counsel that if the
Colombian court were to grant the Precautionary Measures, such measures would not enjoin or
otherwise restrict the sale or transfer of the Minera Shares. This is of course because Minera
would remain subject to any valid claims against it, notwithstanding the transfer of the ownership
of its shares.
2.5.3 On July 31, 2015 the Colombian court heard the application for issuance of the Precautionary
Measures and the application was dismissed on August 5, 2015. Mr. Prins has appealed the
dismissal of the Precautionary Measures; however, no date for the hearing of the appeal has been
set.
2.5.4 Minera has filed a defence to the Labour Suit. The Colombian court has accepted Minera's
defence to the Labour Suit and has scheduled the first substantive hearing in the matter for June
26, 2016. As stated above, the transfer of the Min era Shares would in no way affect the
continuance of the Labour Suit against Minera.
2.5.5 Attached as Appendix "E" to this Report is an update to the Chronology of Events in Colombia
appended to the Receiver's First Report, provided by the Receiver's Colombian counsel.
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3 RESULTS OF THE SALE AND INVESTOR SOLICITATION PROCESS AND RMB'S CREDIT BID
3.1 Overview
3.1.1 As outlined in the First Report the Receiver, in consultation with RMB developed the SISP,
which was approved by the Court on May 20, 2015.
3.1.2 Based on its review of the books and records, the Receiver is aware of no other secured claims
against Seafield than that of RMB. No other party has asserted or made the Receiver aware that
they assert a secured claim against Seafield during the course of the Receivership or Bankruptcy
proceedings.
3.2 Marketing Efforts
3.2.1 Following the granting of the SISP Approval Order, the Receiver undertook the following steps
in accordance with the requirements of the SISP:
a) In conjunction with RMB, the Receiver identified and contacted 123 potential purchasers,
primarily mining companies and investors with a focus on South America as well as other
specifically identified targets;
b) With the assistance of SRK Consulting Inc. ("SRK"), a mining engineering consulting
firm, and in consultation with RMB, the Receiver developed a sale or investment
opportunity teaser (the "Teaser") and a confidential information memorandum (the
"CIM");
c) The Receiver placed advertisements in The Canadian Mining Journal and Mining Journal
describing the SISP and providing the Receiver's contact information for interested
parties. Copies of these advertisements are attached as Appendix "F";
d) All· potential interested parties, were provided a copy of the Teaser and a non-disclosure
agreement ("NDA");
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e) During June and July of2015, the Receiver contacted each of the potential purchasers;
f) Seven potential purchasers executed an NDA and were determined to be "Qualified Phase
I Bidders" in accordance with Sections 2.5(1) (a) to (e) and Section 2.5 (2) of the SISP
and were accordingly provided with the CIM and access to a virtual data room established
by the Receiver;
g) The virtual data room was comprised of approximately 10,000 pages of relevant Company
information generally organized as follows:
i. Corporate files including articles of incorporation, by-laws, annual filing
information, tax returns, and royalty agreements;
ii. Miraflores technical reports, financial models, drill hole information, legal
and geological documents and annual filing information;
iii. Technical reports relating to the Elora Property; and,
iv. Documents relevant to the sales process, including the CIM, the Teaser
and a sales process letter.
h) During the course of Phase 1 of the SISP, KPMG provided any additional information
requested by the Qualified Phase I Bidders, as well as fielded queries regarding the
specific mechanics of the restructuring process and the SISP.
3.3 SISP Phase 1 and Phase 2 Results
3.3.1 At the Phase 1 Bid Deadline of July 15, 2015 the Receiver received three non-binding indications
of interest ("LOis") for the Minera Shares that were all deemed Qualified Non-Binding
Indications of interest based on the criteria outlined in Section 4.2 of the SISP.
3.3.2 All three bids received by the Receiver contemplated only the acquisition of the Minera Shares
or the assets of Minera. No bids were received pursuant to the SISP of Seafield's other property
or interests in Canada (i.e. the Elora Property).
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3.3.3 The Receiver provided copies of all Qualified Non-Binding Indications oflnterest to RMB.
3.3.4 Given the values of each, which ranged from approximately CAD $1 million to CAD $5 million,
the Receiver, in consultation with RMB, communicated to each bidder who submitted non-
binding offers with a price of less than CAD $5 million that, in order to be permitted to continue
onto Phase 2 of the SISP, they would need to increase their non-binding bids to at least CAD $5
million. RMB had advised the Receiver that it would not find it economically feasible to
continue to fund Phase 2 of the SISP if bids did not meet at least this threshold.
3.3.5 One party withdrew from the process due to loss of financing. Of the remaining two bidders, one
increased its bid and was accordingly deemed to. be a Qualified Phase 2 Bidder, while ·the
remaining bidder declined to increase its offer price and withdrew from the process. A summary
of all non-binding offers is set out in a confidential exhibit provided to the Court as Appendix
"G".
3.3.6 Phase 2 of the SISP commenced on July 27, 2015, approximately five days later than originally
planned due to the time required for additional communication with bidders to clarifY the terms of
the submitted LOis.
3.3.7 On July 31,2015 RMB submitted a Bid Notice (as defined in the SISP) declaring its intention to
submit a Qualified Purchase Bid in the amount of CAD $6 million. A copy of the bid notice was
sent to all Qualified Phase 2 Bidders in accordance with the SISP.
3.3.8 Due to many factors and at the request of the remaining interested bidder in the process, the
Receiver formally extended the Phase 2 Bid Deadline from August 19, 2015 to September 4,
2015.
3.3.9 From August 19,2015 to August 21,2015 the remaining interested party attended a site visit and.
technical sessions in Colombia, which included representatives from Minera, KPMG and SRK.
3.3.10 Following attendance at the site, the remaining prospective purchaser submitted a revised LOI
rather than a binding offer as required by the SISP. In addition, this prospective purchaser
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materially reduced its offer price from the price set out in its Phase I LOI. As a result, ultimately
no Qualified Purchase Bids were received by the Receiver pursuant to the SISP. A copy of the
bidder's revised offer has been provided to the Court in a confidential exhibit as Appendix "H".
3.3.11 Based on the value of the revised LOI and the fact that it did not meet the criteria of a Qualified
Purchase Bid (as defined in the SISP), the Receiver terminated the SISP. The Receiver notified
the prospective purchaser that no Qualified Bids had been received and that the Receiver would
be filing a motion advising the Court of the failed process and that the Receiver was in
discussions with the Secured Lender to formalize a credit bid.
3.3.12 Since the termination of the SISP, the Receiver has been in discussion with RMB concerning
RMB submitting a credit bid and the terms thereof. Since the termination of the SISP, the
Receiver has not received any further inquiries or expressions of interest from any party in
relation to the Minera Shares.
3.4 Secured Lender Credit Bid
3.4.1 The Secured Lender ultimately decided to make a credit bid to acquire the Minera Shares.
3.4.2 The Secured Lender has elected to make its credit bid, based on the amount of debt secured by
the Receiver's Borrowings Charge, in the amount of CAD $2,376,697 plus the release of a
material portion of the remaining RMB indebtedness for a total purchase price of $19 million.
3.4.3 The Receiver, the Secured Lender and their respective counsel negotiated a share purchase
agreement in respect of the Minera Shares (the "Share Purchase Agreement").
3.4.4 The Share Purchase Agreement was executed by the patties on February 16, 2016. A copy of the
Share Purchase Agreement is attached hereto as Appendix "I".
3.4.5 The Share Purchase Agreement includes the following terms:
i. The Secured Creditor will acquire 100% of the Minera Shares from the Receiver;
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ii. The purchase price of the shares will be CAD $19.0 million, representing the Secured
Lender's secured debt under the Receiver's Borrowings Charge in the amount of CAD
$2,376,697, as well as the release of CAD $16,623,303 of the additional debt owed by
Seafield to the Secured Creditor;
iii. The Secured Creditor will purchase the Minera Shares on an "as is, where is" basis in
exchange for a release of the obligations secured by the Receiver's Borrowings Charge
and the agreed portion of the debt owed by Seafield to RMB, and at or before closing
will satisfY all amounts owing (i.e the Receiver's professional fees) secured by the
Receiver's Charge, which is provided for in the Receivership Order and ranks in
priority to the Receiver's Borrowings Charge;
iv. The transaction contemplated in the Share Purchase Agreement is conditional upon the
Court issuing an approval and vesting order in relation to the sale of the Minera Shares,
the receipt by RMB of certain approvals for the consummation of the transaction by the
South African Reserve Bank, and compliance with the laws of Colombia as required to
transfer the Minera Shares to RMB; and,
v. The transaction contemplated in the Share Purchase Agreement would require the
Receiver to provide authority and instructions to Minera to prepare a final tax return to
the competent tax authority in Colombia and a foreign investment substitution request
with the Colombian Central Bank in relation to the transfer of ownership of Minera as
required by Colombian law, each to be filed following closing of the transaction.
3.4.6 The Receiver believes that the Share Purchase Agreement represents the best possible disposition
of the Min era Shares for the following reasons:
i. The Secured Lender is the beneficiary of the Receiver's Borrowings Charge, which is
valid and enforceable against the Trustee and is therefore able to utilize this court
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ordered security to acquire the Minera Shares in priority to any other claim (other than
the Receiver's Charge which will be satisfied prior to closing);
ii. The Receiver is not aware of any claim other than the claim of RMB that has been filed
in the bankruptcy of Seafield or in these proceedings;
iii. The Share Purchase Agreement represents a credit bid of CAD $2,376,697 of secured
debt owed by Seafield to the Secured Lender pursuant to the Receiver's Borrowings
Charge plus a portion ofRMB's remaining debt equalling CAD $16,623,303;
iv. The amount secured by the Receiver's Borrowings Charge greatly exceeds thehighest
bid generated by the SJSP (and no binding bids were received);
v. Based on the results of the SJSP, including the site visit with the sole remaining
prospective purchaser and feedback received by the Receiver from prospective
purchasers regarding the value of their. bids, the Receiver does not believe that a
superior offer is likely to result from an extension of the solicitation process and, in any
event, RMB is not willing to provide any further funding to the Receiver to continue
any further marketing of the assets;
vi. Following the termination of the SJSP and the Receiver providing notice to prospective
purchasers that no Qualified Bids had been received, the Receiver did not receive any
further inquiries or expressions of interest from any SISP participants or other industry
actors;
vii. The SJSP, which was approved by the Court, explicitly contemplates a credit bid by the
Secured Lender in the event that the SJSP failed to identify a successful bid; and,
viii. No other parties will be prejudiced by the consummation of the Share Purchase
Agreement.
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4 FINAL STATEMENT OF RECEIPTS AND DISBURSEMENTS
4.1.1 The following table represents a summary of the Receiver's receipts and disbursements for the
period September 9, 2014 to February I, 2016. The table does not include the amounts advanced
by RMB to Minera directly under a separate direct loan agreement with Minera (USD $1.4
million as of December 31, 20 15).
~ ~ - - -- -- ~ - - --- - - - - - - - ~ ---- - -- 71 ' In !be matt~r ofthe) Receivership ofSeafield Resources Ltd.
J Final Statement of Receipts & Disbursements I
' FQl' the pe1•iod September 9, 2014 to Februa1-y 1, 2016 I
~ in CAD I Cash Receipts
Funding provided by RMB 2,376,697 Cash realizations from Seafield bank accounts 47,626 Sale of share in Manitou 12,500 HSTrefunds 8,351
Total Cash Receipts 2,445,175 Cash Disbursements
Professional fees (inc! taxes) 1,828,028 Payments to Minera to fund operations 537,230 Interest of Receiver's borrowings 60,457 Drilling sample storage 6,000 Sale Process advertising 3,525 Miscelleneous expenses 8,531
Total Cash Disbursements 2,443,770 Excess Receipts Over Disbursements 1,405
4.1.2 The cash disbursements of approximately $2.4 million are primarily comprised of:
i. Approximately CAD $1.8 million professional fees (inclusive of taxes) as further described
in Section 5; and,
ii. CAD $537,230 which represents the funding the Receiver provided· directly to Minera
between September and December 2014 before the Secured Lender commenced funding
the monthly operating costs directly.
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5 APPROVAL OF THE FEES AND EXPENDITURES OF THE RECEIVER AND ITS COUNSEL
5.1.1 The following table shows the calculation of the fees of the Receiver and its counsel incurred and
paid to discharge including the estimated fees that are forecasted to be incurred by the Receiver
and its counsel with respect to completing the proceedings:
~n iitilMatier-ofthe Receivel1llliPorseafierd-Resources Ltd.- -- --~ 'Summary of Pmfessional Fees 1 :Period September 2014 • Febmary 2016 , -CD sm Receiver's fees Receiver's Counsel fees
McMillan PPU
Total
864,612
438,280 309,612
1,612,504
Note 1 -The amount only includes fees and disbursements. Sales tax is not included
5.1.2 The Receiver, McMillan and PPU have maintained detailed records of their professional time
and disbursements since the Receivership Order. A summary of Receiver and Receiver's counsel
professional fees is attached to this report as Appendix "J".
5.1.3 Pursuant to paragraphs 18 to 20 of the Receivership Order, the fees and disbursements of the
Receiver and the fees and disbursements of its legal counsel are authorized to be paid on a
periodic basis subject to any final approval as ordered by the Court.
5.1.4 The time spent by the Receiver's personnel during the Receivership is more particularly
described in the Affidavit of Philip Reynolds of KPMG (the "Reynolds Affidavit") sworn
January 25, 2016. The Reynolds Affidavit includes a summary of the personnel, hours, and
hourly rates charged by the Receiver in respect of the Receivership.
5.1.5 The time spent by McMillan during the Receivership is more particularly described in the
Affidavit ofWael Rostom of McMillan (the "Rostom Affidavit") sworn February 16,2016. The
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time spent by PPU during the Receivership is more particularly described in the Affidavit of
David Beltran ofPPU (the "Beltran Affidavit") sworn January 21,2016.
5.1.6 RMB has been provided a full accounting of all professional fees in this matter and has provided
their approval of them.
5.1.7 The Receiver respectfully submits that the Receiver's fees and disbursements and the fees and
disbursements of McMillan and PPU are reasonable in the circumstances and have been validly
incurred in accordance with the provisions of the Receivership Order. Accordingly, the Receiver
now seeks the approval of the Court of the Receiver's fees and disbursements as well as the fees
and disbursements of McMillan and PPU during the Receivership.
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6 RECEIVER'S DISCHARGE
6.1.1 In the event that this Honourable Court approves the Approval and Vesting Order, the Receiver's
administration of the estate, upon closing of the Shares Purchase Agreement, will be essentially
complete. The Receiver may have some miscellaneous administrative items to attend to post-
discharge, but these items are immaterial and, in the Receiver's opinion, should not prevent this
Honourable Court from granting an unconditional discharge effective upon the Receiver closing
the Share Purchase Agreement.
6.1.2 The Receiver respectfully requests that this Honourable Court approve an Order unconditionally
discharging and releasing the Receiver from any and all obligations as Receiver of Seafield
effective upon closing of the Share Purchase Agreement.
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7 RECOMMENDATIONS
7.1.1 The Receiver recommends that this Honourable Court approve:
i. the Approval and Vesting Order;
ii. the activities ofthe Receiver, including the implementation of the SISP;
iii. the accounts of the fees and disbursements of the Receiver and the Receiver's counsel; and,
iv. the discharge ofKPMG Inc. as Receiver ofRMB. ·
All of which is respectfully submitted this 17'" day of February, 2016.
KPMG INC. in its sole capacity as
COURT-APPOINTED RECEIVER OF SEAFIELD RESOURCES LTD.
and not in its personal capacity
Per: Philip Reynolds Senior Vice President
Per: Ryan Adlington Senior Vice President
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Appendix A
Order of Justice Newbould dated September 9, 2014 (the Receivership Order)
33
ONTARIO SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
Court File No.: C:::.V-ILt-lOG,-t;t;, -c:lOC.L
THE HONOURABLE M~. ) ) )
TUESDAY, THE NINTH
JUSTICE N E""W"B ou L ::D DAY OF SEPTEMBER, 2014
BETWEEN:
RMB AUSTRALIA HOLDINGS LIMITED
-and-
SEAFIELD RESOURCES LTD.
ORDER (Appointment Order)
Applicant
Respondent
THIS APPLICATION made by the Applicant RMB Australia Holdings Limited
("RMB") for an Order pursuant to section 243(1) of the Bankruptcy and Insolvency Act,
R.S.C. 1985, c. B-3, as amended (the "BIA'') and section 101 of the Courts of Justice Act,
R.S.O. 1990, c. C.43, as amended (the "CJA") appointing KPMG Inc. ("KPMG") as
receiver and manager (in such capacities, the "Receiver") without security, of all of the
assets, undertakings and properties of Seafield Resources Ltd. (the "Debtor") acquired
for, or used in relation to a business carried on by the Debtor, was heard this day at 330
University Avenue, Toronto, Ontario.
34
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ON READING the affidavit of Alvaro Belevan sworn September 8, 2014 and the
Exhibits thereto and on hearing the submissions of counsel for RMB and the Debtor, no
one else appearing although duly served as appears from the affidavit of service, filed,
and on reading the consent of KPMG to act as the Receiver,
SERVICE
1. THIS COURT ORDERS that the time for service of the Notice of Application
and the Application is hereby abridged and validated so that this Application is
properly returnable today and hereby dispenses with further service thereof.
APPOINTMENT
2. THIS COURT ORDERS that pursuant to section 243(1) of the BIA and section
101 of the CJA, KPMG is hereby appointed Receiver, without security, of all of the
assets, undertakings and properties of the Debtor acquired for, or used in relation to a
business carried on by the Debtor, including all proceeds thereof (the "Property").
RECEIVER'S POWERS
3. THIS COURT ORDERS that the Receiver is hereby empowered and authorized,
but not obligated, to act at once in respect of the Property and, without in any way
limiting the generality of the foregoing, the Receiver is hereby expressly empowered
and authorized to do any of the following where the Receiver considers it necessary or
desirable:
(a) to take possession of and exercise control over the Property and any and
all proceeds, receipts and disbursements arising out of or from the
Property;
(b) to receive, preserve, and protect the Property, or any part or parts thereof,
including, but not limited to, the changing of locks and security codes, the
relocating of Property to safeguard it, the engaging of independent
35
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security personnel, the taking of physical inventories and the placement of
such insurance coverage as may be necessary or desirable;
(c) to manage, operate, and carry on the business of the Debtor, including the
powers to enter into any agreements, incur any obligations in the ordinary
course of business, cease to carry on all or any part of the business, or
cease to perform any contracts of the Debtor;
(d) to engage consultants, appraisers, agents, experts, auditors, accountants,
managers, counsel and such other persons from time to time and on
whatever basis, including on a temporary basis, to assist with the exercise
of the Receiver's powers and duties, including without limitation those
conferred by this Order;
(e) to purchase or lease such machinery, equipment, inventories, supplies,
premises or other assets to continue the business of the Debtor or any part
or parts thereof;
(f) to receive and collect all monies and accounts now owed or hereafter
owing to the Debtor and to exercise all remedies of the Debtor in
collecting such monies, including, without limitation, to. enforce any
security held by the Debtor;
(g) to settle, extend or compromise any indebtedness owing to the Debtor;
(h) to execute, assign, issue and endorse documents of whatever nature in
respect of any of the Property, whether in the Receiver's name or in the
name and on behalf of the Debtor, for any purpose pursuant to this Order;
(i) to undertake environmental or workers' health and safety assessments of
the Property and operations of the Debtor;
36
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0) to initiate, prosecute and continue the prosecution of any and all
proceedings and to defend all proceedings now pending or hereafter
instituted with respect to the Debtor, the Property or the Receiver, and to
settle or compromise any such proceedings. The authority hereby
conveyed shall extend to such appeals or applications for judicial review
in respect of any order or judgment pronounced in any such proceeding;
(k) to market any or all of the Property, including advertising and soliciting
offers in respect of the Property or any part or parts thereof and
negotiating such terms and conditions of sale as the Receiver in its
discretion may deem appropriate;
(1) to sell, convey, transfer, lease or assign the Property or any part or parts
thereof out of the ordinary course of business,
(i) without the approval of this Court in respect of any transaction not
exceeding $100,000, provided that the aggregate consideration for
all such transactions does not exceed $1,000,000; and
(ii) with the approval of this Court in respect of any transaction in
which the purchase price or the aggregate purchase price exceeds
the applicable amount set out in the preceding clause;
and in each such case notice under subsection 63(4) of the Ontario Personal
Property Security Act or section 31 of the Ontario Mortgages Act, as the case
may be, shall not be required, and in each case the Ontario Bulk Sales Act
shall not apply.
(m) to apply for any vesting order or other orders necessary to convey the
Property or any part or parts thereof to a purchaser or purchasers thereof,
free and clear of any liens or encumbrances affecting such Property;
37
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(n) to report to, meet with and discuss with such affected Persons (as defined
below) as the Receiver deems appropriate on all matters relating to the
Property and the receivership, and to share information, subject to such
terms as to confidentiality as the Receiver deems advisable;
(o) to register a copy of this Order and any other Orders in respect of the
Property against title to any of the Property;
(p) to apply for any permits, licences, approvals or permissions as may be
required by any governmental authority and any renewals thereof for and
on behalf of and, if thought desirable by the Receiver, in the name of the
Debtor;
(q) to enter into agreements with any trustee in bankruptcy appointed in
respect of the Debtor, including, without limiting the generality of the
foregoing, the ability to enter into occupation agreements for any property
owned or leased by the Debtor;
(r) to exercise any shareholder, partnership, joint venture or other rights
which the Debtor may have, including without limitation, the Debtor's
rights as sole shareholder of Minera Seafield S.A.S. ("Minera") to, among
other things, appoint one or more directors of Minera and to replace any
of the directors of Minera;
(s) to advance monies to Minera; and
(t) to take any steps reasonably incidental to the exercise of these powers or
the performance of any statutory obligations.
and in each case where the Receiver takes any such actions or steps, it shall be
exclusively authorized and empowered to do so, to the exclusion of all other Persons (as
defined below), including the Debtor, and without interference from any other Person.
38
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DUTY TO PROVIDE ACCESS AND CO-OPERATION TO THE RECEIVER
4. THIS COURT ORDERS that (i) the Debtor, (ii) all of its current and former
directors, officers, employees, agents, accountants, legal counsel and shareholders, and
all other persons acting on its instructions or behalf, and (iii) all other individuals, firms,
corporations, governmental bodies or agencies, or other entities having notice of this
Order (all of the foregoing, collectively, being "Persons" and each being a "Person")
shall forthwith advise the Receiver of the existence of any Property in such Person's
possession or control, shall grant immediate and continued access to the Property to the
Receiver, and shall deliver all such Property to the Receiver upon the Receiver's request.
5. THIS COURT ORDERS that all Persons shall forthwith advise the Receiver of
the existence of any books, documents, securities, contracts, orders, corporate and
accounting records, and any other papers, records and information of any kind related
to the business or affairs of the Debtor, and any computer programs, computer tapes,
computer disks, or other data storage media containing any such information (the
foregoing, collectively, the "Records") in that Person's possession or control, and shall
provide to the Receiver or permit the Receiver to make, retain and take away copies
thereof and grant to the Receiver unfettered access to and use of accounting, computer,
software and physical facilities relating thereto, provided however that nothing in this
paragraph 5 or in paragraph 6 of this Order shall require the delivery of Records, or the
granting of access to Records, which may not be disclosed or provided to the Receiver
due to the privilege attaching to solicitor-client communication or due to statutory
provisions prohibiting such disclosure.
6. THIS COURT ORDERS that if any Records are stored or otherwise contained
on a computer or other electronic system of information storage, whether by
independent service provider or otherwise, all Persons in possession or control of such
Records shall forthwith give unfettered access to the Receiver for the purpose of
allowing the Receiver to recover and fully copy all of the information contained therein
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whether by way of printing the information onto paper or making copies of computer
disks or such other manner of retrieving and copying the information as the Receiver in
its discretion deems expedient, and shall not alter, erase or destroy any Records without
the prior written consent of the Receiver. Further, for the purposes of this paragraph, all
Persons shall provide the Receiver with all such assistance in gaining immediate access
to the information in the Records as the Receiver may in its discretion require including
providing the Receiver with instructions on the use of any computer or other system
and providing the Receiver with any and all access codes, account names and account
numbers that may be required to gain access to the information.
7. THIS COURT ORDERS that the Receiver shall provide each of the relevant
landlords with notice of the Receiver's intention to remove any fixtures from any leased
premises at least seven (7) days prior to the date of the intended removal. The relevant
landlord shall be entitled to have a representative present in the leased premises to
observe such removal and, if the landlord disputes the Receiver's entitlement to remove
any such fixture under the provisions of the lease, such fixture shall remain on the
premises and shall be dealt with as agreed between any applicable secured creditors,
such landlord and the Receiver, or by further Order of this Court upon application by
the Receiver on at least two (2) days' notice to such landlord and any such secured
creditors.
NO PROCEEDINGS AGAINST THE RECEIVER
8. THIS COURT ORDERS that no proceeding or enforcement process in any court
or tribunal (each, a "Proceeding"), shall be commenced or continued against the
Receiver except with the written consent of the Receiver or with leave of this Court.
NO PROCEEDINGS AGAINST THE DEBTOR OR THE PROPERTY
9. THIS COURT ORDERS that no Proceeding against or in respect of the Debtor
or the Property shall be commenced or continued except with the written consent of the
40
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Receiver or with leave of this Court and any and all Proceedings currently under way
against or in respect of the Debtor or the Property are hereby stayed and suspended
pending further Order of this Court.
NO EXERCISE OF RIGHTS OR REMEDIES
10. THIS COURT ORDERS that all rights and remedies against the Debtor, the
Receiver, or affecting the Property, are hereby stayed and suspended except with the
written consent of the Receiver or leave of Hlis Court, provided that nothing in this
paragraph shall (i) empower the Receiver or the Debtor to carry on any business which
the Debtor is not lawfully entitled to carry on, (ii) exempt the Receiver or the Debtor
from compliance with statutory or regulatory provisions relating to health, safety or the
environment, (iii) prevent the filing of any registration to preserve or perfect a security
interest, or (iv) prevent the registration of a claim for lien.
NO INTERFERENCE WITH THE RECEIVER
11. THIS COURT ORDERS that no Person shall discontinue, fail to honour, alter,
interfere with, repudiate, terminate or cease to perform any right, renewal right,
contract, agreement, licence or permit in favour of or held by the Debtor, without
written consent of the Receiver or leave of this Court.
CONTINUATION OF SERVICES
12. THIS COURT ORDERS that all Persons having oral or written agreements with
the Debtor or statutory or regulatory mandates for the supply of goods and/ or services,
including without limitation, all computer software, communication and other data
services, centralized banking services, payroll services, insurance, transportation
services, utility or other services to the Debtor are hereby restrained until further Order
of this Court from discontinuing, altering, interfering with or terminating the supply of
such goods or services as may be required by the Receiver, and that the Receiver shall
be entitled to the continued use of the Debtor's current telephone numbers, facsimile
41
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numbers, internet addresses and domain names, provided in each case that the normal
prices or charges for all such goods or services received after the date of this Order are
paid by the Receiver in accordance with normal payment practices of the Debtor or
such other practices as may be agreed upon by the supplier or service provider and the
Receiver, or as may be ordered by this Court.
RECEIVER TO HOLD FUNDS
13. THIS COURT ORDERS that all funds, monies, cheques, instruments, and other
forms of payments received or collected by the Receiver from and after the making of
this Order from any source whatsoever, including without limitation the sale of all or
any of the Property and the collection of any accounts receivable in whole or in part,
whether in existence on the date of this Order or hereafter coming into existence, shall
be deposited into one or more new accounts to be opened by the Receiver (the "Post
Receivership Accounts") and the monies standing to the credit of such Post
Receivership Accounts from time to time, net of any disbursements provided for herein,
shall be held by the Receiver to be paid in accordance with the terms of this Order or
any further Order of this Court.
EMPLOYEES
14. THIS COURT ORDERS that all employees of the Debtor shall remain the
employees of the Debtor until such time as the Receiver, on the Debtor's behalf, may
terminate the employment of such employees. The Receiver shall not be liable for any
employee-related liabilities, including any successor employer liabilities as provided for
in section 14.06(1.2) of the BIA, other than such amounts as the Receiver may
specifically agree in writing to pay, or in respect of its obligations under sections 81.4(5)
or 81.6(3) of the BIA or under the Wage Earner Protection Program Act ..
42
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PIPED A
15. TillS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal
Infonnation Protection and Electronic Documents Act, the Receiver shall disclose personal
information of identifiable individuals to prospective purchasers or bidders for the
Property and to their advisors, but only to the extent desirable or required to negotiate
and attempt to complete one or more sales of the Property (each, a "Sale"). Each
prospective purchaser or bidder to whom such personal information is disclosed shall
maintain and protect the privacy of such information and ·limit the use of such
information to its evaluation of the Sale, and if it does not complete a Sale, shall return
all such information to the Receiver, or in the alternative destroy all such information.
The purchaser of any Property shall be entitled to continue to use the personal
information provided to it, and related to the Property purchased, in a manner which is
in all material respects identical to the prior use of such information by the Debtor, and
shall return all other personal information to the Receiver, or ensure that all other
personal information is destroyed.
LIMITATION ON ENVIRONMENTAL LIABILITIES
16. THIS COURT ORDERS that nothing herein contained shall require the Receiver
to occupy or to take control, care, charge, possession or management (separately and/ or
collectively, "Possession") of any of the Property that might be environmentally
contaminated, might be a pollutant or a contaminant, or might cause or contribute to a
spill, discharge, release or deposit of a substance contrary to any federal, provincial or
other law respecting the protection, conservation, enhancement, remediation or
rehabilitation of the environment or relating to the disposal of waste or other
contamination including, without limitation, the Canadian Environmental Protection Act,
the Ontario Environmental Protection Act, the Ontario Water Resources Act, or the Ontario
Occupational Health and Safety Act and regulations thereunder (the "Environmental
Legislation"), provided however that nothing herein shall exempt the Receiver from
43
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any duty to report or make disclosure imposed by applicable Environmental
Legislation. The Receiver shall not, as a result of this Order or anything done in
pursuance of the Receiver's duties and powers under this Order, be deemed to be in
Possession of any of the Property within the meaning of any Environmental Legislation,
unless it is actually in possession.
LIMITATION ON THE RECEIVER'S LIABILITY
17. THIS COURT ORDERS that the Receiver shall incur no liability or obligation as
a result of its appointment or the carrying out the provisions of this Order, save and
except for any gross negligence or wilful misconduct on its part, or in respect of its
obligations under sections 81.4(5) or 81.6(3) of the BIA or under the Wage Earner
Protection Program Act. Nothing in this Order shall derogate from the protections
afforded the Receiver by section 14.06 of the BIA or by any other applicable legislation.
RECEIVER'S ACCOUNTS
18. THIS COURT ORDERS that the Receiver and counsel to the Receiver shall be
paid their reasonable fees and disbursements, in each case at their standard rates and
charges unless otherwise ordered by the Court on the passing of accounts, and that the
Receiver and counsel to the Receiver shall be entitled to and are hereby granted a
charge (the "Receiver's Charge") on the Property, as security for such fees and
disbursements, both before and after the making of this Order in respect of these
proceedings, and that the Receiver's Charge shall form a first charge on the Property in
priority to all security interests, trusts, liens, charges and encumbrances, statutory or
otherwise, in favour of any Person, but subject to sections 14.06(7), 81.4(4), and 81.6(2) of
the BIA.
19. THIS COURT ORDERS that the Receiver and its legal counsel shall pass its
accounts from time to time, and for this purpose the accounts of the Receiver and its
44
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legal counsel are hereby referred to a judge of the Commercial List of the Ontario
Superior Court of Justice.
20. THIS COURT ORDERS that prior to the passing of its accounts, the Receiver
shall be at liberty from time to time to apply reasonable amounts, out of the monies in
its hands, against its fees and disbursements, including legal fees and disbursements,
incurred at the standard rates and charges of the Receiver or its counsel, and such
amounts shall constitute advances against its remuneration and disbursements when
and as approved by this Court.
FUNDING OF THE RECEIVERSHIP
21. THIS COURT ORDERS that the Receiver be at liberty and it is hereby
empowered to borrow by way of a revolving credit or otherwise, such monies from
time to time as it may consider necessary or desirable, provided that the outstanding
principal amount does not exceed $750,000 (or such greater amount as this Court may
by further Order authorize) at any time, at such rate or rates of interest as it deems
advisable for such period or periods of time as it may arrange, for the purpose of
funding the exercise of the powers and duties conferred upon the Receiver by this
Order, including interim expenditures. The whole of the Property shall be and is hereby
charged by way of a fixed and specific charge (the "Receiver's Borrowings Charge") as
security for the payment of the monies borrowed, together with interest and charges
thereon, in priority to all security interests, trusts, liens, charges and encumbrances,
statutory or otherwise, in favour of any Person, but subordinate in priority to the
Receiver's Charge and the charges as set out in sections 14.06(7), 81.4(4), and 81.6(2) of
the BIA.
22. THIS COURT ORDERS that neither the Receiver's Borrowings Charge nor any
other security granted by the Receiver in connection with its borrowings under this
Order shall be enforced without leave of this Court.
45
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23. THIS COURT ORDERS that the Receiver is at liberty and authorized to issue
certificates substantially in the form annexed as Schedule "A" hereto (the "Receiver's
Certificates") for any amount borrowed by it pursuant to this Order.
24. THIS COURT ORDERS that the monies from time to time borrowed by the
Receiver pursuant to this Order or any further order of this Court and any and all
Receiver's Certificates evidencing the same or any part thereof shall rank on a pari passu
basis, unless otherwise agreed to by the holders of any prior issued Receiver's
Certificates.
SERVICE AND NOTICE
25. THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the
"Protocol") is approved and adopted by reference herein and, in this proceeding, the
service of documents made in accordance with the Protocol (which can be found on the
Commercial List website at http:/ fwww.ontariocourts.cajscj/practice/practice-
directionsftoronto/ e-service-protocol/) shall be valid and effective service. Subject to
Rule 17.05 this Order shall constitute an order for substituted service pursuant to Rule ·
16.04 of the Rules of Civil Procedure. Subject to Rule 3.01(d) of the Rules of Civil
Procedure and paragraph 21 of the Protocol, service of documents in accordance with
the Protocol will be effective on transmission. This Court further orders that a Case
Website shall be established in accordance with the Protocol with the foiJowing URL
'www.kpmg.ca/ seafieldresources'.
26. THIS COURT ORDERS that if the service or distribution of documents in
accordance with the Protocol is not practicable, the Receiver is at liberty to serve or
distribute this Order, any other materials and orders in these proceedings, any notices
or other correspondence, by forwarding true copies thereof by prepaid ordinary mail,
courier, personal delivery or facsimile transmission to the Debtor's creditors or other
interested parties at their respective addresses as last shown on the records of the
Debtor and that any such service or distribution by courier, personal delivery or
46
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facsimile transmission shall be deemed to be received on the next business day
following the date of forwarding thereof, or if sent by ordinary mail, on the third
business day after mailing.
GENERAL
27. THIS COURT ORDERS that the Receiver may from time to time apply to this
Court for advice and directions in the discharge of its powers and duties hereunder.
28. THIS COURT ORDERS that nothing in this Order shall prevent the Receiver
from acting as a trustee in bankruptcy of the Debtor.
29. THIS COURT HEREBY REQUESTS the aid and recognition of any court,
tribunal, regulatory or administrative body having jurisdiction in Canada, in the United
States or in the Republic of Colombia to give effect to this Order and to assist the
Receiver and its agents in carrying out the terms of this Order. All courts, tribunals,
regulatory and administrative bodies are hereby respectfully requested to make such
orders and to provide such assistance to the Receiver, as an officer of this Court, as may
be necessary or desirable to give effect to this Order or to assist the Receiver and its
agents in carrying out the terms of this Order.
30. THIS COURT ORDERS that the Receiver be at liberty and is hereby authorized
and empowered to apply to any court, tribunal, regulatory or administrative body,
wherever located, for the recognition of this Order and for assistance in carrying out the
terms of this Order, and that the Receiver is authorized and empowered to act as a
representative in respect of the within proceedings for the purpose of having these
proceedings recognized in a jurisdiction outside Canada.
31. THIS COURT ORDERS that the Applicant shall have its costs of this
Application, up to and including entry and service of this Order, provided for by the
terms of the Applicartt' s security or, if not so provided by the Applicant's security, then
47
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on a substantial indemnity basis to be paid by the Receiver from the Debtor's estate
with such priority and at such time as this Court may determine.
32. THIS COURT ORDERS that any interested party may apply to this Court to
vary or amend this Order on not less than seven (7) days' notice to the Receiver and to
any other party likely to be affected by the order sought or upon such other notice, if
any, as this Court may order.
'•. ;·~·
i. (. ·.
48
SCHEDULE "A"
RECEIVER CERTIFICATE
CERTIFICATE NO. ____ _
AMOUNT$ __________ _
1. THIS IS TO CERTIFY that KPMG Inc., the receiver (the "Receiver") of the assets,
undertakings and properties Seafield Resources Ltd. acquired for, or used in relation to
a business carried on by the Debtor, including all proceeds thereof (collectively, the
"Property") appointed by Order of the Ontario Superior Court of Justice (Commercial
List) (the "Court") dated the [9th] day of September, 2014 (the "Order") made in an
action having Court file number 14-CL-__ __, has received as such Receiver from the
holder of this certificate (the "Lender") the principal sum of $ being part of
the total principal sum of $ which the Receiver is authorized to borrow
under and pursuant to the Order.
2. The principal sum evidenced by this certificate is payable on demand by the
Lender with interest thereon calculated and compounded [daily][monthly not in
advance on the ___ day of each month] after the date hereof at a notional rate per
annum equal to the rate of per cent above the prime commercial lending rate of
Bank of from time to time.
3. Such principal sum with interest thereon is, by the terms of the Order, together
with the principal sums and interest thereon of all other certificates issued by the
Receiver pursuant to the Order or to any further order of the Court, a charge upon the
whole of the Property, in priority to the security interests of any other person, but
subject to the priority of the charges set out in the Order and in the Bankruptcy and
Insolvency Act, and the right of the Receiver to indemnify itself out of such Property in
respect of its remuneration and expenses.
4. All sums payable in respect of principal and interest under this certificate are
payable at the main office of the Lender at Toronto, Ontario.
49
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5. Until all liability in respect of this certificate has been terminated, no certificates
creating charges ranking or purporting to rank in priority to this certificate shall be
issued by the Receiver to any person other than the holder of this certificate without the
prior written consent of the holder of this certificate.
6. The charge securing this certificate shall operate so as to permit the Receiver to
deal with the Property as authorized by the Order and as authorized by any further or
other order of the Court.
7. The Receiver does not undertake, and it is not under any personal liability, to
pay any sum in respect of which it may issue certificates under the terms of the Order.
DATED the __ day of ____ ---' 2014.
I<PMG Inc., solely in its capacity as Receiver of the Property, and not in its
personal capacity
Per: Name: Title:
50
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51
AppendixB
First Report of the Receiver to the Court, dated May II, 2015 and the Supplement to the First Report, dated May 18, 2015 (both without exhibits)
Pagel2
52
Court File No.CV-14-10686-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
IN THE MATTER OF SEAFIELD RESOURCES LTD. OF THE CITY OF TORONTO
IN THE PROVINCE OF ONTARIO
FIRST REPORT TO THE COURT SUBMITTED BY KPMG INC.,
RECEIVER
May 11,2015
53
Table of Contents
Introduction and Purpose of Report ................................................................................................. 2 1.1 Introduction ......................................................................................................................... 2 1.2 Purpose of Receiver's First Report ..................................................................................... 3
2 Initial Activities of the Receiver ...................................................................................................... 5 2.1 Taking Possession of the Books and Records ..................................................................... 5 2.2 Cash and Banking ............................................................................................................... 5 2.3 Notice .................................................................................................................................. 5 2.4 Employees ........................................................................................................................... 6 2.5 Independent Counsel. .......................................................................................................... 6
3 Overview ofMinera ......................................................................................................................... 7 3.1 Background ofMinera ........................................................................................................ 7 3.2 Overview of Activity Since the Date of Receivership ........................................................ 7 3.3 Significant Events in Colombia to be Brought to the Attention of the Court ..................... 9
4 Other Company Assets .................................................................................................................. 12 4.1 Shares of Manitou Gold Inc .............................................................................................. 12 4.2 Investment in the Elora Property ...................................................................................... 12
5 Proposed Sale and Investor Solicitation Process ........................................................................... 14
6 Receipts and Disbursements .......................................................................................................... 16
7 Conclusion and Order Sought ........................................................................................................ 19
54
Listing of Appendices
Appendix A
AppendixB
AppendixC
AppendixD
AppendixE
Appendix F
Receivership Order dated September 9, 2014
Notice and Statement of the Receiver (Form 87)
Chronology of Events in Colombia
Summary of Labour Agreement Amendments
Sale and Investor Solicitation Process
Receiver and Counsels' fees
Page 1
55
1 Introduction and Purpose of Report
1.1 Introduction
1.1.1 Seafield Resources Ltd. ("Seafield" or the "Company") is a company incorporated pursuant to the
Ontario Business Corporations Act with a registered office at 36 Toronto Street, Suite 1000,
Toronto, Ontario. Seafield is a development stage gold company with its principal asset being the
shares of its wholly·owned subsidiary, Minera Seafield S.A.S ("Minera"), a Colombian company.
Minera is 100% owner of 15 mining concessions covering an area of 6,042.8 hectares located in
the Municipality ofQuinchfa, Department ofRisaralda, Republic of Colombia.
1.1.2 The Company's senior secured lender, and by far most significant creditor, is RMB Australia
Holdings Ltd. ("RMB"), which is owed approximately CAD $18.6 million 1 from Seafield and
Minera. These amounts were borrowed by Seafield pursuant to a facility agreement between RMB
and Seafield dated February 21, 2013 (the "Facility Agreement"). Seafield, as borrower under
the Facility Agreement, and Minera, as guarantor of Seafield's obligations under the Facility
Agreement, each granted RMB security over all their respective assets, undertakings and property,
including but not limited to (in the case of Seafield) all of the issued and outstanding shares in
Minera (the "Minera Shares").
1.1.3 As a result of the decline in the price of gold and continuing cash flow difficulties, the Company
could not successfully restructure its financing arrangement with RMB, and ultimately failed to
make an interest payment of approximately $406,000 due on July 15, 2014, causing the Company
in default under the Facility Agreement.
1 All dollar amounts expressed herein, unless otherwise stated, are expressed in Canadian Dollars.
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1.1.4 On August 28, 20 I 4, RMB issued a demand for payment and notice of intention to enforce security
(the "BIA Notice") pursuant to Section 244 of the Bankruptcy and Insolvency Act ("BIA'').
1.1.5 On September 4, 20 I 4, Seafield publically announced that Minera filed a request to enter
reorganization proceedings under the Colombian law I I 16 of20062•
1.1.6 RMB was strongly opposed to the decision taken by Seafield to file Minera for reorganization under
Colombian law as RMB believed that such a filing request, if accepted, would materially prejudice
the interests of RMB and other operating creditors of Minera. As such, RMB lost confidence in
the executive management of Seafield.
1.1. 7 Accordingly, shortly after RMB issued its BIA Notice, it commenced an application to appoint
KPMG Inc. ("KPMG") as receiver of Seafield (the "Receiver") to among other things, take
possession of and exercise control over the assets of the Company (including the Minera Shares)
and any and all proceeds, receipts and disbursements arising out of or from the assets (the
"Property").
1.1.8 By order of the Honourable Mr. Justice Newbould of the Ontario Superior Court of Justice made
on September 9, 2014, KPMG was appointed as Receiver (the "Receivership Order"). A copy of
the Receivership Order is attached as Appendix "A".
1.2 Purpose of Receiver's First Report
1.2.1 This is the Receiver's First Report to this Honourable Court in this matter and it is filed to:
a) Provide an update with respect to the actions taken to obtain control over Minera;
b) Request this Honourable Court's approval of the proposed sale process of the Company's
propetty, including its interest.in Minera described herein;
2 An insolvency proceeding under Colombian law which enables the business to continue as a going concern while seeking a settlement with its creditors.
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c) Present the statement of receipts and disbursements for the receivership period September
9 to April30, 2015;
d) Support the Receiver's request for authorization to assign Seafield into Bankruptcy;
e) Support the Receiver's request for an order increasing the amount the Receiver is
authorized to borrow from $750,000 to USD $3,000,000 and for an order that the advances
made directly by RMB to Minera shall be deemed to be secured obligations under the
Receiver's Borrowing Charge;
f) Provide an update to this Honourable Court on various other matters; and
g) Support the Receiver's request for the approval of the Receiver's First Report and the
activities of the Receiver described therein.
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2 Initial Activities of the Receiver
2.1 Taking Possession of the Books and Records
2.1.1 The Company's registered office is that of DSA Corporate Services Inc. and Marrelli Support
Services Inc. which Seafield engaged to provide corporate secretarial, financial accounting and
reporting services for the Company and its subsidiaries.
2.1.2 Immediately upon appointment, the Receiver attended the Company's registered offices and took
possession of the books and records.
2.2 Cash and Banking
2.2.1 After its appointment, the Receiver notified the Company's bank of its appointment and requested
all accounts be frozen for deposit only.
2.2.2 The Receiver immediately arranged for the opening of new bank accounts in the name of the
receivership estate to facilitate future receipts and disbursements with respect to the administration
of the receivership.
2.3 Notice
2.3.1 The Receiver has issued the prescribed notice pursuant to Section 245(1) of the Bankruptcy and
Insolvency Act to all known secured and unsecured creditors of the Company, providing notice of
its appointment. A copy of the notice is attached hereto as Appendix "B".
2.3.2 The prescribed notice pursuant to Section 245(2) also been provided to the Office of the
Superintendent of Bankruptcy. This notice includes an interim statement of receipts and
disbursements, a statement of all property of which the Receiver has taken possession or control
that has not yet been sold or realized and information about the anticipated completion of the
receivership.
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2.4 Employees
2.4.1 Seafield did not have any employees as of the date of the Receivership Order.
2.4.2 The executives of Seafield, Mr. David Prins (former Chief Executive Officer, President and
Chairman) ("Prins") and Ms. Stephanie Ashton (former Chief Financial Officer) ("Ashton") were
engaged under contractor agreements which were terminated by the Receiver following
appointment.
2.4.3 Minera has approximately 20 employees who are involved in the administration, care and
maintenance of the Min era assets.
2.5 Independent Counsel
2.5.1 The Receiver has retained McMillan LLP ("McMillan") as its independent counsel in these
proceedings. McMillan is a well-known and highly regarded national Canadian business law firm.
2.5.2 The Receiver also retained Philippi, Prietocarrizosa & Uria ("Colombian Counsel" or "PPU") as
its independent local counsel in Colombia. PPU has approximately 230 lawyers and offices in
Bogota and Barranquilla, Colombia and Santiago, Chile. PPU is recognized as a leading Latin
American law firm and has received recognition from, among others, Chambers Latin America,
International Financial Law Review, Euromoney, International Tax Review and Latin Lawyer.
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3 Overview of Min era
3.1 Bacl<ground of Min era
3.1.1 The Company's principal asset is its sole shareholding in Minera.
3.1.2 The assets of Minera were acquired in April 2010 through a sale purchase agreement with
Asociaci6n de Mineros de Miraflores. Following acquisition, the Company began advancing the
exploration and development ofMinera's assets toward commercial production of gold.
3.1.3 Min era hired several employees in Colombia to oversee the exploration, administration and security
of the site. Prior to the Receivership Order, the assets ofMinera were explored through a series of
drilling programs, including two Preliminary Economic Assessments completed in April2012 and
August 2013 by SRK Consulting (U.S.), Inc. ("SRK"), a professional mining and geotechnical
consulting firm.
3.1.4 An updated technical report (commissioned by RMB) was completed by SRK in February 2015
(the "2015 Technical Report") and indicates an after-tax net present value of expected future gold
and silver production of greater than US$70 million, to be derived from a development of the
property into an underground and open pit mine. However, significant capital is required to bring
the asset to production.
3.2 Overview of Activity Since the Date of Receivership
3.2.1 Up until August 30, 2014 the former directors ofMinera (the "Former Board") consisted of the
following individuals:
(a) Prins, Director;
(b) Ashton, Director;
(c) Giovanny Ortiz ("Ortiz"), Director and CEO
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(d) Catalina Cadena ("Cadena"), Director and Deputy CEO;
(e) Cesar Lopez ("Lopez"), Director; and
(t) Juan Villarzu ("Villarzu"), Director
3.2.2 The Affidavit of Alvaro Be levan sworn September 8, 2014, filed in support of the application of
RMB to this Honourable Court for the Receivership Order, set out RMB's efforts to attempt to
replace the Former Board and the objectives that would be achieved after changing the board. The
primary objectives in replacing the Former Board were (a) to withdraw Minera's application for
admission into reorganization proceedings in Colombia; (b) to provide a stable funding source for
Minera once the Former Board was removed; and (c) to run a sales process to maximize value for
stakeholders.
3.2.3 Since its appointment and up until recently, the Receiver has faced significant challenges in
achieving these objectives largely due to actions and positions taken by the Former Board
immediately prior to and following the granting of the Receivership Order. The principal
challenges arose from the Fonner Board's refusal to acknowledge the authority of the Receiver to
exercise the rights as the legal representative of Seafield as the sole shareholder of Minera. This
refusal continued notwithstanding that the Receivership Order expressly granted the Receiver the
power to exercise the powers of Seafield as sole shareholder of Minera, including the power to
remove and replace the directors of Minera.
3.2.4 A chronology of events describing the challenges and summarizing the various steps taken and
documents filed on behalf of the Former Board and the Receiver from August 2014 through to
present has been prepared (the "Chronology of Events") and is attached hereto as Appendix "C".
There are a number of documents referred to in the Chronology of Events; while the Receiver has
access to these documents, the majority of them are in Spanish.
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3.2.5 Ultimately, the activities in Colombia led to the Receiver requesting for Minera to be put under the
control of the Office of the Superintendent of Companies in Colombia (the "Control Measure").
The imposition of the Control Measure over Minera facilitated the replacement of the Fonner Board
with a new board (the "New Board") (the members of the New Board are set out in Appendix
"C") and recognition of the Receiver's authority by the relevant Colombian regulators.
3.2.6 Subject to the approval of this Honourable Court, the Receiver is now in position to conduct a sales
and investment solicitation process involving Minera, as further described herein.
3.3 Significant Events in Colombia to be Brought to the Attention of the Court
3.3.1 The following section highlights specific events in Colombia the Receiver would like to bring to
the Court's attention including amendments to labour agreements of former Minera officers and
directors, Prins and Ortiz.
3.3.2 On October 14,2014, Prins and Ortiz informed the Receiver and Seafield of the existence of alleged
amendments to their labour agreements with Minera (the "Labour Agreement Amendments")
which, among things, provided them with significant claims for compensation against Min era. The
Receiver subsequently learned that the Labour Agreement Amendments were adopted by Minera
following a resolution of the former board of directors of Seafield made shortly prior to the
Receivership Order, at a time that Seafield was encountering significant cash flow problems and
was in default under the RMB Facility Agreement. A summary of the Labour Agreement
Amendments was prepared by PPU and is attached as Appendix "D".
3.3.3 The existence of the alleged Labour Agreement Amendments came as a surprise to the Receiver.
Despite the fact the Receiver had been appointed on September 9, 2014 and despite the fact the
Receiver had made a number of requests for copies of any labour, employment, or consulting
agreements between Seafield or Minera and its officers following September 9, 2014, the Receiver
was only informed of the existence of the Labour Agreement Amendments on October 14, 2014.
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63
3.3.4 It is the Receiver's understanding that the Labour Agreement Amendments may have the effect of
giving Prins and Ortiz a priority over the creditors of Min era in an insolvency proceeding under
Colombian law and therefore may have a detrimental effect on the recoveries of the creditors of
Seafield.
3.3.5 On October 24, 2014, the Receiver sent correspondence to Prins and Ortiz, requesting that any
rights under the Labour Agreement Amendments be waived.
3.3.6 On November 29, 2014, Prins sent correspondence to Minera, requesting payment of "labour
benefits" which he claimed under the Labour Agreement Amendments.
3.3. 7 On December 11, 20 14, correspondence from Min era was delivered by Mr. Alvaro Be levan
("Be1evan") terminating Prins' labour contract and its amendments. Belevan negotiated a
termination of Ortiz' labour contract and its amendments on March 26, 2015 and signed a new
agreement under which Ortiz would provide ongoing services to Minera.
3.3.8 On January 9, 2015, Prins filed a writ with the Superintendent of Companies that his rights under
the Labour Agreement Amendments be recognized during the "reorganization procedure". The
Superintendent responded to Prins on February 2, 2015, indicating that there was no reorganization
procedure in respect of Minera.
3.3.9 On April 5, 2015, Prins sent a letter (the "April s•h Letter") to RMB and certain of its affiliates
alleging breaches of Prins' labour agreement relating to his termination, an undertaking by Minera
to the Colombian government related to relocation expenses for former employees and, alleging
defamatory statements made about him by employees of RMB and members of the New Board.
RMB responded to the April 5°' Letter on April 14, 20l5, denying each and every allegation stated
or implied therein.
3.3.10 Although the April 5"' Letter was not addressed to the Receiver, the letter included certain
references to the Receiver in connection with the allegations contained therein. The Receiver has
reviewed the April 5"' Letter in detail and is of the opinion that the complaints are without merit.
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64
However, as the Receiver is mentioned in the letter, the Receiver felt it was appropriate to bring
the letter to the attention of the Court.
3.3.11 The Receiver seeks the authorization of the Court to assign Seafield into bankruptcy in order to
preserve any rights to challenge the Labour Agreement Amendments and any other reviewable
transactions undertaken by Seafield or any related or controlling person.
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4 Other Company Assets
4.1 Shares of Manitou Gold Inc.
4.1.1 At the date of the Receivership Order, the Company owned 1,000,000 shares of Manitou Gold Inc.
("Manitou") a Canadian gold exploration company trading on the TSX Venture exchange.
4.1.2 The Receiver was approached by Manitou to purchase the shares. After a negotiation with Manitou
and considering the marketability and potential disposal costs of the shares with the Company's
broker, the Receiver sold the shares to Manitou for a total of$12,500.
4.1.3 On or around the date the Receiver agreed to sell the shares, the shares were trading at $0.0 I 5 per
share with limited volume (the shares did not trade on at least 20 trading days between the date of
the Receivership Order and the date of the sale). This approach.to the sale of the Manitou shares
was considered to be the approach that would garner the highest net estate realizations.
4.2 Investment in the Elora Property
4.2.1 The Company has a I 00% registered and beneficial interest in I 4 patented parcels of mining land
and one licence of occupation in the Upper Manitou Lake Area, Boyer Lakes Map Area, Kenora
Mining Division (Dryden Area) District of Kenora, Ontario (the "Elora Property"), which it
obtained pursuant to the terms of an Option Agreement between Elora Gold Mines Limited
("Elora") and Gold Summit Mines Ltd. ("Gold Summit") dated October I, 2002. The interest
was assigned to Seafield pursuant to an assignment agreement among Elora, Gold Summit and
Seafield dated October I, 2003, as restated between Elora and Seafield pursuant to an agreement
dated October I, 2005 (the "Elora Option Agreement").
4.2.2 According to the Elora . Option Agreement, Elora retained a 2.5% net smelter return royalty
("NSR") and Seafield is required to make annual advance royalty payments of $20,000 by
December I st of each year until the project reaches commercial production.
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66
4.2.3 In 2012, the Company entered into an option agreement with Manitou (the "Manitou Option
Agreement") whereby Maoitou could acquire the Company's interest in the Elora Property in
exchange for the payment of $0.2 million in cash, the issuance of 2,000,000 common shares of
Manitou and the completion of a $2.5 million work commitment over a three year period.
4.2.4 In May 2014, Manitou approached the Company to renegotiate the terms of the Manitou Option
Agreement, however, revised terms could not be agreed and the agreement was terminated.
4.2.5 The Receiver is proposing to market the Company's interest in the Elora Property through the sale
and investor solicitation process described fm1her herein.
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67
5 Proposed Sale and Investor Solicitation Process
5.1.1 Pursuant to the Receivership Order, the Receiver is authorized to market and sell the Property. In
this regard, the Receiver is of the view that it is necessary to execute a sale and investor solicitation
process ("SISP") to properly market Minera and the Elora Property with a goal of achieving
maximum realizations for all creditors and stakeholders.
5.1.2 The Receiver is seeking approval from this Honourable Court to approve the SISP which has been
developed in consultation with RMB. The SISP is attached hereto as Appendix "E". The key
activities and timelines of the SISP are summarized below:
Phase 2 Bid Deadline
Selection of the Successful Bid
Closing of any Successful Bid
19,2015
August 19, 2015
September II, 2015
September 30, 2015
Solicitation of non-binding letters of intent ("LOI''s) for the Company .
• • To occur at 5:00pm on July 15,2015 .
• LOis will be considered in to the ofthe SISP • Within 5 business days following the Phase l Bid Deadline, the LOis
received will" be assessed to determine which LOis will be qualified to move onto ·
• For a period of approximately 6 weeks after the identification of LOis, Prospective Bidders conduct additional due diligence and prepare irrevocable bids ("Final Bids").
• During Phase 2, Prospective Bidders will be given access to a more data room and the opportunity to meet with management and tour
• To occur at 5:00pm on August 19, 2015. • Prospective bidders must deliver their Final Bids prior to the Phase 2 Bid
Deadline. • Terms of all Final Bids will be clarified. • The Receiver will make a recommendation that the most favorable Final
Bid is selected and the terms of the agreement will be negotiated (the "Successful Bid") .
• •
5.1.3 Based on the proposed timeframe, the final closing of a sales transaction is contemplated for the
end of September, 2015. The Receiver is of the view that the timeframe is commercially reasonable
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given the nature of the asset and the market of potential investors. This time line may be subject to
regulatory approval requirements in Colombia.
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6 Receipts and Disbursements
6.1.1 As a development stage gold company, Seafield does not have any sources of revenue.
6.1.2 The disbursements during the receivership have primarily related to the preservation ofMinera's
operations in an idle state and include the payment of wages of Minera's employees, and other
costs such as site security, .insurance and property taxes. Funding Minera's operating costs on an
ongoing basis was necessary to avoid reorganization proceedings which the Former Board
attempted to initiate prior to the making of the Receivership Order and which could have prejudiced
the interests of RMB and other operating creditors of Minera.
6.1.3 Minera's operating costs were initially financed by the Receiver's borrowings from RMB under
Receiver's Certificates totalling USD $443,471 in principal.
6.1.4 On December 19, 2014, Minera entered into a loan agreement directly with RMB (the "Minera
Loan Agreement"). The Minera Loan Agreement, as amended, 3 enables Minera to borrow up to
USD $3,000,000 from RMB in order to fund operating costs. The interest rate under the Minera
Loan Agreement is LIBOR plus 7% (same as under the Facility Agreement) and there are no
incremental fees associated with the Minera Loan Agreement.
6.1.5 The Minera Loan Agreement was put in place to facilitate direct funding to Minera in order to
ensure that the funding provided by RMB to Minera would have priority over Min era's assets in
the event of an asset sale in respect ofMinera. The Receiver supported the Min era Loan Agreement
to ensure the ongoing funding of Minera and to avoid reorganization proceedings in respect of
Min era. In consideration ofRMB providing funding to Minera under the Minera Loan Agreement,
3 The financial accommodations provided for in the Minera Loan Agreement were initial provided in Canadian dollars, however the Minera Loan Agreement was amended on February 5, 2015 to provide that the financial accommodations would be in US dollars.
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70
the Receiver agreed to seek an order from the Court that the advances made under the Minera Loan
Agreement be deemed to be secured under the Receiver's Borrowing Charge (as that term is defined
in the Receivership Order).
6.1.6 The total amount outstanding under the Minera Loan Agreement as of April 30, 2015 is USD
$489,364.
6.1.7 The following table represents a summary of the Company's receipts and disbursements for the
period September 9, 2014 to April 30, 2015. The table does not include the amounts advanced by
RMB to Minera directly under the Minera Loan Agreement (USD $489,364 as of April30, 2015).
The aggregate total of the funds advanced to the Receiver through Receiver's Certificates pursuant
to the Facility Agreement and directly to Minera through the Minera Loan Agreement is close to
$1,000,000. Additional disbursements will be required in the coming months, including the
ongoing funding of Minera and professional fees to the Receiver and its independent counsel.
Accordingly, the Receiver is seeking to increase the authorized borrowings from $750,000 to USD
$3,000,000 (inclusive of amounts borrowed directly from RMB by Min era under the Minera Loan
Agreement).
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In the matter of the Receivership of Seafield Resources Ltd. Statement of Receipts & Disbursements
For the period September 9, 2014 to Apri130, 2015 As at April30, 2015
Account Description Disbursements Receipts Cash realizations from Seafield bank accounts 41,587 Sale of share in Manitou 12,500 HST refunds 8,351 Payments to Minera to fund operations 469,107 HSTpaid 54,220 Web hosting services 2,540 Bank charges 1,921 CRA deemed trust claim 1,624 Drilling sample storage 1,500 Total Receipts and Disbursements 530,912 62,438 Net Disbursements over Receipts 468,473
Funding provided by RMB (USD $443,471) 477,393 Cash used to fund receivership (468,473) Net balance in Estate 8,920
6.1.8 In addition to the above, fees of the Receiver, McMillan and Colombian Counsel up to and
including November 30, 2014 have been paid by RMB pursuant to a fee and disbursement
guarantee agreement. Details these fees have been included in Appendix "F".
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7 Conclusion and Order Sought
7.1.1 As may be evident from Section 3.0 and Appendix "C" of this First Report, the Receiver has faced
significant difficulty in obtaining possession over the Company's investment in Minera.
7.1.2 Though the Receiver has finally been able to replace the board ofMinera as of the date of the First
Report, a dispute remains between former executive of the Company, Prins, and Min era regarding
the governance ofMinera, as it relates to the Labour Agreement Amendments.
7.1.3 We submit this First Report to this Honourable Court in support of our Motion respectfully
requesting this Honourable Court to:
(a) Approve this First Report, and the activities of the Receiver described herein;
(b) Approve the SISP;
(c) . Approve the Statement of Receipts and Disbursements for the period September 9, 2014
to April30, 2015;
(d) Authorize the Receiver to assign the Company into bankruptcy;
(e) Increase the amount the Receiver is authorized to borrow from $750,000 to USD
$3,000,000; and
(f) Order that the advances made directly by RMB to Minera shall be deemed to be secured
obligations under the Receiver's Borrowing Charge.
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All of which is respectfully submitted this lith day of May, 2015.
KPMG INC. in its sole capacity as COURT-APPOINTED RECEIVER OF SEAFIELD RESOURCES LTD. and not in its personal capacity
Per: Philip Reynolds Senior Vice President
Per: Ryan Adlington Senior Vice President
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Court File No.CV-14-10686-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
IN THE MATTER OF SEAFIELD RESOURCES LTD. OF THE CITY OF TORONTO
IN THE PROVINCE OF ONTARIO
SUPPLEMENT TO THE FIRST REPORT TO THE COURT SUBMITTED BY KPMG INC.,
RECEIVER
May 18, 2015
75
1 Purpose of the Supplement to the First Report
1.1.1 The purpose of this supplement to the First Report is to provide this Honourable Court with an
update of events that have transpired subsequent to the filing of the First Report on May 12, 2015.
Capitalized terms used herein and not otherwise defined shall have the same meaning ascribed to
them in the First Report
1.1.2 On May 15, 2015, the Receiver was provided with responding motion materials from Mr. David
Prins, former Chief Executive Officer, President and Chairman of Seafield (the "Prins
Materials").
1.1.3 The Prins Materials suggest that Mr.Prins is mainly opposed to the Receiver having the power to
assign Seafield into bankruptcy and the effect that might have on the Labour Agreement
Amendments. On May 15, 2015, Receiver's counsel sent Mr. Prins a letter explaining that a
bankruptcy of Seafield would not have the effect of automatically nullifYing or voiding the Labour
Agreement Amendments and that should the trustee in bankruptcy of Seafield decide to pursue any
actions in respect of the Labour Agreement Amendments, it must proceed with such action at a
later date on notice to Mr. Prins. The letter is attached as Appendix "A".
1.1.4 The Prins Materials also assert that the Labour Agreement Amendments did not create any new
obligations for Minera or Seafield. While this is an issue to be determined at a later date, the
Receiver believes the following documents will be relevant in making that determination:
(a) Minutes ofSeafield's compensation committee and board of directors meeting dated
June 16, 2014 and June 20, 2014, respectively (Appendix "B");
(b) Amendments to the employment agreement of Mr. Prins dated August 28, 2014
(Appendix "C"); and
(c) The assignment agreement related to Ms. Stephanie Ashton's employment agreement
dated August 30, 2014 (Appendix "D").
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76
All of which is respectfully submitted this 18th day of May, 2015.
KPMG INC. in its sole capacity as COURT-APPOINTED RECEIVER OF SEAFIELD RESOURCES LTD. and not in its personal capacity
Per: Philip Reynolds Senior Vice President
Per: Ryan Adlington Senior Vice President
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77
AppendixC
Order of Justice Wilton-Siegel dated May 20, 2015 (the SISP Approval Order)
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78
Court File No. CV-14-10686-00CL
ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE HONOURABLE
JUSTICE WILTON-SIEGEL
~1i'i:i'iir-.
) WEDNESDAY, THE 20TH ) ) DAYOFMAY,2015
. /~6' 0~ d~ ~~--' ' frn~ATTER OF RECEIVERSHIP OF SEAFIELD RESOURCES LTD.
;'' ij ' ; ~~ '~ rn \({. .:·~-~ 4J ·5~, ~',~C"'J () \{,. '-~ .§:' ORDER
'··"'" ,..:; • "'I? ~.
~.<u!!~'TI'Iis MOTION, made by KPMG Inc. in its capacity as the Court-appointed
receiver pursuant to Section 243(1) of the Bankruptcy and Insolvency Act ("BIA'') and
Section 10 I of the Courts of Justice Act (the "Receiver") of Seafield Resources Ltd.
("Seafield''), was heard this day at 330 University Avenue, Toronto, Ontario.
ON READING the Motion Record of the Receiver, the Factum of_the Receiver,
the Responding Motion Record of David Prins, the Factum of David Prins, the
Supplement to the First Report of the Receiver to the Court, dated May 18, 2015, the
Affidavit of David Prins, dated May 19,2015 and on hearing the submissions of counsel
for the Receiver and counsel for RMB Australia Holdings Ltd. and RMB Resources Inc.,
the principal secured creditor of Seafield, and no one appearing for any other parties,
although properly served as appears from proof of service:
1. THIS COURT ORDERS that the time for service of the Notice of Motion and
the Motion Record of the Receiver is hereby abridged and validated so that this motion
is properly returnable today and hereby dispenses with further service thereof.
2. THIS COURT ORDERS that the Sales and Investor Solicitation Procedure,
attached as Schedule "A" to this Order (the "SISP"), is hereby approved.
3. THIS COURT ORDERS that the Receiver is hereby authorized to take the steps
that are reasonably necessary or desirable to carry out the SISP, including, without
79
I•
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limitation, all steps as the legal representative of Seafield as sole shareholder of Minera
Seafield S.A.S. ("Minera").
4. TillS COURT ORDERS that the permitted amount of the Receiver's Borrowings
Charge, provided for at paragraph 21 of the Order of Justice Newbould, dated September
9, 2014 (the "Receivership Order"), shall be and is increased from $750,000 to USD
$3,000,000.
5. THIS COURT ORDERS that the Receiver is hereby authorized to assign
Seafield Resources Ltd. into bankruptcy if it reasonably determines that such step is
necessary to preserve any rights to challenge the Labour Agreement Amendments (as
defined in the First Report) and any other reviewable transactions undertaken by
Seafield or any other person.
6. THIS COURT ORDERS that this Order, the Receivership Order and the SISP
shall remain valid and binding notwithstanding any assigrunent into bankruptcy of
Seafield.
7. This Court hereby requests the aid and recognition of any other Canadian and
foreign court, tribunal, regulatory or administrative body ("Judicial Body"), including ·
any Judicial Body of the Republic of Colombia, to give effect to this Order and to assist
the Receiver and its respective agents in carrying out the terms of this Order. All
Judicial Bodies are hereby respectfully requested to make such orders and to provide
such assistance to the Receiver as an officer of this Court, as may be necessary or
desirable to give effect to this Order, to grant representative status to the Receiver in any
foreign proceeding, or to assist the Receiver and its respective agents in carrying out the
terms of this Order.
EN7EhCC AT/ ii\SCMiT A TORO~TO ON I BOO" "JO: LEI DI\NS LE flEG;:rm: NO.:
MAY Z ·J 2015
80
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SCHEDULE "A"
81
,.
SALE AND INVESTOR SOLICITATION PROCEDURES
SEAFIELD RESOURCES LTD.
RECITALS
A. Pursuant to an Order (the "Receivership Order") granted by the Ontario Superior Court of Justice (the "Court") on September 9, 2014, KPMG Inc. was appointed as receiver (the "Receiver") of all of the assets, undertakings and properties of Seafield Resources Ltd. ("Seafield").
B. On May 19,2015, the Court granted an order (the "SISP Approval Order") approving a sale and investor solicitation process (the "SISP") and the SISP procedures set forth herein (these "SISP Procedures").
C. The SISP Approval Order, the SISP and these SISP Procedures shall govern the process for soliciting and selecting bids for (i) the sale of all or substantially all of the property, assets and undertakings of Seafield (the "Seafield Property''), including without limitation (a) all of the share capital of Minera (the "Minera Shares"), and (b) the Elora gold mine and related assets located in the Kenora Mining Division in Northwestern Ontario (the "Elora Property") (a "Sale"); (ii) the sale of all or substantially all of the property, assets, and undertakings of Minera (the "Minera Property") by Minera, subject to compliance with applicable Colombian law and approval by the Receiver acting as the authorized representative of the sole shareholder of Minera; and (iii) for the restructuring, recapitalization or refinancing of Seafield or Minera (an "Investment").
D. All dollar amounts expressed herein, unless otherwise noted, are in Canadian currency. Unless otherwise indicated herein any event that occurs on a day that is not a Business Day shall be deemed to occur on the next Business Day.
ARTICLE 1- DEFINED TERMS
In these SISP Procedures:
(I) "Approval Hearing" has the meaning ascribed thereto in Section 5.8(1).
(2) "Backup Bid" has the meaning ascribed thereto in Section 5.6(4).
(3) "Backup Bid Expiration Date" has the meaning ascribed thereto in Section 5.6(6).
(4) "Backup Bidder" has the meaning ascribed thereto in Section 5.6(4).
(5) "Bid Notice" has the meaning ascribed to it in Section 4.3(5).
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(6) "Business Day" means any day other than (i) a Saturday or Sunday or (ii) a day which is a statutory holiday in either Toronto, Ontario or Medellin, Colombia.
(7) "Court" has the meaning ascribed thereto in Recital A.
(8) "Confidentiality Agreement" has the meaning ascribed thereto in Section 2.4(2).
(9) "Creditor Consultation Rights" has the meaning ascribed to it in Section 5.7.
(10) "Defmitive Investment Agreement" has the meaning ascribed thereto in Section 5.3(a).
(11) "Deposit" has the meaning ascribed thereto in Section 5.2(i).
(12) "Elora Property" has the meaning ascribed thereto in Recital C.
(13) "Form of Purchase Agreement" means the form of purchase and sale agreement to be developed by the Receiver and provided to Qualified Phase 2 Bidders that submitted a: . Qualified Non-Binding Indication of Interest that is a Sale Proposal prior to the Phase 1 Bid Deadline.
(14) "Investment" has the meaning ascribed thereto in Recital C.
(15) "Investment Proposal" has the meaning ascribed thereto in Section 2.5(1 )(d).
(16) "Known Potential Bidders" has the meaning ascribed thereto in Section 2.4(1).
(17) "Minera" means Seafield's wholly-owned Colombian subsidiary, Minera Seafield S.A.S.
(18) "Minera Property" has the meaning ascribed thereto in Recital C.
(19) "Minera Shares" has the meaning ascribed thereto in Recital C.
(20) "New Potential Bidder" has the meaning ascribed thereto in Section 2.4(1).
(21) "Non-Binding Indication of Interest" has the meaning ascribed thereto in Section4.1(1).
(22) "Phase 1 Bid Deadline" has the meaning ascribed thereto in Section 4.1 (2).
(23) "Phase 2 Bid Deadline" has the meaning ascribed thereto in Section 5.1.
(24) "Potential Bidder" has the meaning ascribed thereto in Section 2.5(1).
(25) "Potential Bidder Deadline" has the meaning ascribed thereto in Section 2.5(1).
(26) "Purchase Price" has the meaning ascribed thereto in Section 5.2(b ).
(27) "Qualified Bidder" has the meaning ascribed thereto in Section 5.4(1).
(28) "Qualified Bids" has the meaning ascribed thereto in Section 5.4(1).
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(29) "Qualified Investment Bid" has the meaning ascribed thereto in Section 5.3.
(30) "Qualified Non-Binding Indication of Interest" has the meaning ascribed thereto in Section 4.2(1).
(31) "Qualified Phase 1 Bidder" has the meaning ascribed thereto in Section 2.5(2).
(32) "Qualified Phase 2 Bidder" has the meaning ascribed thereto in Section 4.3( 4).
(33) "Qualified Purchase Bid" has the meaning ascribed thereto in Section 5.2.
(34) "Receiver" means KPMG Inc., in its capacity as receiver of Seafield pursuant to the Receivership Order.
(35) "Receivership Order" has the meaning ascribed thereto in Recital A.
(36) "RMB" means RMB Australia Holdings Limited.
(37) "RMB Facility" means the lending facility made available to Seafield by RMB pursuant to that certain Credit Agreement dated February 21, 2013, as amended, restated, or supplemented from time to time.
(38) "Sale" has the meaning ascribed thereto in Recital C.
(39) "Sale Proposal" has the meaning ascribed thereto in Section 2.5(1)(d).
( 40) "Seafield" has the meaning ascribed thereto in Recital A.
(41) "Secured Claims Amount" means the aggregate amount owing (whether for principal, interest, fees and recoverable expenses) to the Secured Creditor, as at the date which the transactions contemplated by the Qualified Bid or Successful Bid, if any, are completed, under the RMB Facility and validly secured by the Seafield Property, all as determined by the Receiver, Court or other court of competent jurisdiction.
( 42) "Secured Creditor" means RMB or any purchaser or assignee of the RMB Facility, related security documents and indebtedness outstanding thereunder.
( 43) "SISP" has the meaning ascribed thereto in Recital B.
(44) "SISP Approval Order" has the meaning ascribed thereto in Recital B.
(45) "SISP Procedures" has the meaning ascribed thereto in Recital B.
(46) "Solicitation Process" has the meaning ascribed thereto in Section 2.1(1).
(47) "Successful Bid" has the meaning ascribed thereto in Section 5.6(4).
( 48) "Successful Bidder" has the meaning ascribed thereto in Section 5.6( 4).
(49) "Target Closing Date" means September 30, 2015.
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(50) "Teaser Letter" has the meaning ascribed thereto in Section 2.4(1 ).
ARTICLE 2- SOLICITATION
Section 2.1 Solicitation Process
(1) These SISP Procedures describe, among other things, the Seafield Property and the Minera Property available for sale, the opportunity for an investment in Seafield or Minera, the debts and equity interests of Seafield in need of restructuring, the manner in which prospective bidders may gain access to or continue to have access to due diligence materials concerning Seafield, the Seafield Property, the Minera Shares, the Minera Property, and the Elora Property, the manner in which bidders and bids become Qualified Bidders and Qualified Bids, respectively, the receipt and negotiation of bids received, the ultimate selection of one or more Successful Bids and a Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures), and the approval thereof by the Court (collectively, the "Solicitation Process").
(2) The Receiver, shall conduct the Solicitation Process as outlined herein. In the event that there is a disagreement or clarification required as to the interpretation or application of these SISP Procedures, the Court will have the jurisdiction to hear such matter and provide directions, upon application of the Receiver, or any other party, with a hearing on no less than three (3) Business Days notice.
Section 2.2 Sale and Investment Opportunity
These SISP Procedures provide for (i) a sale of all or part of the Seafield Property, (ii) a sale of all or part of the Minera Property and (iii) an investment in Seafield and/or Minera, in each case structured in a manner acceptable to the Receiver.
Section 2.3 "As Is, Where Is"
Any Sale or Investment will be on an "as is, where is" basis and without surviving representations, warranties, covenants or indemnities of any kind, nature, or description by the Receiver, Seafield or Minera or any of their agents, estates, advisors, professionals or otherwise, except to the extent set forth in the relevant agreement with the Successful Bidder.
Section 2.4 Solicitation of Interest
(1) As soon as reasonably practicable after the granting of the SISP Approval Order, the Receiver, will prepare a list of potential bidders in respect of a Sale or Investment (the "Known Potential Bidders"). The Secured Creditor may on a timely basis identify any parties to the Receiver which shall be included in the list of Known Potential Bidders. Concurrently, the Receiver, will prepare an initial offering summary (the "Teaser Letter") notifying Known Potential Bidders of the existence of the Solicitation Process and inviting the Known Potential Bidders to express their interest in participating in a Sale or an Investment.
(2) Promptly after the granting of the SISP Approval Order, the Receiver shall distribute to the Known Potential Bidders the Teaser Letter and a form of confidentiality agreement satisfactory to the Receiver (a "Confidentiality Agreement"). The Receiver shall also issue a press release announcing this SISP.
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Section 2.5 Participation Requirements
(1) Unless otherwise provided for herein, ordered by the Court or agreed by the Receiver, in order to participate in the Solicitation Process and be considered for qualification as a Qualified Phase I Bidder, an interested party (a "Potential Bidder") must deliver the following:
(a) an executed Confidentiality Agreement, which shall inure to the benefit of any purchaser of any part of the Seafield Property or the Minera Property or any investor in Seafield or Minera;
(b) a specific indication of the anticipated sources of capital for such Potential Bidder and preliminary evidence of the availability of such capital, or such other form of financial disclosure and credit support or enhancement that will allow the Receiver and its legal and financial advisors, to make, in their reasonable business or professional judgment, a reasonable determination as to the Potential Bidder's fmancial and other capabilities to consummate a Sale or an Investment;
(c) a letter setting forth the identity of the Potential Bidder, the contact information for such Potential Bidder, full disclosure of the direct and indirect owners of the Potential Bidder and their principals;
(d) an indication of whether the Potential Bidder is offering to (i) acquire all or substantially all of the Seafield Property and/or the Minera Property (a "Sale Proposal"); or (ii) make an investment in Seafield and/or Minera (an "Investment Proposal"); and
(e) a written acknowledgment of receipt of a copy of the SISP Approval Order (including these SISP Procedures) and agreeing to accept and be bound by the provisions contained therein.
(2) A Potential Bidder will be deemed a "Qualified Phase 1 Bidder" if: (a) such Potential Bidder has satisfied all of the requirements described in Section 2.5(1) above; and (b) such Potential Bidder's fmancial information and credit support or enhancement demonstrate to the satisfaction of the Receiver in its reasonable business judgment, the financial capability of such Potential Bidder to consummate a transaction and that such Potential Bidder is likely (based on availability of financing, experience and other considerations) to consummate either a Sale or an Investment. Notwithstanding the requirements set out in Section 2.5(1) (a) to (e), the Receiver may designate any Potential Bidder as a Qualified Phase I Bidder. Upon executing the Confidentiality Agreement, the Secured Creditor shall be deemed to be a Qualified Phase I Bidder.
(3) The determination as to whether a Potential Bidder is a Qualified Phase 1 Bidder pursuant to Section 2.5(2) will be made as promptly as practicable but no later than five (5) Business Days after a Potential Bidder delivers all of the materials required above. If it is determined that a Potential Bidder is a Qualified Phase 1 Bidder, the Receiver will promptly notifY the Potential Bidder that it is a Qualified Phase 1 Bidder.
(4) If it is determined in accordance with Section 2.5(2) above, that there are no Qualified Phase 1 Bidders and that, as a consequence, proceeding with these SISP Procedures is not in the
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best interests of Seafield or its stakeholders, the Receiver shall notify the Secured Creditor forthwith, and within five (5) Business Days of such determination, file an application with the Court seeking directions with respect to the conduct of the SISP.
ARTICLE 3- DUE DILIGENCE
(1) As soon as practicable after the determination that a party is a Qualified Phase 1 Bidder, the Receiver will make available to such Qualified Phase 1 Bidder in a secure online electronic data room confidential due diligence information regarding (i) the Seafield Property and the Minera Prope1ty available for sale, and (ii) the debt and equity interests in Seafield and Minera. At the request of a Qualified Phase 1 Bidder, such confidential due diligence information shall also be provided on a confidential basis to a proposed lender of such Qualified Phase 1 Bidder that is reasonably acceptable to the Receiver.
(2) Each Qualified Phase 1 Bidder shall have such access to due diligence materials and information relating to the Seafield- Property, the Minera Property and the debt and equity interests in Seafield and Minera, as the Receiver deems appropriate.
(3) At the discretion of the Receiver due diligence access may include presentations (as may be scheduled by the Receiver), access to physical and secure online electronic data rooms, on-site inspections and such other matters as a Qualified Phase I Bidder or Qualified Phase 2 Bidder may reasonably request and as to which the Receiver, in its reasonable business judgment deems appropriate. The Receiver shall not be obligated to furnish any due diligence materials or information after the Phase 2 Bid Deadline.
(4) Without limiting the generality of any term or condition of any confidentiality agreement between the Receiver and any Potential Bidder, Qualified Phase 1 Bidder, Qualified Phase 2 Bidder, Successful Bidder or Backup Bidder, unless otherwise agreed by the Receiver or by further order of the Court, no Potential Bidder, Qualified Phase 1 Bidder, Qualified Phase 2 Bidder, Successful Bidder or Backup Bidder shall be permitted to have any discussions with any counterparty to any contract with Seafiled or Minera, any current or former director, officer or employee of Seafield or Minera, or with any regulatory authority responsible for Seafield, Minera or any of their businesses or any other Potential Bidder, Qualified Phase 1 Bidder or Qualified Phase 2 Bidder in coiDlection with a Non-Binding Indication of Interest or any other bid submitted in accordance with the terms hereof or in contemplation thereof.
(5) The Receiver is not responsible for, and will have no liability with respect to, any information obtained by any Known Potential Bidder, Potential Bidder or Qualified Bidder in coiD!ection with the Seafield Property, Minera Property, a Sale Transaction or Investment. The Receiver does not make any representations or warranties whatsoever as to the information or the materials provided, except, to the extent the information is provided under any definitive sale or investment agreement executed and delivered by a Successful Bidder or Backup Bidder.
ARTICLE 4- PHASE 1
Section 4.1 Seeking Non-Binding Indications oflnterest by Qualified Phase 1 Bidders
(1) From the date of the SISP Approval Order until the Phase 1 Bid Deadline, in accordance with the terms of the SISP Approval Order and these SISP Procedures, the Receiver will seek to
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identify and qualify Qualified Phase 1 Bidders, and will solicit non-binding indications of interest from Qualified Phase 1 Bidders to acquire all, or substantially all of the Seafield Property or the Minera Property or to invest in Seafield and/or Minera (each a "Non-Binding Indication of Interest").
(2) Subject to Section 4.3(5), in order to continue to participate in the SISP Process, a Qualified Phase 1 Bidder must deliver a Non-Binding Indication of Interest to the Receiver so as to be received by the Receiver not later than 5:00p.m. (Toronto time) on July 15, 2015, or such later date or time as the Receiver may determine appropriate (the "Phase 1 Bid Deadline").
Section 4.2 Non-Binding Indications of Interest by Qualified Phase 1 Bidders
(1) Unless otherwise ordered by the Court or agreed by the Receiver, a Non-Binding Indication of Interest will be considered a "Qualified Non-Binding Indication oflnterest" only . if it is submitted by a Qualified Phase 1 Bidder, received on or before the Phase 1 Bid Deadline, and contains the following information:
(a) An indication of whether the Qualified Phase 1 Bidder is offering to (i) make a Sale Proposal; or (ii) make an Investment Proposal;
(b) In the case of a Sale Proposal, it shall identify
i. the purchase price (including liabilities to be assumed by the Qualified Phase 1 Bidder);
n. the assets included, any of the assets expected to be excluded, and/or any additional assets desired to be included in the transaction;
iii. the structure and financing of the transaction (including, but not limited to, the sources of financing for the purchase price, preliminary evidence of the availability of such financing and the steps necessary and associated timing to obtain the financing and consummate the proposed transaction and any related contingencies, as applicable);
iv. an acknowledgement that the contemplated sale will be made on an "as is where is" basis;
v. the proposed treatment of employees ofMinera;
vi. the key material contracts and leases, if any, the Qualified Phase 1 Bidder wishes to acquire and the Qualified Phase 1 Bidder's proposed treatment of related cure costs, if any;
vii. any anticipated corporate, shareholder, internal or regulatory approvals, including without limitation any approvals with respect to the grant or transfer of any mining permits or licenses, required to close the transaction and the anticipated time frame and any anticipated impediments for obtaining such approvals;
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viii. a timeline to closing with critical milestones and a statement with respect to the Qualified Phase 1 Bidder's ability to consummate the contemplated transaction by the Target Closing Date;
ix. a detailed description of any additional due diligence required or desired to be conducted prior to the Phase 2 Bid Deadline, if any;
x. contact information for any business, financial or legal advisors retained or to be retained in connection with the contemplated transaction;
xi. a specific indication of sources of capital for the Qualified Phase 1 Bidder and preliminary evidence of the availability of such capital, or such other form of fmancial disclosure and credit-quality support or enhancement, including contact information for capital/financing sources, that will allow the Receiver to make a reasonable business judgement as to the Qualified Phase 1 Bidder's financial or other· capabilities to consummate the contemplated transaction;
xii. any conditions to closing that the Qualified Phase 1 Bidder may wish to impose; and
xiii. any other terms or conditions of the Sale Proposal which the Qualified Phase 1 Bidder believes are material to the transaction;
(c) In the case of an Investment Proposal, it shall identify:
(i) the aggregate amount of the equity and debt investment (including, the sources of such capital, preliminary evidence of the availability of such capital and the steps necessary and associated timing to obtain the capital and consummate the proposed transaction and any related contingencies, as applicable) to be made in Seafield or Minera;
(ii) the underlying assumptions regarding the pro forma capital structure (including, the anticipated debt levels, debt service fees, interest and amortization);
(iii) the consideration to be allocated to the stakeholders including claims of any secured or unsecured creditors of Seafield and Minera and the proposed treatment of employees;
(iv) the structure and fmancing of the transaction including all requisite financial assurance including a specific indication of sources of capital for the Qualified Phase 1 Bidder and preliminary evidence of the availability of such capital, or such other form of financial disclosure and credit-quality support or enhancement, including contact information for capital/financing sources, that will allow the Receiver to make a reasonable business judgement as to the Qualified Phase 1 Bidder's financial or other capabilities to consummate the contemplated transaction;
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(v) any anticipated corporate, shareholder, internal or regulatory approvals, including without limitation any approvals with respect to the grant or transfer of any mining permits or licenses, required to close the transaction, the anticipated time frame and any anticipated impediments for obtaining such approvals;
(vi) the proposed corporate goverance structure of the entity or entities owning/operating ·the business, following implementation of the investment
(vii) contact information for any business, fmancial or legal advisors retained or to be retained in connection with the contemplated transaction;
(viii) additional due diligence required or desired to be conducted prior to the Phase 2 Bid Deadline, if any;
(ix) a timeline to closing with critical milestones and a statement with respect to the Qualified Phase 1 Bidder's ability to consummate the contemplated transaction by the Target Closing Date;
(x) to the extent not addressed elsewhere, the proposed treatment of stakeholders, including lenders, trade creditors, shareholders and employees;
(xi) any conditions to closing that the Qualified Phase 1 Bidder may wish to impose;
(xii) any other terms or conditions of the Investment Proposal which the Qualified Phase 1 Bidder believes are material to the transaction; and
(d) Such other infom1ation reasonably requested by the Receiver,
(2) The Receiver may waive compliance with any one or more of the requirements specified herein and deem any non-compliant Non-Binding Indication of Interest to be a Qualified Non-Binding Indication of Interest.
Section 4.3 Assessment of Qualified Non-Binding Indications of Interest and Determination of Qualified Phase 2 Bidders
(1) Subject to Section 4.3(7) and Section 5.7, the Receiver will provide copies of any Qualified Non-Binding Indications of Interest received to the Secured Creditor.
(2) The Receiver will assess any Qualified Non-Binding Indications of Interest received, and will determine whether proceeding with these SISP Procedures on the basis of such Qualified Non-Binding Indications ofinterest is in the best interests of Seafield and its stakeholders. Such assessment will be made as promptly as practicable after the Phase I Bid Deadline.
(3) If the Receiver, in accordance with Section 4.2 above, determines that no Qualified Non-Binding Indication of Interest was received, the Receiver shall advise the Secured Creditor
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forthwith, and within five (5) Business Days of the Phase 1 Bid Deadline, file an application with the Court seeking directions.
( 4) If the Receiver, in accordance with Section 4.2 above, determines that (i) one or more Qualified Non-Binding Indications oflnterest were received, and (ii) proceeding with these SISP Procedures is in the best interests of Seafield and its stakeholders, these SISP Procedures will continue and each Qualified Phase 1 Bidder who has submitted a Qualified Non-Binding Indication of Interest that is determined by the Receiver on consideration of the information delivered at Section 4.2(1), likely be consummated, shall be deemed to be a "Qualified Phase 2 Bidder". Subject to the restrictions set out in Section 5.7, the Receiver shall provide advance wxitten notice of the commencement of Phase 2 and the names of the Qualified Phase 2 Bidders to the Secured Creditor.
(5) Notwithstanding any other provision in these SISP Procedures, the Secured Creditor shall, subject to executing the Confidentiality Agreement, be deemed to be a Qualified Phase 2 Bidder even if it did not submit a Non-Binding Indication of Interest. Subject to the restrictions and limitations set out in Section 4.3(7) and Section 5.7, the Secured Creditor shall be permitted to submit a Qualified Purchase Bid or Qualified Investment Bid, provided that the Secured Creditor declares its intention to do so within 5 business days of the commencement of Phase 2 by delivering written notice thereof to the Receiver (the "Bid Notice"). The Bid Notice shall contain the amount of the Secured Creditor's bid together with a summary of all material terms of the bid. The Secured Creditor shall not be entitled to increase the amount of its bid following delivery of the Bid Notice. The Receiver shall forthwith provide a copy of the Secured· Creditor's Bid Notice to all Qualified Phase 1 Bidders.
( 6) If the Secured Creditor does not submit a Bid Notice within 5 business days of the commencement of Phase 2 then the Secured Creditor will not be permitted to submit any bid thereafter, save and except for in the circumstances describe!l in Section 5.5(2).
(7) Notwithstanding any other provision of this SISP, to the extent that the Secured Creditor or any employee, officer, director or partner of the Secured Creditor or any of its affiliates, at any time received copies of any Qualified Non-Binding Indication of Interest or information regarding the proposed consideration to be paid by the bidder in such a Qualified Non-Binding Indication of Interest, the Secured Creditor shall not be permitted to submit any bid that provides for consideration that exceeds the amount of the Secured Claims Amount.
ARTICLE 5- PHASE 2
Section 5.1 Seeking Qualified Bids by Qualified Phase 2 Bidders
In order to continue to participate in the Solicitation Process, a Qualified Phase 2 Bidder must deliver a Qualified Purchase Bid or Qualified Investment Bid to the Receiver and such bids must be received by the Receiver by no later than 5:00p.m. (Toronto time) on August 19, 2015, or such later date or time as the Receiver may determine appropriate (the "Phase 2 Bid Deadline").
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Section 5.2 Qualified Purchase Bids
A Sale Proposal submitted by a Qualified Phase 2 Bidder will be considered a "Qualified Purchase Bid" only if the Sale Proposal complies with all of the following:
(a) it includes a letter stating that the Sale Proposal is irrevocable until the earlier of (a) the approval by the Court of a Successful Bid, and (b) 45 Business Days following the Phase 2 Bid Deadline; provided, however. that if such Sale Proposal is selected as the Successful Bid or the Backup Bid, it shall remain irrevocable until the closing of the Successful Bid or the Backup Bid, as the case may be;
(b) it includes a duly authorized and executed purchase and sale agreement substantially in the Form of Purchase Agreement specifying the purchase price, expressed in Canadian dollars (the "Purchase Price"), together with all exhibits and schedules thereto, and such ancillary agreements as may be required by the Qualified Phase 2 Bidder with all exhibits and schedules thereto (or term sheets that describe the material tenus and provisions of such ancillary agreements) and such ancillary agreements and the proposed orders to approve the sale by the Court, as well as copies of such materials marked to show the amendments and modifications to the Form of Purchase Agreement;
(c) it does not include any request or entitlement to any break-fee, expense reimbursement or similar type of payment. Further, by submitting a Sale Proposal, a Qualified Phase 2 Bidder shall be deemed to waive its right to pursue a substantial contribution claim in any way related to the submissions of its Sale Proposal or these SISP Procedures;
(d) it includes evidence sufficient to allow the Receiver to make a reasonable determination as to the bidder's (and its direct and indirect owners' and their principals') financial and other capabilities to consummate the transaction contemplated by the Sale Proposal, which evidence could include but is not limited to evidence of a firm, irrevocable commitment for all required funding and/or financing from a creditworthy bank or financial institution;
(e) it is not conditioned on (i) the outcome of unperformed due diligence by the bidder and/or (ii) obtaining any financing capital and includes an acknowledgement and representation that the bidder has had an opportunity to conduct any and all required due diligence prior to making its Sale Proposal;
(f) it fully discloses the identity of each entity that is bidding or otherwise that will be sponsoring or participating in the Sale Proposal, including the identification of the Qualified Phase 2 Bidder's direct and indirect owners and their principals, and the complete terms of any such participation;
(g) it includes an acknowledgement and representation that the Qualified Phase 2 Bidder: (i) has relied solely upon its own independent review, investigation and/or inspection of any documents and/or the assets to be acquired and liabilities to be assumed in making its Sale Proposal; (ii) did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever,
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whether express or implied (by operation of law or otherwise), regarding the assets to be acquired or liabilities to be assumed or the completeness of any information provided in connection therewith, including by the Receiver, or any of its advisors, except as expressly stated in the purchase and sale agreement submitted by it; (iii) is a sophisticated party capable of making its own assessments in respect of making its Sale Proposal; and (iv) has had the benefit of independent legal advice in connection with its Sale Proposal;
(h) it includes evidence, in form and substance reasonably satisfactory to the Receiver, of authorization and approval from the Qualified Phase 2 Bidder's board of directors (or comparable governing body) with respect to the submission, execution, delivery and closing of the transaction contemplated by the Sale Proposal;
(i) it is accompanied by a refundable deposit (the "Deposit") in the form of a wire transfer (to a trust account specified by the Receiver), or such other form acceptable to the Receiver, payable to the order of KPMG Inc., in trust, in an amount equal to 5% of the proposed gross purchase price, to be held and dealt with in accordance with these SISP Procedures;
G) it contains full details of the proposed number of employees of Minera who will become employees of the Qualified Phase 2 Bidder and the proposed terms and conditions of employment to be offered to those employees;
(k) it includes an acknowledgement and representation that the Qualified Phase 2 Bidder will assume the obligations of Seafield or Minera under executory contracts, unexpired leases, and licences proposed to be assigned (or identifies with particularity which of such contracts, leases,· and licenses of Seafield or Minera, as applicable, that the Qualified Phase 2 Bidder wishes not to assume, or alternatively wishes to assume), contains full details of the Qualified Phase 2 Bidder's proposal for the treatment of related cure costs; and which of these the assumption of which is a condition of closing;
(!) it provides for closing of the Qualified Purchase Bid by no later than the Target Closing Date;
(m) if the Qualified Phase 2 Bidder is an entity newly formed for the purpose of the transaction, the bid shall contain an equity or debt commitment letter from the parent entity or sponsor, which is satisfactory to the Receiver, that names the Receiver as a third party beneficiary of any such commitment letter with recourse against such parent entity or sponsor;
(n) it includes evidence, in form and substance reasonably satisfactory to the Receiver, of compliance or anticipated compliance with any and all applicable Canadian, Colombian and any foreign regulatory approvals (including, if applicable, anti-trust regulatory approval and any approvals with respect to the grant or transfer of any mining permits or licenses), the anticipated time frame for such compliance and any anticipated impediments for obtaining such approvals;
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( o) it contains other information reasonably requested by the Receiver; and
(p) it is received by no later than the Phase 2 Bid Deadline.
Section 5.3 Qualified Investment Bids
An Investment Proposal submitted by a Qualified Phase 2 Bidder will be considered a "Qualified Investment Bid" only if the Investment Proposal complies with all of the following:
(a) it includes duly authorized and executed binding definitive documentation setting out the terms and conditions of the proposed transaction, including the aggregate amount of the proposed equity and/or debt investment and details regarding the proposed equity and/or debt structure of Seafield and/or Minera, if applicable, following completion of the proposed transaction (a "Definitive Investment Agreement");
(b) it includes a letter stating that the Investment Proposal is irrevocable until the earlier of (a) approval by the Court of a Successful Bid, and (b) 45 Business Days following the Phase 2 Bid Deadline; provided, however, that if such Investment Proposal is selected as the Successful Bid or Backup Bid, it shall remain irrevocable until the earlier of (i) the closing of the Successful Bid or the Backup Bid, as the case may be, and (ii) the outside date stipulated in the Successful Bid or the Backup Bid, as applicable;
(c) it does not include any request or entitlement to any break-fee, expense reimbursement or similar type of payment. Further, by submitting an Investment Proposal, the Qualified Phase 2 Bidder shall be deemed to waive its right to pursue a substantial contribution claim in any way related to the submission of its Investment Proposal or these SISP Procedures;
(d) it includes written evidence of a firm, irrevocable commitment for all required funding and/or financing from a creditworthy bank or financial institution to consummate the proposed transaction, or other evidence satisfactory to the Receiver, to allow the Receiver to make a reasonable determination as to the Qualified Phase 2 Bidder's financial and other capabilities to consummate the transaction contemplated by the Investment Proposal;
(e) it is not conditioned on (i) the outcome of unperformed due diligence by the Qualified Phase 2 Bidder and/or (ii) obtaining any financing capital and includes an acknowledgement and representation that the Qualified Phase 2 Bidder has had an opportunity to conduct any and all required due diligence prior to making its bid;
(f) it fully discloses the identity of each entity that is bidding or otherwise that will be sponsoring or participating in the Investment Proposal, including the identification of the Qualified Phase 2 Bidder's direct and indirect owners and their principals, and the complete terms of any such participation;
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(g)
(b)
(i)
(k)
(l)
(m)
(n)
it includes an acknowledgement and representation that the Qualified Phase 2 Bidder: (i) has relied solely upon its own independent review, investigation and/or inspection of any documents in making its Investment Proposal; (ii) did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever, whether express or implied (by operation of law or otherwise), regarding the business of Seafield or Minera, or the completeness of any information provided in connection therewith, including by the Receiver or any of its advisors, except as expressly stated in the Definitive Investment Agreement; (iii) is a sophisticated party capable of making its own assessments in respect of making its Investment Proposal; and (iv) has had the benefit of independent legal advice in connection with its Investment Proposal;
it includes evidence, in form and substance reasonably satisfactory to the Receiver, of authorization and approval from the Qualified Phase 2 Bidder's board of directors (or comparable governing body) with respect to the submission, execution, delivery and closing of the transaction contemplated by the Investment Proposal;
it is accompanied by a Deposit in the form of a wire transfer (to a trust account specified by the Receiver), or such other form acceptable to the Receiver, payable to the order of KPMG Inc., in trust, in an amount equal to 5% of the total proposed investment, to be held and dealt with in accordance with these SISP Procedures;
it provides for closing of the Qualified Investment Bid by no later than.theTarget Closing Date;
if the Qualified Phase 2 Bidder is an entity newly formed for the purpose of the transaction, the Investment Proposal shall contain an equity or debt commitment letter from the parent entity or sponsor, and satisfactory to the Receiver, that names the Receiver as a third party beneficiary of any such commitment letter with recourse against such parent entity or sponsor;
it includes evidence, in form and substance reasonably satisfactory to the Receiver, of compliance or anticipated compliance with any and all applicable Canadian, Colombian, and foreign regulatory approvals (including, if applicable, anti-trust regulatory approval), the anticipated time frame for such compliance and any anticipated impediments for obtaining such approvals;
it contains other information reasonably requested by the Receiver; and
it is received by no later than the Phase 2 Bid Deadline.
Section 5.4 Qualified Bids
(1) Qualified Purchase Bids and Qualified Investment Bids shall hereinafter be referred to as "Qualified Bids" and each a "Qualified Bid" and each bidder who has submitted a Qualified Bid shall hereinafter be referred to as a "Qualified Bidder".
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(2) Notwithstanding Section 5.2 and Section 5.3 hereof, the Receiver may waive compliance with any one or more of the Qualified Bid requirements specified herein, and deem such non-compliant bids to be Qualified Purchase Bids or Qualified Investment Bids, as the case may be.
Section 5.5 No Qualified Bids
(1) The Receiver will assess the Qualified Bids received, if any, and will determine whether it is likely that the transactions contemplated by such Qualified Bids are likely to be consummated and whether proceeding with these SISP Procedures is in the best interests of Seafield and its stakeholders. Such assessments will be made as promptly as practicable but no later than five (5) Business Days after the Phase 2 Bid Deadline, provided that such time period may be extended upon the consent of the Receiver or order of the Court. upon application and appropriate notice.
(2) If the Receiver, in accordance with Section 5.5(1) above, determines that (a) no Qualified Bid was received, or (b) at least one Qualified Bid was received but it is not likely that the transactions contemplated in any such Qualified Bids will be consummated, the Receiver shall notify the Secured Creditor forthwith, and within ten (1 0) Business Days of such determination, file an application with the Court seeking directions. In the circumstances described in this subsection, the Secured Creditor shall have the option within five (5) business days from such determination to submit a credit bid (that would constitute a binding agreement if accepted) even. if they did not submit a credit bid at any other point during Phase 1 or Phase 2, and notwithstanding the receipt of any new information regarding bids or offers after the commencement of Phase 2.
Section 5.6 Selection Criteria
(1) In selecting the Successful Bid, the Receiver will review each Qualified Bid. Evaluation criteria with respect to a Sale Proposal may include, but are not limited to items such as: (a) the purchase price and the net value (including assumed liabilities and other obligations to be performed or assumed by the bidder) provided by such bid; (b) the claims likely to be created by such bid in relation to other bids; (c) the counterparties to the transaction; (d) the proposed revisions to the Form of Purchase Agreement and the terms of the transaction documents; (e) other factors affecting the speed, certainty and value of the transaction (including any regulatory approvals required to close the transaction); (f) the assets included or excluded from the bid and the transaction costs and risks associated with closing multiple transactions versus a single transaction for all or substantially all of the Seafield Property and/or the Minera Property; (g) the estimated number of employees of Minera that will be offered post closing employment by the bidder and any proposed measures associated with their continued employment; (h) the transition services required from Seafield or Minera post-closing and any related restructuring costs; and (i) the likelihood and timing of consummating the transaction by the Target Closing Date.
(2) Evaluation criteria with respect to an Investment Proposal may include, but are not limited to items such as: (a) the amount of equity and debt investment and the proposed sources and uses of such capital; (b) the debt to equity structure post-closing; (c) the counterparties to the transaction; (d) the terms of the transaction documents; (e) other factors affecting the speed, certainty and value of the transaction; (f) planned treatment of stakeholders; and (g) the likelihood and timing of consummating the transaction by the Target Closing Date ..
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(3) The Receiver may select Qualified Bids for further negotiation and/or clarification of any terms or conditions of such Qualified Bids, including the amounts offered, before identifying the highest or otherwise best Qualified Bid(s) received (the "Successful Bid").
( 4) Upon completion of any further negotiations or clarifications that may be conducted pursuant to Section 5 .4(3) above, the Receiver will identify the Successful Bid and may identify a next highest or otherwise best Qualified Bid received (such offer, the "Backup Bid"). The Qualified Bidders(s) who made the Successful Bid is/are the "Successful Bidder" and the Qualified Bidder(s) who made the Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures) is/are .the "Backup Bidder'} The Receiver will notify the Successful Bidder and any Backup Bidder that they are, respectively, the Successful Bidder and the Backup Bidder.
(5) The Receiver will finalize definitive agreements in respect of the Successful Bid and the Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures), if any, conditional upon approval by the Court.
(6) If a Backup Bid is identified in accordance with these SISP Procedures, then such Backup Bid shall remain open· until the consummation of the transaction contemplated by the Successful Bid (the "Backup Bid Expiration Date").
(7) All Qualified Bids (other than the Successful Bid and any Backup Bid identified in accordance with these SISP Procedures) shall be deemed rejected by the Receiver on and as of the date of approval of the Successful Bid or any Backup Bid by the Court.
Section 5. 7 Secured Creditor Consultation and Consent
(!) For the purposes of the Solicitation Process and these SISP Procedures, and notwithstanding any other provision in these SISP Procedures, any requirement for the Receiver to: (a) consult with the Secured Creditor, and (b) provide copies of any expressions of interest, bids or other offers submitted in connection with the Solicitation Process or these SISP Procedures (collectively, the "Creditor Consultation Rights") shall all be subject to the terms, conditions and limitations contained in this Section 5.7.
(2) Subject to subsection 5. 7(3), the Creditor Consultation Rights shall be suspended for the period commencing on the earlier of (x) the date that a Non-Binding Indication of Interest Qualified Purchase Bid, Qualified Investment Bid (including any credit bid) is actually s · a:>r ..JIU.J by the Secured Creditor (y) the date that a Bid Notice is issued by the Secured Cr ditor as e.w-.,.~..u. required by Section 4.3(5); provided, however, such Creditor Consultation Rights shal resume <>-/ ,t.cl on the date when the Non-Binding Indication of Interest, Qualified Purchase Bid or ualified Cj.I).JAI Investment Bid, as applicable, submitted by the Secured Creditor has been rejected dis no Gr~ longer being considered by the Receiver, as evidenced by written notice to the Secur Creditor ot from the Receiver. For greater certainty, during any period of time during which e Secured Creditor's Creditor Consultation Rights are suspended, no officer, directol)er partner er any of its affiliates shall be entitled to receive any information contemplated under the Credito~(~ Consultation Rights, unless and until the Receiver has selected a Successful Bid. 1
(3) The suspension of Creditor Consultation Rights pursuant to Section 5.7(2) will not apply in the case of an Indication of Interest, Qualified Purchase Bid or Qualified Investment Bid that
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is submitted by the Secured Creditor which (a) is a credit bid that involves consideration (excluding assumed obligations) that does not exceed the Secured Claims Amount as determined by the Receiver, and (b) is delivered with a binding covenant and undertaking by the Secured Creditor in favour of the Receiver covenanting and undertaking that no change shall be made to the economic terms of the offer or bid from and after the date of its submission and the key terms of such bid are disclosed to other interested parties.
( 4) For the purposes of the Solicitation Process and these SISP Procedures, prior to obtaining any Creditor Consultation Rights the Secured Creditor shall be required to execute a confidentiality agreement with the Receiver.
(5) The Receiver will not provide to the Secured Creditor any new information regarding bids obtained from the commencement of Phase 2 until the expiry of the period to submit a Bid Notice.
Section 5.8 Approval Hearing
(1) After definitive agreements in respect of a Successful Bid and Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures) have been finalized, in the case of the Successful Bid, signed (conditional on court approval) and, in the case of the Backup Bid signed (conditional on non-completion of the Successful Bid and on court approval) in accordance with these SISP Procedures, Seafield shall seek a hearing as soon as practicable on a date to be scheduled by the Court that will permit not less than 2 full business Days' notice to the service list (the "Approval Hearing") to approve the Successful Bid or to approve Seafield causing Minera to enter into an agreement with respect to the Successful Bid and to enter into an agreement with respect to the Backup Bid. The Approval Hearing may be adjourned or rescheduled by the Receiver, without further notice, by an announcement of the adjourned date at the Approval Hearing.
(2) If, following approval of the Successful Bid transaction by the Court, the Successful Bidder fails to consummate the transaction for any reason, then the Backup Bid, if there is one, will be deemed to be the Successful Bid hereunder and the Receiver shall effectuate a transaction with the Backup Bidder subject to the terms of the Backup Bid, without further order of the Court.
Section 5.9 Deposits
(1) All Deposits shall be retained by the Receiver and invested in an interest bearing trust account in a Schedule I Bank in Canada. If there is a Successful Bid, the Deposit (plus accrued interest) paid by the Successful Bidder whose bid is approved pursuant to the Approval Hearing shall be applied to the purchase price to be paid or investment amount to be made by the Successful Bidder upon closing of the Successful Bid. The Deposit (plus accrued interest) paid by the Backup Bidder, if there is one, shall be retained by the Receiver until the Backup Bid Expiration Date or, if the Backup Bid becomes the Successful Bid, shall be applied to the purchase price to be paid or investment amount to be made by the Backup Bidder upon closing of the Backup Bid. The Deposits (plus applicable interest) of all Phase 2 Bidders not selected as the Successful Bidder or Backup Bidder shall be returned to such bidders without interest within five (5) Business Days of the later of the date upon which the Successful Bid and any Backup Bid are approved by the Court. If these SISP Procedures are terminated in accordance with the
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provisions hereof, all Deposits shall be returned to the bidders without interest within five (5) Business Days of the date upon which these SISP Procedures are terminated.
(2) If an entity selected as the Successful Bidder or Backup Bidder breaches its obligations to close, it shall forfeit its Deposit to the Receiver; provided. however, that the forfeiture of such Deposit shall be in addition to, and not in lieu of, any other rights in law or equity that the Receiver has or may have against such breaching entity.
Section 5.10 Approvals
For greater certainty, the approvals required pursuant to the terms hereof are in addition to, and not in substitution for, any other approvals required by any Canadian; Colombian, or other foreign statute or are otherwise required at law in order to implement a Successful Bid or Backup Bid, as the case may be.
Section 5.11 Notice to the Receiver
Any notice or other communication to be given to the Receiver in connection with this SISP shall be given in writing and shall be given by personal delivery (in which case it shall be left with a responsible officer of the recipient) or by electronic communication addressed to the Receiver as follows:
KPMGinc. 333 Bay Street- Suite 4600 Toronto, ON M5H 285 Attention: Phil Reynolds and Ryan Adlington Telephone No.: 416-777-8500 Facsimile No.: 416-777-3364 Email: [email protected]
with a copy to:
McMillan LLP Brookfield Place, Suite 4400 181 Bay Street Toronto, ON M5J 2T3 Attention: Wae1 M. Rostom and Jennifer Cockbill Telephone No.: 416.865.7790 Facsimile No.: 416.865.7048 Email: [email protected]
Section 5.12 Reservation of Rights
(1) The Receiver (a) reject, at any time any bid that is (i) inadequate or insufficient, (ii) not in conformity with the requirements of these SISP Procedures or any orders of the Court applicable to Seafield, or (iii) contrary to the best interests of Seafield, its estate, and stakeholders as determined by the Receiver; (b) in accordance with the terms hereof accept bids not in
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conformity with these SISP Procedures to the extent that the Receiver determines, in its reasonable business judgment, that doing so would benefit Seafield, its estate, and stakeholders; and (c) in accordance with the terms hereof extend the Potential Bidder Deadline, Phase 1 Bid Deadline or Phase 2 Bid Deadline; and (d) reject all bids. The Receiver shall not be required to accept the highest bid, but shall be entitled to recommend to the Court a transaction that in its view maximizes value for all stakeholders.
(2) These SISP Procedures do not, and shall not be interpreted to, create any contractual or other legal relationship between the Receiver on the one hand and any Known Potential Bidder, Potential Bidder, Qualified Potential Bidder, Qualified Phase 1 Bidder, Qualified Phase 2 Bidder, Qualified Bidder, Successful Bidder or Backup Bidder, on the other hand, except as specifically set forth in definitive agreements that may be executed by the Receiver.
(3) Subject to the restrictions and limitations set out in Section 5.7, the Receiver will consult with the Secured Creditor.
Section 5.13 Further Orders
At any time during the SISP, the Receiver may apply to the Court for directions with respect to the discharge of its powers and duties hereunder.
Section 5.14 Credit Bid
These SISP Procedures permit the Secured Creditors to submit a credit bid, provided such credit bid is in accordance with the terms and conditions of these SISP Procedures and in accordance with applicable law.
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AppendixD
Form 21 Assignment for the General Benefit of Creditors of Seafield Resources Ltd.
Page 14
102
District of: Division No. Court No. Estate No.
Ontario 09- Toronto
0 Natural person
-- FORM21-Assignment for the General Benefit of Creditors
(Section 49 of the Act)
In the Matter of the Bankruptcy of Seafield Resources Ltd.
· of the City ofT oronto, in the Province of Ontario
This indenture made this 24th day of August 2015 between
Seafield Resources Ltd. 36 Toronto Street, Suite 1000
Toronto ON M5C 2C5 hereinafter called "the debtor"
and KPMG Inc.
hereinafter called 'the trustee."
1RJ Corporate or other legal entity
Whereas the debtor is insolvent and desires to assign and to abandon all his/her property for distribution among his/her creditors, in pursuance of the Act,
This indenture witnesses that the debtor does hereby assign to the trustee all the debtor's property for the uses, intents and puqYoses provided by the Act.
Signed at the City of Hamilton in the Province of Ontario, in the presence of Asya Rzhevsky.
24-Aug-2015 Date
Page 1 of 1
103
Appendix E
Updated Chronology of Events in Colombia
Page [5
104
Chronology of Events in Colombia
E.l Activity of the Former Board prior to the Receiver's Appointment
E.l.l Up until August 30,2014 the former directors ofMinera (the "Former Board") consisted of the following individuals:
(a) Prins, Director;
(b) Ashton, Director;
(c) Giovanny Ortiz ("Ortiz"), Director and CEO
(d) Catalina Cadena ("Cadena"), Director and Deputy CEO;
(e) Cesar Lopez ("Lopez"), Director; and
(f) Juan Villarzu ("Villarzu"), Director
E.1.2 On August 30, 2014, after making a demand and sending the BIA Notice, RMB (pursuant to a
share pledge agreement to secure the funds advanced under the Facility Agreement) held a
meeting ofMinera's shareholders where the following decisions were approved:
(a) The Former Board was removed; and
(b) The following individuals were appointed as the Board of Directors of Minera (the
"New Board"):
Principal' Alternate
Richard Winters John Forwood
.
Alvaro Belevan James Bennett
Arnold Vogel Daniel Jimenez Pastor
1 As described below, the New Board was re-elected on November I I, 2014, at which time Arnold Vogel was replaced by Richard Seledon and Daniel Jimenez Pastor's position as an Alternate Board member was made vacant.
105
E.1.3 Minutes of the August 30, 2014 shareholders' meeting were registered with the Chamber of
Commerce of Medellin Colombia on September 2, 2014.
E.1.4 On September 2, 2014, Mr. Prins, acting as principal member of the Former Board, filed a request
for reconsideration and appeal with the Chamber of Commerce of Medellin to revoke the
registration of his removal and the appointment of the New Board.
E.l.S Also on September 2, 2014, Ms. Cadena, acting as member of the Former Board and as de facto
agent of Mr. Lopez, Mr. Villarzu and Ms. Ashton, filed a request for reconsideration and appeal
with the Chamber of Commerce of Medellin, to revoke the registration of the removal of the
Fonner Board and the appointment of the New Board.
E.1.6 By way of context, under the Colombian Law, the Chamber of Commerce administers
companies' registrations in its jurisdiction, and therefore all major corporate events including
incorporation, liquidation, amendments to bylaws or corporate registrations and appointment of
officers and directors must be filed with the Chamber of Commerce for purposes of public
disclosure and enforceability.
E.l.7 On September 3, 2014, the New Board held a meeting, in which it was decided to remove Mr.
Ortiz and Ms. Cadena as CEO and Deputy CEO, respectively, and to appoint Mr. Alvaro
Belevan, a representative of RMB, as the new legal representative for the company. A copy of
this decision was filed with the Office of the Superintendent of Companies (the "SOC") on
September 3, 2014.
E.1.8 On September 4, 2014, certain members of the Former Board filed a petition with the SOC,
requesting that Minera be admitted to an insolvency proceeding pursuant to Colombian law 1116
of2006 (the "Insolvency Petition").
E.1.9 By way of context, under Colombian Law, the SOC is (i) the governmental authority responsible
for overseeing the conduct and corporate affairs of Colombian companies, and (ii) the authority
with judicial powers over insolvency proceedings.
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E.l.lO On September 5, 2014, the New Board held a further meeting, in which the following actions
were approved:
(a) The New Board approved a resolution to withdraw the Insolvency Petition; and,
(b) The New Board would take steps to notifY the Superintendent that a third party
(RMB) would be willing to fund the operation of Minera, to ensure its continuance.
E.l.ll The minutes of the September 5, 2014 meeting of the New Board were filed with the SOC on
September 5, 2014.
E.l.l2 On September 9, 2014, Mr. Alvaro Belevan, acting as legal representative of Minera, filed a
petition with the SOC requesting the dismissal of the Insolvency Petition.
E.2 Activities in Colombia since the Receiver's Appointment
E.2.1 Pursuant to the Receivership Order, the Receiver was vested with the authority to represent
Seafield, the sole shareholder ofMinera; including the power to remove and replace the directors
ofMinera.
E.2.2 On September II, 2014, Mr. Andres Velasquez Giraldo ("Velasquez"), legal advisor to the
Former Board, communicated to the Receiver that Minera would not recognize the Receiver as
representative of Seafield.
E.2.3 On September 16, 2014, Velasquez, acting on behalf of the Former Board, filed a petition for
reconsideration and appeal with the Chamber of Commerce of Medellin, requesting the
revocation of the registration of the removal of the Former Board and the appointment of the New
Board (the "Former Board Petition").
E.2.4 On September 16, 2014, Colombian Counsel delivered a letter to the Former Board advising that
the Receiver was vested with the power to exercise Seafield's rights as the sole shareholder of
Minera, and refuting all arguments of the Former Board regarding the Receiver's alleged lack of
107
authority. A translated copy of the Receivership Order was provided to the Former Board along
with that letter.
E.2.5 On September 17, 2014, the Receiver, acting on the advice of Colombian Counsel, held a meeting
ofMinera's shareholders in which the following decisions were ratified:
(a) The removal of the Former Board and the appointment of the New Board;
(b) The decision of the New Board to remove the former legal representative and its
alternates and to appoint a new legal representative;
(c) The decision of the New Board to withdraw the Insolvency Petition.
E.2.6 The above decisions were communicated to the SOC along with a request that the Insolvency
Petition be dismissed.
E.2.7 On September 19,2014, acting on the advice of Colombian Counsel, the Receiver filed a petition
with the Superintendent requesting that Minera be put under control of the SOC (the "Control
Measure") as a consequence of the governance disputes that Minera was facing. The purpose of
the Control Measure was to have the SOC investigate the actions of the Former Board and ratifY
its removal in order to resolve the governance disputes, and ultimately, recognize the control of
Minera by the Receiver.
E.2.8 On September 30, 2014, the Receiver along with McMillan and Colombian Counsel, met in
Colombia with the members of the Fonner Board. The parties initiated negotiations with a view
to attempting to consensually resolve all open issues. It was agreed that parties would seek
suspension of all proceedings for a I 0-day period to attempt a settlement while RMB provided
funding to Minera for its reasonable operating expenses during that period.
E.2.9 On October 8, 2014, the Chamber of Commerce of Medellin dismissed the Former Board
Petition.
108
E.2.10 On October 12, 2014, Mssrs. Prins and Ortiz, who ":ere patt of the Former Board of Minera,
informed the Receiver and Seafield of the existence of alleged amendments to their labour
agreements (the "Labour Agreement Amendments") giving them significant claims for
compensation against Minera. The Receiver learned that these amendments to the labour
contracts were made at or about the time that Seafield was encountering significant cash flow
problems and was in default under the RMB Facility Agreement. As a consequence of learning
of this information, the Receiver terminated further negotiations with the Former Board and filed
a writ on behalf of Seafield reiterating its petition to submit Minera to the Control Measure.
E.2.11 For a period of time after the Receiver requested that Minera be put under the Control Measure,
Mr. Velasquez, purporting to be a legal advisor of Min era, continued to take certain steps and file
various documents in furtherance of the Fonner Board's Petition and the Insolvency Petition.
E.2.12 In the mean time, the Receiver, on the advice of Colombian Counsel, took various steps and filed
certain documents with the Colombian authorities to oppose the Insolvency Petition and to have
the authority of the New Board recognized by the Former Board, who continued to purport to
occupy management roles notwithstanding the steps taken to remove them.
E.2.13 On October 29, 2014, Mr. Velasquez, purporting to be the legal advisor of the Former Board,
filed a petition with the Superintendent of Industry and Trade against the registration of the
decisions adopted by the shareholders assembly in the meeting held on August 30, 20 I 4 (the
"SIC Petition").
E.2.14 On October 30, 2014, Mr. Velasquez, acting on behalf of the Former Board, made an offer to the
Receiver in order to resolve the governance disputes over Minera: the Former Board would drop
the Former Board Petition and leave control of Minera to the Receiver provided that the
registration of the minutes of the shareholders' meeting of Minera held on August 30, 2014,
would be withdrawn. The offer was accepted by the Receiver.
109
E.2.15 On November II, 2014, a meeting of the shareholders of Minera was held, definitively
dismissing the Former Board of Minera. A new board of Minera was re-elected and registered
with changes as described in paragraph E.l.2 above.
E.2.16 On November 12, 2014, the SOC imposed the Control Measure on Minera and initiated
proceedings against certain members of the Former Board.
E.2.17 On November 28, 2014, the SOC dismissed the Insolvency Petition pursuant to the agreement
reached with the Former Board on October 30, 2014. Mr. Velasquez, on behalf of the Former
Board, also requested a formal withdrawal of the Former Board Petition and the SIC Petition.
E.2.18 On February 12, 2015, a shareholders' meeting of Minera was held to appoint Ms. Cadena as
legal representative and Mr. Belevan as her alternate.
E.2.19 On February 16, 2015, a petition was filed on behalf of Seafield with the SOC to terminate the
Control Measure, however, it required certain amendments to the corporate registration of
Minera, including evidence of the tennination of the Former Board Petition and the SIC Petition.
The required amendments were completed by Colombian Counsel and communicated to the SOC
onApril8, 2015.
E.2.20 On March 26, 2015, Minera and Ortiz entered into (i) an agreement to terminate Ortiz's labour
agreement, waiving any and all of its rights, and (ii) a services agreement.
E.2.21 On March 27, 2015, the ordinary shareholders' meeting ofMinera was held to approve Minera's
financial statements and management report for 2014.
E.2.22 On March 31, 2105, Mr. Alvaro Belevan resigned as deputy CEO ofMinera.
E.2.23 As requested by the SOC, on April6, 2015, Minera filed with the SOC a copy of the minutes of
the March 27, 2015 shareholders' meeting.
E.2.24 On May 7, 2015, Cadena delivered a letter to the Receiver, explaining her actions during 2014.
E.2.25 On May 8, 2015, Ortiz delivered a letter to the Receiver, explaining his actions during 2014.
110
E.2.26 On June 4, 2015, the SOC issued a resolution ceasing the Control Measure.
E.2.27 On July 8, 2015, the 10'" Labour Court of Medellin admitted a law suit raised by Prins against
Minera on the basis of"harassment" (the "Prins' Claim").
E.2.28 On July 31,2015, a hearing was held at the lOth Labour Court of Medellin in regards to certain
interim precautionary measure requested by Prins in relation to the Prins' Claim. The Court
refused to grant the precautionary measure on the basis that there were no grounds for granting
them.
E.2.29 On August 5, 2015, Colombian Counsel filed a writ of defense in relation to the Prins' Claim.
E.2.30 On August 12, 2015, a meeting of the shareholders of Minera was held to approve the resignation
of Mr. Alvaro Belevan and the appointment of Angela Marfa Restrepo as deputy CEO ofMinera.
E.2.31 On August 13,2015, Prins filed a resource for appeal against the decision of the 10'" Labor Court
of Medellin to deny the precautionary measure. This appeal is currently pending at the District
court of Medellin.
E.2.32 On October 9, 2015, RMB registered its existing pledge over the Miner Shares by special registry
pursuant to Law 1676 of2013.
E.2.33 Cadena visited the SOC on January 13, 2016. She was informed that the SOC decided to
terminate the proceeding against Prins. No information on the result of the proceeding was
provided as it was deemed as classified information.
111
AppendixF
Advertisements in The Canadian Mining Journal, and Mining Journal
Page 16
112
F~llowMQn Linked 1m 9
World news
Zinc ready for loading at Port Pirie, South Austmfia
they don't come out the other end unaltered, but nobody does that."
Briggs said what some experts were saying was "look. we have had a 250,000t decline in LME stocks year to date, that doesn't mean the market has been in a deficit to that extent Some of
that metal has simply ended up being moved somewhere else".
Citigroup said significant off~warrant tonnage was sitting in warehouses in the US and Asia. Wilson said: ''We would therefore expect the majority of inflows to occur in these locations. These inflows are expected to help clean
out more of the zinc positioning length and put a dampener on any more bullish zinc ideas through the (northern) summer, as hard stocks data puts the ghostly off~warranttheories into black and white for the market."
Analysts also pointed out that if . people stored metal as part of
INVITATION FOR PROPOSALS
LME stock, they must pay a higher rental charge than if it was stored in a non~LME warehouse. So there was an arbitrage play there.
Things were by no means clear cut, said Briggs. Or to put it another way: "These are murky markets.'1
Twas ever thus.
TO PURCHASE THE BUSINESS AND/OR ASSETS OF SEAFIELD RESOURCES LTD AND MINERA SEAFIELD SAS
Pursuant to an mder of the Ontario Superior Court of justice, Commercial List, made l\hy 20, 2015, KPMG Inc. in its capacity as Court~appointcd receiver {the "Receiver") of Seaticld Resources Ltd ("Seaficld" ()f 1he "Company'), is soliciting written proposals for the ricc1uisition of the Company's assets, by way of sale or an investment into the Company or its wholly*owned Colombian subsidiary, ~·Iinera Sea[icld SAS ("Mincra'') .
. Minera, is 100% owner of 15 mining concessions covering an area of 6,042.8 hectares located in the Quinchia District in Colombia ("Miraflores" or the "Project"). i\Jiraflorcs hosts a resource base of 1.8!\-Ioz gold and 3.6J\Im: silver.
i\ February 20l5 Technical Report (Prclimin:uy Economic Assessment lc\•cl) on ~-Hraflores cond~tcted by SRK Consulting (US) Inc. presents the following key attributes: • Avcra.gc annual production of approximately 45koz gold over a 12 year mine life • Ai.'erage life of mine total cash cost of US$602 per ounce (including off~sitc project costs, royalties and silver credits) • High grade open pit and underground ;woes containing 146koz gold@ 1.4Sg/t and 408ko,.; gold@ 3.51g/t respectively • After~ta."X NPV (5% discount rate, $1,200 gold) of USS73 million
Seafield is also owner of 14 patented parcels of. mining land and one license of occupation in the Kenora Mining Di\·ision of Northwt.>stcrn Ont.ario (the "Elora Property").
Interested parties must be qualified by the Receiver in order to participate in the process and are required to submit initial bids by no later than 5:00p.m. (ES1) on Wednesday July 15,2015.
To obtain further details about bid q~1alificarion, or the process in general, please contact 1-.Jr. Zakir Pare! at + 1 (416) 777*8944 or [email protected] or Mr. Aaron Collier at +1 (416) 777~8854 or [email protected] and/ or visit the .Receivers website Olttp:/ / WW\V. kpmg.com/ ca/ en/ services/ advisory/ transactionrcs tructuring/ creditorlinksites /sea fi.eld- resources! td/ pages/ d c faul t.aspx).
KPMGINC., COURT-APPOINTED RECEIVER OF SEAFIELD RESOURCES LTD.
113
PROFESSIONAL DIRECTORY MONTT GROUP SpA Chilean Mining Attorneys
Montt Group SpA offers a full array of legal and technical services, particularly creation of mining companies. filing for mining claims, easements, administrative permits, due diligence and legal surveillance Own Offices in Antofagasta and Copiapo and other cities Since 1974 serving clients in Chile and Latin American countries
www.monttgroup.com +562 2544 6800 [email protected]
AEl Mining Services 2 www.aelminingservlces.com Brandt 11 www.brandtca DMC Mining Services 20 www.dmcmining.com
.. H?rd-Line Solutions 48 www.hard-llne.com Hercules Sealing Products 38 www.herculesca.ca IESO 9 www.saveonenergy.ca/business JoyGiobal 4 WW\'V.joyglobal.com KPMG 45 www.kpmg.ca Manulift 21 w.vw.manulift.ca/canada·dealers Montt Group SpA 45 www.monttcia.cl
Consulting assistance for mining clients from grass roots exploration through to mine closure.
Mo~ion Canada Petro Canada
PPG Protective &
Marine Coatings
PR Engineering Rosta Inc.
Cradle to cradle
=w=srk consulting ~ > 1,500 profcssiorJats • >50 offices • >20 countries • 6 continents
7 www.motioncanada.com 32 wvvw.!ubricants.petro-canada.ca/mining
43 • www.ppgpmc.com
41 www.prengineering.com 25 www.rostainc.com
Saskatchewan Research Council 17 www.src.sk.ca/mining
SRK Consulting- 45 www.srk.com Stantec 47 www.stantec.com/mining
INVITATION FOR PROPOSALS TO PURCHASE THE BUSINESS AND/OR ASSETS OF
SEAFIELD RESOURCES LTD AND MINERA SEAFIELD SAS
Pursuant to an order of the Ontario Superior Court of Justice, Commercial List, made May 20, 2015, KPMG Inc. in its capacity as Court-appointed receiver (the "Receiver") of Scafield Resources Ltd ("Seatield" or the "Company"), is soliciting written proposals for the acquisition of the Company's assets, by way of sale or an investment into the Company or its wholly-owned Colombian subsidiary, Minera Seafield SAS ("Minera").
· Minera, is 1 00% owner of I 5 mining concessions covering an area of 6,042.8 hectares located in the Quinchfa District in Colombia ("Miraflores" or the "Project"). Miraflores is an undeveloped open-pit and underground project with a resource base of 1.8Moz gold and 3.6Moz silver.
Seafield is also owner of 14 patented parcels of mining land and one license of occupation in the Ken ora Mining Division of Northwestern Ontario (the "Elora Property").
Interested parties must be qualified by the Receiver in order to participate in the process and are required to submit initial bids by no later than 5:00p.m. (EST) on Wednesday July 15, 2015.
To obtain further details about bid qualification, or the process in general, please contact Mr. Zakir Patel at +1 (416) 777-8944 or [email protected] or Mr. Aaron Collier at +1 (416) 777-8854 or [email protected] and/ or visit the Receiver's website (http://www.kpmg.com/ca/cn/services/ advisory/transactionrestructuring/creditorlinksites/ seafield-resources-ltd/pages/default.aspx).
KPMGINC., COURT-APPOINTED RECEIVER OF SEAFIELD RESOURCES LTD.
June/july 2015. Canadian Mining Journa1145
--------~~------------------------------~-~~~----------~---~ '
114
F¢1/<:wtU$0» linkedfm 7
World news
SILVER ,
Pan American's lateral thinking Paul Harris
Use of lateral thinking to pick the most appropriate mining processes to optimise its existing operations in Mexico is helping to propel Pan American Silver towards its aim to become the pre·eminent primary silver producer in the world.
"Primary silver deposits are a rare breed, so while we keep our eyes open and watch the junior market and their greenfield exploration, our organic growth opportunities at La Colorada and Dolores have been more attractive than potential acquisitions over the past two years," chief operarting officer Steve Busby said this week.
"The expansions are really about taking the technical and operational teams that are intimate with the resources and
the process alternatives to optimise them, and over a two·year study we generated attractive projects that we cannot better by bringing other projects into the company."
This month, Pan American gave the OK to a US$112.4 million expansion at Dolores in Chihuahua that will include milling high-grade material to 425 microns and passing it through a 5,600!/d pulp agglomeration circuit to improve silver and gold recoveries. "This has been used at the Castle Mountain operation in California and the Barrick Gold's Ruby Hill operation in Nevada and it should increase gold recovery by 13% and silver recovery by 18%/ Busby said.
The project's production throughput will also expand from 16,500t/d to 18,500t/d. A 1 ,500!/d
underground mine developed under the open pit will use open sloping to bring the total operation to 20,000!/d.
"In 2017, this will increase production 40% from 4.5Moz silver to 6.3Moz plus increase gold production 52% to 206,000oz, up from 135,000oz, for the first five years. More importantly, the economies of scale of increased production will drive cash costs down from minus·$7 an ounce to minus-$11 an ounce,n Busby said.
At La Colorada, a four-year, $145.9 million expansion is underway that will see it become one of the 1 0-largest primary silver mines in the world through the deVelopment of a new shaft to exploit higher grade resources in the primary Candelaria and Estrella geological structures at depth. When completed in 2018,
INVITATION FOR PROPOSALS
production will increase from 4Moz·4.5Moz of silver to 7 .5Moz·8Moz of silver.
"The shaft at Candelaria really limited development," Busby said.
'With the veins running at depth we decided to build a new shaft between them and produce from both structures. We have completed the pilot hole for a 5.1 m·diameter raise bore shaft that we will raise from the 610m level, which we hope to complete in mid-toCJate 2016 and then start the undergrpund development."
As at Dolores, cash costs are also expected to fall following the expansion. "In addition to having higher silver grades at depth there are also higher grades of lead and zinc, so this will really drive our cash costs down. Our cash costs in 2014were about $1 0/oz and we think they will be sub $7 /oz in 2018," he said.
TO PURCHASE THE BUSINESS AND/ORASSETS OF SEAFIELD RESOURCES LTD AND MINERA SEAFIELD SAS
Pursuant to an order of the Ontario Superior Court of Justice, Commercial List, made May 20, 2015, KPlv1G Inc. in its capacity as Court-appointed receiver (the "Receiver") of Seafield Resources Ltd ("Seafield, or the "Company"), is soliciting written propo~als for the acquisition of the Company's assets, by way of sale or an investment into the Company or its wholly·owned Colombian subsidiary, b-iinera Seafield SAS ("Minera").
:Minera, is 100% owner of 15 mining conces!dons covering an area of 6,042.8 hectares located in the Quinchia District in Colombh ("Miraflores" or the "Project"). i\:firaflores is an undeveloped opcn·pit ~lnd underground project with a resource base of 1.8Moz gold and 3.61\-loz silYer.
Seafield is also owner of 14 patented parcels of mining land and one license of occupation in the Kenora Mining Division of Northwestern Ontario (the "Elora Property").
Imerested parties must be qualified by the Receiver in order to_ partidpate in the process and are required to submit initial bids by no later than 5:00p.m. (EST) on Wednesday July 15,2015.
To obtain further details abom bid qualification, or the process in genet·al, please contact tvfr. Zakir Patel at +1 (416) 777 .. 8944 or [email protected] or Mr. Aaron Collier at +1 (416) 777-8854 or [email protected] and/ or visit the Receiver's website (http:/ /www.kpmg.com/ ca/ en/ services/ advisorr I transactionrestructuring/ crcditorlinksires/ seaheld-resources· ltd/ pages/ dcfaulr.aspx).
KPMGINC., COURT-APPOINTED RECEIVER OF SEAFIELD RESOURCES LTD
115
Appendix G
Summary of Non-Binding Indications oflnterest (confidential)
Pagel?
116
This Confidential Appendix has been Redacted Pending a Determination of the Receiver's Request for
a Sealing Order
117
AppendixH
Bidder revised offer (confidential)
Page 18
118
This Confidential Appendix has been Redacted Pending a Determination of the Receiver's Request for
a Sealing Order
119
Appendix I
Share Purchase Agreement
Page 19
120
KPMG INC., solely in its capacity as the Court-appointed receiver of Seafield Resources Ltd.
and not in its personal or corporate capacity
AND
RMB AUSTRALIA HOLDINGS LIMITED
SHARE PURCHASE AGREEMENT
February 16, 2016
121
Section 1.1 Section 1.2 Section 1.3 Section 1.4 Section 1.5 Section 1.6 Section 1.7 Section 1.8 Section 1.9
Section 2.1 Section2.2
Section3.1 Section 3.2 Section 3.3
Section 4.1 Section4.2 Section4.3 Section4.4
Section 5.1
Section 6.1 Section 6.2 Section 6.3
TABLE OF CONTENTS
ARTICLEl INTERPRETATION
Definitions .................................................................................................................. 2 Currency ..................................................................................................................... 5 Entire Agreement ...................................................................................................... 6 Governing Law .......................................................................................................... 6 Singular, Plural and Gender .................................................................................... 6 Certain Words ............................................................................................................ 6 Headings and Table of Contents ............................................................................. 6 Statutory References ................................................................................................. 6 Actions to be Performed on a Business Day .......................................................... 7
ARTICLE2 PURCHASE AND SALE OF PURCHASED SHARES
Agreement of Purchase and Sale .................. : .......................................................... 7 Purchase Price ............................................................................................................ 7
ARTICLE3 REPRESENTATIONS AND WARRANTIES
Representations of the Receiver .............................................................................. 7 Representations of the Purchaser ............................................................................ 8 Limitations .................................................................................................................. 9
ARTICLE4 COVENANTS
Pre-Closing Cooperation .......................................................................................... 9 Acquisition on" As Is, Where Is" Basis ................................................................ 10 Books and Records .................................................................................................. 10 Foreign Investment Substitution in Colombia .................................................... 11
ARTICLES BID AND AUCTION PROCEDURES
Approval and Vesting Order ................................................................................. 11
ARTICLE6 CONDITIONS
Conditions for the Benefit of the Purchaser ......................................................... 12 Conditions for the Benefit of the Receiver ........................................................... 13 Mutual Conditions .................................................................................................. 13
( i )
122
Section 7.1 Section 7.2 Section 7.3 Section 7.4
Section 8.1
ARTICLE? CLOSING
Closing Date and Place of Closing ........................................................................ 14 Deliveries on Closing by the Receiver .................................................................. 14 Deliveries on Closing by the Purchaser ............................................................... 15 Risk ............................................................................................................................ 16
ARTICLES TERMINATION
Termination .............................................................................................................. 16
ARTICLE9 MISCELLANEOUS
Section 9.1 Disclosure of Agreement ........................................................................................ 17 Section 9.2 Liability of the Parties ............................................................................................. 17 Section 9.3 Obligations to Survive ............................................................................................ 18 Section 9.4 Damages ................................................................................................................... 18
. Section 9.5 Further Assurances ................................................................................................. 18 Section 9.6 Assignment by Purchaser ....................................................................................... 18 Section 9.7 Time of the Essence ................................................................................................. 18 Section 9.8 Notices ....................................................................................................................... 18 Section 9.9 Solicitors and Agents and Tender ......................................................................... 20 Section 9.10 Successors and Assigns .......................................................................................... 20 Section 9.11 No Brokers ................................................................................................................ 20 Section 9.12 Third Party Beneficiaries ........................................................................................ 20 Section 9.13 Severability ............................................................................................................... 20. Section 9.14 Counterparts ............................................................................................................ 21 Section 9.15 No Strict Construction ............................................................................................ 21
ADDENDA
SCHEDULE 1 RECEIVERSHIP ORDER SCHEDULE 2 BIDDING PROCEDURES ORDER
( ii)
123
THIS SHARE PURCHASE AGREEMENT dated as of the 16th day of February, 2016.
AMONG:
KPMG INC. ("KPMG"), solely in its capacity as the Court-appointed receiver of Seafield Resources Ltd., a corporation organized and existing under the laws of the Province of Ontario, Canada ("Seafield"), and not in its ·personal or corporate capacity, (the "Receiver")
-and-
RMB AUSTRALIA HOLDINGS LIMITED, a company existing under the laws of Australia having registration number ACN 003 201 214 (the "Purchaser")
WHEREAS:
A. KPMG was appointed as Receiver, without security, of all of the assets, undertakings and properties of Seafield (including, for greater certainty, the Purchased Shares (as defined herein)) acquired for, or used in relation to a business carried on by Seafield, including all proceeds thereof (collectively, the "Property") pursuant to an order (as such order may be amended or restated from time to time, the "Receivership Order") of the Ontario Superior Court of Justice (Commercial List) (the "Court") dated September 9, 2014, bearing Court File No. CV-14-10686-00CL (as attached at Schedule 1, the "Receivership Proceedings");
B. Seafield is the sole shareholder of Minera Seafield S.A.S., a corporation organized and existing under the laws of Colombia ("Minera");
C. Seafield is indebted to the Purchaser in the principal amount of $16,500,000, plus any accrued interest and fees and expenses owing in connection therewith, being an aggregate of $22,010,268 as of February 1, 2016, pursuant to a facility agreement dated February 21, 2013, as amended, restated or supplemented from time to time (the "Seafield Debt");
D. Pursuant to the terms of the Receivership Order and such further orders of the Court, the Receiver was authorized to borrow monies from time to time to fund the Receivership Proceedings, which borrowing were secured by the Receiver's Borrowings Charge (as defined in the Receivership Order), being a priority charge over all of the Property of Seafield;
E. The Receivership Order authorizes the Receiver to market any or all of the Property, including advertising and soliciting offers in respect of the Property or any part or parts thereof and to negotiate such terms and conditions of sale as the Receiver in its discretion may deem appropriate;
F. The Receiver conducted a sales and investor solicitation procedure in order to solicit bids for the sale of all or substantially all of the property, assets or undertakings of
124
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Seafield, for the sale of all or substantially all of the property, assets or undertakings of Minera or for the restructuring, recapitalization or refinancing of Seafield or Minera pursuant to an order of the Court dated May 20, 2015, bearing Court File No. CV-14-10686-00CL (as attached at Schedule 2, the "Bidding Procedures Order"), but did not receive any Qualified Bids (as defined therein);
G. The Purchaser has offered to purchase all of the Receiver's and Seafield's right, title and interest, if any, in and to the Purchased Shares on the terms and subject to the conditions set forth in this Agreement including the issuance of the Approval and Vesting Order (as defined herein); and
H. The Receiver has agreed to bring a motion to obtain an order of the Court to, among other things, authorize the Receiver to enter into this Agreement and authorize and· approve the sale of all of the Receiver's and Seafield's right, title and interest, if any, in and to the Purchased Shares.
NOW THEREFORE this Agreement witnesses that in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party (as defined herein) to the other, the Parties agree as follows:
ARTICLE1 INTERPRETATION
Section 1.1 Definitions
Whenever used in this Agreement the following words and·· terms shall have the meanings set out below:
In this Agreement:
"Affiliate" has the meaning ascribed thereto under the Business Corporations Act (Ontario);
"Agreement" means this share purchase agreement, including all schedules, and all supplements, amendments or restatements, as permitted, and references to "Article", "Section" or "Schedule" mean the specified Article or Section of, or Schedule to, this Agreement;
"Applicable Law" means, in respect of any Person, property, transaction or event, any domestic or foreign statute, law (including the common law), ordinance, rule, regulation, treaty, restriction, regulatory policy, standard, code or guideline, by-law or order that applies in whole or in part to such Person, property, transaction or eventi
"Approval and Vesting Order" means one or more orders approving the transactions described herein and vesting title to the Purchased Shares in the Purchaser or its assignees free and clear of all Liens;
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"Assets" means all property and assets of Minera of every nature and kind and wheresoever situate;
"Bidding Procedures" means the bidding procedures approved by the Court pursuant to the Bidding Procedures Order appended as Schedule 2 hereto;
"Bidding Procedures Order" has the meaning ascribed thereto in the Recitals;
"Books and Records" means all of the books, records, books of account, supplier and customer lists, business information, research and development information, business· analyses and plans, and records, and all other documents, files, records, correspondence, electronic information (including emails and web page content), and other data and information, financial or otherwise related to the Business within the control or possession of Seafield or Minera at the Closing Date, and including all data and information stored by Seafield or Minera electronically, digitally or on computer related media in respect of the Business, which can be transferred in accordance with Applicable Law;
"Business" means the business of Minera, being the business of mineral exploration, evaluation, development and exploitation in certain areas within the Quinchia Project in Colombia;
"Business Day" means any day which is not a Saturday, a Sunday or any day on which Canadian chartered banks are closed for business in Toronto, Ontario;
uclaim" means any claim, action, demand, cause of action, suit, complaint, proceeding, arbitration, judgment, settlement, award, assessment, re-assessment, order, investigation, enquiry or hearing made or threatened;
"Closing" means the completion of the Transaction in accordance with the terms and subject to the conditions of this Agreement on the Closing Date at the Closing Time;
"Closing Date" means the date on which Closing occurs;
"Closing Time" has the meaning ascribed thereto in Section 7.1;
"Colombian Tax Return" has the meaning ascribed thereto in Section 4.4;
"Colombian Taxes" has the meaning ascribed thereto in Section 6.3(b );
"Consentu means any approval, authorization, consent, order, license, permission, permit (including any environmental permit), qualification, exemption or waiver by any Governmental Authority or other Person;
"Contracts" means any agreement, contract, licence, undertaking, engagement or commitment of any nature, written or oral in respect of the Business or Assets;
"Court" has the meaning ascribed thereto in the Recitals;
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"Governmental Authority" means any domestic or foreign government, whether federal, provincial, state, territorial or municipal; and any governmental agency, ministry, department, court (including the Court), Tribunal, commission, stock exchange, bureau, board or other instrumentality exercising or purporting to exercise legislative, judicial, regulatory or administrative functions of, or pertaining to, government or securities market regulation;
"Income Tax Act" means, collectively, the Income Tax Act (Canada), the Income Tax Application Rules (Canada) and the Income Tax Regulations, in each case as amended to the date hereof;
"KPMG" has the meaning ascribed thereto in the Recitals;
"Lien" means any mortgage, charge, pledge, hypothec, security interest, assignment, lien (statutory or otherwise), easement, title retention agreement or arrangement, conditional sale, deemed or statutory trust, restrictive covenant or other · encumbrance of any nature which, in substance, secures payment or performance of an obligation;
"Minera" has the meaning ascribed thereto in the Recitals;
"Parties" means, collectively, the Purchaser and the Receiver, and "Party" means any one of them;
"Person" means individuals, corporations, limited and unlimited liability companies, general and limited partnerships, associations, trusts, unincorporated organizations, joint ventures and Governmental Authorities;
"Property" has the meaning ascribed thereto in the Recitals;
"Purchase Price" has the meaning ascribed thereto in Section 2.2;
"Purchased Shares" has the meaning ascribed thereto in Section 2.1;
"Purchaser" has the meaning ascribed thereto in the Recitals;
"Purchaser's Solicitors" means the law firm of Stikeman Elliott LLP;
"Receiver" has the meaning ascribed thereto in the Recitals;
"Receiver's Borrowing Charge" has the meaning ascribed thereto in the Receivership Order;
"Receiver's Certificate" has the meaning given in the Receivership Order;
"Receiver's Solicitors" means the law firm McMillan LLP;
"Receivership Debt Amount" means the aggregate outstanding principal amount borrowed by KPMG (in its capacity as the Receiver) plus any accrued interest and
127
-5-
charges thereon, being $2,376,697 as of the date hereof, which is secured by the Receiver's Borrowings Charge and is being credit bid by the Purchaser;
"Receivership Order" has the meaning ascribed thereto in the Recitals;
"Receivership Proceedings" has the meaning ascribed thereto in the Recitals;
"Representative" means, in respect of a Party, each director, officer, employee, agent, Affiliate, manager, lender, solicitor, accountant, professional advisor, consultant, contractor and other representative of such Party or such Party's Affiliates and shaH include each director, officer, employee, agent, Affiliate, manager, lender, solicitor, accountant, professional advisor, consultant, contractor and other representative of such Affiliate;
"Seafield" has the meaning ascribed thereto in the Recitals;
"Seafield Debt"" has the meaning ascribed thereto in the Recitals;
"Tax Legislation" means, coiiectively, the Income Tax Act and ail federal, provincial, territorial, municipal, foreign, or other statutes imposing a Tax, including ail treaties, conventions, rules, regulations, orders, and decrees of any jurisdiction;
"Tax" or "Taxes" means all taxes, assessments, charges, dues, duties, rates, fees, imposts, levies and similar charges of any kind lawfully levied, assessed or imposed by any Governmental Authority under any applicable Tax Legislation, including Canadian federal, provincial, territorial, municipal and local, foreign or other income, capital, goods and services, sales, registration and recording, harmonized sales, excise, value added, business or transfer taxes and any other similar or like taxes and charges imposed by a Governmental Authority in connection with the sale, transfer or registration of transfer of the Purchased Shares, including any interest, penalties and fines associated therewith;
"Termination Date" means April 3D, 2016;
"Transaction" means the purchase by the Purchaser and sale by the Receiver of ail of the Receiver's and Seafield's right, title and interest, if any, in and to the Purchased Shares contemplated by this Agreement; and
"Tribunal" means any court (including a court of equity), arbitrator or arbitration panel and any other Governmental Authority, stock exchange, professional or business organization or association or other body exercising adjudicative, regulatory, judicial or quasi-judicial powers.
Section 1.2 Currency
All references in this Agreement to monetary amounts, unless indicated to the contrary, are to the currency of Canada.
128
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Section 1.3 Entire Agreement
This Agreement constitutes the entire agreement between the Parties with respect to its subject matter, and supersedes any and all prior negotiations, understandings and agreements between the Parties. This Agreement may not be amended or modified in any respect except by written instrument signed by the Parties. There are no covenants, promises, warranties, representations, conditions, understandings or other agreements, oral or written, express, implied or collateral between the Parties in connection with the subject matter of this Agreement except as specifically set forth in this Agreement and the Purchaser shall acquire all of the Receiver's and Seafield's right, title and interest, if any, in and to the Purchased Shares on an "as is, where is" basis. Any cost estimates, projections or other predictions contained or referred to in any other material that has been provided to the Purchaser or any of its Representatives are not and shall not be deemed to be representations or warranties of the Receiver or any of its Representatives. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision (whether or not similar), nor shall such waiver constitute a waiver or continuing waiver unless otherwise expressly provided in writing duly executed by the Party to be bound thereby.
Section 1,4 Governing Law
This Agreement is a contract made under and shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in the Province of Ontario. Each Party hereto irrevocably submits to the non-exclusive jurisdiction of the Court supervising the Receivership Proceedings with respect to any matter arising hereunder or relating hereto.
Section 1.5 Singular, Plural and Gender
Words importing the singular include the plural and vice versa, and words importing gender include the masculine, feminine and neuter genders.
Section 1.6 Certain Words
In this Agreement, the words "including" and "includes" means "including (or includes) without limitation", and "third party" means any Person who is not a Party.
Section 1.7 Headings and Table of Contents
The headings and any table of contents contained in this Agreement, including the separation of this Agreement into articles, sections, subsections, paragraphs and clauses, are for convenience of reference only, and shall not affect the meaning or interpretation.
Section 1.8 Statutory References
All references to any statute is to that statute or regulation as now enacted or as may from time to time be amended, re-enacted or replaced and includes all regulations made
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thereunder, unless something in the subject matter or context is inconsistent therewith or unless expressly provided otherwise in this Agreement.
Section 1.9 Actions to be Performed on a Business Day
Whenever this Agreement provides for or contemplates that a covenant or obligation is to be performed, or a condition is to be satisfied or waived on a day which is not a Business Day, such covenant or obligation shall be required to be performed, and such condition shall be required to be satisfied or waived on the next Business Day following such day.
ARTICLE2 PURCHASE AND SALE OF PURCHASED SHARES
Section2.1 Agreement of Purchase and Sale
On the Closing Date and subject to the terms and conditions of this Agreement (which conditions, for greater certainty, include the issuance of the Approval and Vesting Order), the Receiver hereby agrees to sell, assign and transfer to the Purchaser, and the Purchaser agrees to purchase from the Receiver, all (but not less than all) of the issued and outstanding shares of Minera (collectively, the "Purchased Shares").
Section 2.2 Purchase Price
The consideration payable by the Purchaser to the Receiver for the Purchased Shares is $19,000,000 (the "Purchase Price"). The Purchase Price shall be paid and satisfied on Closing by providing a credit in the full amount of the Receivership Debt Amount in full satisfaction of the Receiver's Borrowing Charge as well as a release of $16,623,303 (and no more) of the Seafield Debt, as of the date hereof (it being acknowledged that the final amounts of the Receivership Debt Amount and released Seafield Debt constituting the Purchase Price shall be determined on the Closing Date).
ARTICLE3 REPRESENTATIONS AND WARRANTIES
Section3.1 Representations of the Receiver
The Receiver represents and warrants to the Purchaser as follows and acknowledges that the Purchaser is relying on such representations and warranties in connection with entering into this Agreement and performing its obligations hereunder:
(a) The Receiver has been appointed by the Court as receiver of the Property pursuant to the Receivership Order, a copy of which is appended as Schedule 1 hereto;
(b) Subject to the issuance of the Approval and Vesting Order, the Receiver has all necessary power and authority to enter into this Agreement and to carry out its obligations under this Agreement. This Agreement has been duly executed and delivered by the Receiver and constitutes a legal, valid and
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binding obligation of the Receiver enforceable against it in accordance with its terms, subject to any limitations imposed by Applicable Law;
To the knowledge of the Receiver, there is no action, suit, proceeding or Claim against Seafield or the Receiver that is pending or, to the Receiver's knowledge, threatened against Seafield or the Receiver in any court or by or before any Governmental Authority that would be reasonably expected to adversely affect the Receiver's ability to perform its obligations under this Agreement on a timely basis; and
None of the Receiver or, to the knowledge of the Receiver, Seafield, is a non-resident of Canada within the meaning of section 116 of the Income Tax Act.
Section3.2 Representations of the Purchaser
The Purchaser represents and warrants to the Receiver as follows and acknowledges that the Receiver is relying on such representations and warranties in connection with entering into this Agreement and performing its obligations hereunder:
(a) The Purchaser is a corporation duly formed and validly subsisting under the laws of the jurisdiction of its formation and has the requisite power and authority to carry on its business as now conducted by it and to own its properties and assets, and is qualified to carry on business under the Applicable Laws of the jurisdictions where it carries on a material portion of its business;
(b) Subject to approval from the South African Reserve Bank (which has been obtained) and approval of the Financial Surveillance Department of the South African Reserve Bank (which remains outstanding as of the date hereof) the Purchaser has taken all necessary action to authorize the entering into and performance by it of this Agreement and completion of the Transaction, and the execution, delivery and performance by the Purchaser of this Agreement does not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition), result in a breach or a violation of, or conflict with, any of the terms or provisions of its constating documents or by-laws or any contracts or instruments to which it is a party or pursuant to which any of its assets or property may be affected, and will not result in the violation of any Applicable Law;
(c) Except for the approval of the South African Reserve Bank (which has been obtained) and approval of the Financial Surveillance Department of the South African Reserve Bank (which remains outstanding as of the date hereof) the execution, delivery and performance of this Agreement by the Purchaser does not and will not require any Consent, approval, authorization or other order of, action by, filing with or notification to, any Governmental Authority, except where failure to obtain such Consent, approval, authorization or action, or to make such filing or notification, would not
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prevent, affect or delay the consummation by the Purchaser of the Transaction;
There is no action, suit, proceeding or Claim against the Purchaser that is pending or, to the Purchaser's knowledge, threatened against the Purchaser in any court or by or before any Governmental Authority that would adversely affect the Purchaser's ability to perform its obligations under this Agreement on a timely basis; and
This Agreement has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser and is enforceable against the Purchaser in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar Applicable Laws relating to creditors' rights generally and subject to general principles of equity.
Limitations
With the exception of the Receiver's representations and warranties in Section 3.1 and the Purchaser's representations and warranties in Section 3.2, neither the Receiver nor the Purchaser or their Representatives have made or shall be deemed to have made any other representation or warranty, express or implied, at law or in equity, in respect of the Receiver, the Purchaser, the Purchased Shares, Minera or the sale or purchase of the Purchased Shares pursuant to this Agreement.
Section4.1
(a)
(b)
ARTICLE4 COVENANTS
Pre-Closing Cooperation
Prior to the Closing, upon the terms and subject to the conditions of this Agreement, each of the Parties shall use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and cooperate with each other in order to do, all things necessary, proper or advisable under Applicable Law to consummate the Transaction as soon as practicable;
Prior to the Closing, the Receiver shall promptly make available to the Purchaser, as the Purchaser may require, copies of all title documents, abstracts of title, deeds, leases, surveys, plans of survey, certificates, building plans, Contracts, agreements, studies, sketches, and reports, and such other materials and documents that the Receiver has in its possession pertaining to the Business and the Assets, for the purpose of allowing the Purchaser to investigate at its own expense the title of Seafield to the Purchased Shares and the title of Minera to the Assets, the condition, merchantability, extent, quality, quantity, fitness for purpose and all other aspects of the Assets; and
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Each of the Receiver and the Purchaser shall promptly notify each other of the occurrence, to such Party's knowledge, of any event or condition, or the existence, to such Party's knowledge, of any fact, that would reasonably be expected to result in any of the conditions set forth in Section 6.1, Section 6.2, or Section 6.3 not being satisfied by the Termination Date.
Acquisition on "As Is, Where Is" Basis
The Purchaser hereby acknowledges and agrees as follows:
(a)
(b)
(c)
Section4.3
The Purchased Shares are being purchased on an "as is, where is" basis as they exist at the Closing Time;
It has conducted such inspections of the Assets and the Business as deemed appropriate, satisfied itself with respect to the Assets, the Business and the Purchased Shares and all matters connected with or related to the Assets, the Business and the Purchased Shares and has relied entirely upon its own investigations and inspections in entering into this Agreement to acquire all of the Receiver's and Seafield's right, title and interest, if any, in and to the Purchased Shares, without regard to any information made available or provided by the Receiver or its Representatives; and
Except as expressly set forth in this Agreement, the Receiver makes no representations, warranties, statements or promises on its own behalf or on behalf of Seafield in favour of the Purchaser concerning the Purchased Shares, the Assets or the Business, or the Receiver's or Seafield's right, title or interest in or to the Purchased Shares, which the Purchaser acknowledges are being acquired on an "as is, where is" basis, whether express or implied, statutory or collateral, arising by operation of Applicable Law or otherwise.
Books and Records
The Receiver, any trustee, trustee in bankruptcy or similar official appointed with respect to Seafield, and each of their Representatives shall, for a period of six (6) years from the Closing Date, have access to, and the right to copy, at their expense to the extent necessary or useful in connection with their administration and discharge of their duties and obligations, including the filing of any Tax return or the defence or settlement of any litigation or to comply with any Applicable Law and during usual business hours, upon reasonable prior notice to the Purchaser, all Books and Records which are to be transferred and conveyed to the Purchaser pursuant to this Agreement. The Purchaser shall use reasonable efforts to retain and preserve all such Books and Records for such six (6) year period. The Purchaser shall not be responsible or liable to the Receiver or any other Person for or as a result of any unintentional loss or destruction of or damage to any of the Books and Records.
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Section4.4 Foreign Investment Substitution in Colombia
Forthwith upon issuance of the Approval and Vesting Order, the Receiver shall authorize Minera (pursuant to power of attorney or otherwise) to (a) complete a special purpose income tax return on behalf of Seafield for filing with the Colombian competent taxing authority (Direcci6n de Impuestos y Aduanas Nacionales - DIAN) in respect of the Transaction (the "Colombian Tax Return") as soon as practicable but in any event within 30 calendar days following the Closing Date and, (b) execute and file the Colombian Tax Return with the DIAN together with any applicable taxes imposed under the Applicable Law of Colombia in connection with the Transaction within thirty (30) calendar days following the Closing Date. In addition, the Receiver shall cause Seafield to cooperate with the Purchaser in preparing and filing the corresponding foreign investment substitution request before the Colombian Central Bank (Banco de Ia Republica de Colombia) and in answering all further reasonable requirements of any Colombian Governmental Authority that may arise in relation to the substitution of the foreign investment on behalf of the Purchaser.
ARTICLES BID AND AUCTION PROCEDURES
Section 5.1 Approval and Vesting Order
(a) As soon as reasonably practicable, the Receiver shall serve and file a motion, which motion shall seek, among other things: (i) approval of the Receiver's execution of this Agreement, and (ii) the issuance of the Approval and Vesting Order;
(b) The Receiver shall use its commercially reasonable efforts to have the Court issue the Approval and Vesting Order;
(c) If leave to appeal is sought, an appeal is taken or a stay pending appeal is requested with respect to the Approval and Vesting Order, the Receiver shall promptly notify the Purchaser of such leave to appeal, appeal or stay request and shall promptly provide to the Purchaser a copy of the related notice(s) or order(s) and written notice of any motion or application filed in connection with any leave to appeal or appeal from such orders; and
(d) The Receiver shall use commercially reasonable efforts to diligently prosecute the dismissal of any motion for any such leave to appeal, appeal, or stay request.
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ARTICLE6 CONDITIONS
Section 6.1 Conditions for the Benefit of the Purchaser
The obligations of the Purchaser to complete the Transaction shall be subject to the satisfaction of, or compliance with, at or before the Closing Time, each of the following conditions precedent:
(a) All representations and warranties of the Receiver contained in this Agreement shall be true and correct as at the Closing Time with the same force and effect as if made at and as of such time;
(b) The Receiver shall have complied with and performed in all material respects all of its covenants and obligations contained in this Agreement required to be performed by it prior to or by the Closing Time, including those obligations set out in Section 5.1 hereof;
(c) The Receiver shall have delivered or caused to be delivered to the Purchaser all items referred to in Section 7.2;
(d) Notwithstanding Section 9.13, no determination shall have been made by the Court or any other Governmental Authority, in connection with the Receivership Proceedings or otherwise, that any provisions of this Agreement are partially or completely invalid or unenforceable;
(e) The Purchaser shall have received the approval of the South African Reserve Bank (it being acknowledged that this condition has been satisfied) and the approval of the Financial Surveillance Department of the South African Reserve Bank (which remains outstanding as of the date hereof) as to the consummation of the Transaction;
(f) The Purchaser shall be satisfied with the form and content of the Colombian Tax Return;
(g) Arrangements satisfactory to the Purchaser shall have been made that it and Minera shall have control over all Books and Records; and
(h) The Purchaser shall be in receipt of an opinion of DLA Piper Martinez Neira, Colombian legal counsel to the Purchaser, as to Colombian law matters related to the Purchased Shares, in form and content satisfactory to Purchaser.
The foregoing conditions are for the exclusive benefit of the Purchaser and non-satisfaction or non-performance of any such condition may only be waived by the Purchaser, in its sole discretion, in whole or in part, at any time and from time to time without prejudice to any other rights which the Purchaser may have. Any such waiver is only binding on the Purchaser if it is made in writing.
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Section 6.2 Conditions for the Benefit of the Receiver
The obligations of the Receiver to complete the Transaction shall be subject to the satisfaction of, or compliance with, at or before the Closing Time, each of the following conditions precedent:
(a) All representations and warranties of the Purchaser contained in this Agreement shall be true and correct as at the Closing Time with the same force and effect as if made at and as of such time;
(b) The Purchaser shall have complied with and performed in all material respects all of its covenants and obligations contained in this Agreement to be performed by it before or by the Closing Time;
(c) All amounts owing to the Receiver and its legal counsel on account of their respective professional fees plus reasonable estimates to fulfil the Receiver's obligations under this Agreement shall have been received;
(d) The Purchaser shall have delivered, or caused to be delivered to the Receiver all items referred to in Section 7.3; and
(e) If the Purchaser assigns any of its rights or obligations arising under this Agreement in accordance with Section 9.6, the Purchaser and such assignee shall have executed and delivered to the Receiver an assignment and assumption agreement (pursuant to which the Purchaser shall remain jointly and severally liable) satisfactory to the Receiver, acting reasonably.
The foregoing conditions are for the exclusive benefit of the Receiver and non-satisfaction or non-performance of any such condition may only be waived by the Receiver, in its sole discretion, in whole or in part, at any time and from time to time without prejudice to any other rights which the Receiver may have. Any such waiver is only binding on the Receiver if it is made in writing.
Section 6.3 Mutual Conditions
The obligations of the Parties to complete the Transaction shall be subject to the satisfaction of, or compliance with, at or before the Closing Time, each of the following conditions precedent:
(a) The Approval and Vesting Order shall have been issued and entered by the Court and such orders shall not have been stayed, vacated or appealed and no order shall have been issued which restrains or prohibits the completion of the Transaction;
(b) the Receiver and the Purchaser shall have received evidence satisfactory to each of them, in their sole and unfettered discretion, that Minera has (i) completed and executed the Colombian Tax Return, (ii) adequately made provision for payment of any taxes payable to the DIAN in connection with
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the Columbian Tax Return ("Colombian Taxes"), and (iii) irrevocably directed its Colombian legal counsel to file the Colombian Tax Return and pay the Colombian Taxes, if any, forthwith after the Closing Date; and
(c) There shall be no order issued by any Governmental Authority delaying, restricting or preventing, and no pending or threatened Claim, judicial or administrative proceeding, or investigation against any Party by any Person, for the purpose of enjoining, delaying, restricting or preventing the consummation of this Transaction, or otherwise claiming that this Agreement or the consummation of the Transaction is improper or would give rise to proceedings under any Applicable Law.
The foregoing conditions are for the benefit of both Parties and non-satisfaction or non-performance of any such condition may only be waived by no less than both of them, in their sole discretion, in whole or in part, at any time and from time to time without prejudice to any other rights which they each may have. Any such waiver is only binding on a Party if it is made in writing, however no Party shall be able to delay or prevent Closing due to non-satisfaction of these mutual conditions due to a breach of this Agreement by that Party.
ARTICLE7 CLOSING
Section 7.1 Closing Date and Place of Closing
Closing shall take place at 10:00 a.m. (the "Closing Time") on the Closing Date at the offices of the Receiver's Solicitors, or such other time and location as the Parties may agree upon in writing. Any tender of documents or money hereunder may be made upon the Receiver or the Purchaser or upon the solicitors acting for the Party on whom tender is desired. All proceedings to be taken and all documents to be executed and delivered by all Parties at the Closing shall be deemed to have been taken and executed simultaneously and no proceedings shall be deemed to have been taken nor documents executed or delivered until all have been taken, executed and delivered. The Parties agree that if the Purchaser has assigned only part of its rights and obligations in accordance with Section 9.6, at the Purchaser's election, the Closing Time in respect of the Purchaser and the Closing Time in respect of the permitted assignee shall take place 5 minutes apart, in the order as determined by the Purchaser in its sole and absolute discretion
Section 7.2 Deliveries on Closing by the Receiver
At the Closing Time, the Receiver shall deliver, or cause to be delivered to the Purchaser:
(a) Pursuant to the Approval and Vesting Order, to the extent not already in the possession of the Purchaser, share certificates representing the Purchased Shares, free and clear of all Liens, other than (i) those restrictions on transfer, if any, contained in the constating documents of Minera and (ii) Liens granted in favour of the Purchaser, duly endorsed in blank for transfer, or
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accompanied by irrevocable security transfer powers of attorney duly executed in blank, in either case by the holders of record, together with evidence satisfactory to the Purchaser that the Purchaser or its nominee(s) have been entered upon the books of Minera as the holder of the Purchased Shares;
A true and complete copy of the Approval and Vesting Order, as issued by the Court;
The Receiver's Certificate (as defined in the Approval and Vesting Order) executed by the Receiver;
The original of Minera' s stock ledger wherein the Purchaser is registered as owner of the Purchased Shares;
A bring-down certificate executed by the Receiver, in a form satisfactory to the Purchaser, acting reasonably, certifying that all of the representations and warranties of the Receiver hereunder remain true and correct in all material respects as of the Closing Time; and
Such other documents as may be reasonably requested by the Purchaser's Solicitors to effect or evidence Closing and the transfer of the Purchased Shares.
Section 7.3 Deliveries on Closing by the Purchaser
At the Closing Time, the Purchaser shall deliver, or cause to be delivered to the Receiver:
(a) The payment required by Section 2.2 reflected by a confirmation and acknowledgement executed by the Purchaser confirming that the Receivership Debt Amount is fully satisfied and extinguished and that $16,623,303 (and no more) of the Seafield Debt as of the date hereof is satisfied and extinguished (it being acknowledged that the final amounts of the Receivership Debt Amount and released Seafield Debt constituting the Purchase Price shall be determined on the Closing Date);
(b) A bring-down certificate executed by the Purchaser, in a form satisfactory to the Receiver, acting reasonably, certifying that all of the representations and warranties of the Purchaser hereunder remain true and correct in all material respects as of the Closing Time;
(c) A certificate executed by the Purchaser, certifying that the open share pledge agreement over the shares of Minera executed on February 21, 2013 is terminated and authorizing the legal representative of Minera to cancel the registration of such pledge in Minera's stockholders registry book; and
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(d) Such other documents as may be reasonably requested by the Receiver's Solicitors to effect or evidence Closing and the transfer of the Purchc.sed Shares.
Section 7.4 Risk
The Business will be and remain at the risk of Seafield to the extent of its interest until Closing and at the risk of the Purchaser from and after Closing. If, prior to Closing, a material portion of the Assets are substantially damaged or destroyed by fire or other casualty, then, at its option, the Purchaser may decline to complete the Transaction. Such option must be exercised within ten (10) Business Days after receipt of notice in writing by the Purchaser from the Receiver of the occurrence of damage or destruction (or prior to the Closing Date if such occurrence takes place within ten (10) days of the Closing Date) in which event this Agreement will be terminated automatically. If the Purchaser does not exercise such option, it will complete the Transaction and will be entitled to the benefit of an assignment of the proceeds of insurance referable to such damage or destruction. Where any damage or destruction is not substantial, the Purchaser will complete the Transaction and will be entitled to the benefit of an assignment of the proceeds of insurance referable to such damage or destruction provided that such damage or destruction is insured or, otherwise, to an agreed abatement.
ARTICLES TERMINATION
Section 8.1 Termination
This Agreement may be terminated at any time prior to the Closing:
(a) Subject to any required Court approval, by mutual written consent of the Receiver and the Purchaser;
(b) Automatically and without any action or notice by either the Receiver or the Purchaser, immediately upon the issuance of a final and non-appealable order, decree, or ruling or any other action by a Governmental Authority to restrain, enjoin or otherwise prohibit the Transaction;
(c) By either the Receiver or the Purchaser if the Closing has not occurred on or before the Termination Date other than in the circumstances described in Section 8.1(d) and Section 8.1(e);
(d) By the Receiver, if there has been a material violation or breach by the Purchaser of any agreement, covenant, representation or warranty of the Purchaser in this Agreement which would prevent the satisfaction of, or compliance with, any condition set forth in Section 6.2 by the Termination Date and such violation or breach has not been waived by the Receiver or cured by the Termination Date, unless the Receiver is in material breach of its obligations under this Agreement;
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(e) By the Purchaser, if there has been a material violation or breach by the Receiver of any agreement, covenant, representation or warranty of the Receiver in this Agreement which would prevent the satisfaction of, or compliance with, any condition set forth in Section 6.1(a), Section 6.1(b) or Section 6.1(c) by the Termination Date and such violation or breach has not been waived by the Purchaser or cured by the Termination Date, unless the Purchaser is in material breach of its obligations under this Agreement;
(f) By the Purchaser, if any condition set forth in Section 6.1(d), Section 6.1(e), Section 6.1(f), Section 6.1(g) or Section 6.1(h) has not been satisfied, unless the Purchaser is in material breach of its obligations under this Agreement;
(g) By either Party, if the conditions set forth in Section 6.3 have not been satisfied by the Termination Date; or
(h) By the Purchaser in the circumstances and upon the terms set out in Section 7.4.
ARTICLE9 MISCELLANEOUS
Section 9.1 Disclosure of Agreement
Each of the Parties agree that this Agreement shall be filed in the Receivership Proceedings with such redactions as are agreed upon between the Parties and the Court.
Section 9.2 Liability of the Parties
The Purchaser acknowledges and agrees that in all matters pertaining to this Agreement, including in its execution, KPMG is acting solely in its capacity as Receiver of Seafield and, as such, its liability under this Agreement, if any, will be in its capacity as Receiver, and KPMG and its Representatives shall have no personal or corporate liability of any kind, whether in contract, in tort or otherwise and in no circumstance will the Receiver be liable for any consequential damages including loss of profit.
Nothing contained in this Agreement, including for greater certainty anything under Sections 4.1(a), 4.4, S.l(d), 6.3(b) and 9.5, shall require the Receiver to (a) take any act, step, action or commence or continue any proceeding unless the Purchaser has provided the Receiver with sufficient cash funding required by the Receiver, as determined by the Receiver acting reasonably, to take such act, action or proceeding with the benefit of legal advice from counsel of its choice, or (b) take any act, step, action or commence or continue any proceeding that is, in the good faith opinion of the Receiver, reasonably likely to expose the Receiver, KPMG, its subsidiaries, affiliates, partners or employees to any liability or sanction under Applicable Laws which is not subject to cash reimbursement from the Purchaser.
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Section 9.3 Obligations to Survive
(a) The obligations and covenants of the Parties set out in the following sections and articles of this Agreement shall survive Closing, shall remain in full force and effect, shall not merge as a result of Closing and shall be binding on the Parties thereafter: Section 4.2 [Acquisition on "As Is, Where Is" Basis], Section 4.3 [Books and Records], Section 4.4 [Foreign Investment Substitution in Colombia], Section 9.2 [Liability of the Parties], Section 9.4 [Damages] and Section 9.5 [Further Assurances]; and
(b) The obligations and covenants of the Parties set out in the following sections and articles of this Agreement shall survive termination of this Agreement: Section 9.2 [Liability of the Parties], Section 9.4 [Damages] and Section 9.11 [No Brokers].
Section 9.4 Damages
Under no circumstance shall any of the Parties or their Representatives be liable for any special, punitive, exemplary, consequential or indirect damages (including loss of profits) that may be alleged to result, in connection with, arising out of, or relating to this Agreement or the transactions contemplated herein.
Section 9.5 Further Assurances
Each of the Parties hereto from and after the date hereof shall, from time to time, and at the request and expense of the Party requesting the same, do all such further acts and things and execute and deliver such further instruments, documents, matters, papers and assurances as may be reasonably requested to complete the Transaction and for more effectually carrying out the true intent and meaning of this Agreement. The Receiver's obligations under this Section shall terminate on its discharge as Receiver.
Section 9.6 Assignment by Purchaser
The Purchaser shall be permitted to assign this Agreement or any of its rights or obligations under this Agreement to one or more of its affiliates (as such term is defined in National Instrument 45'106) , provided that: (a) notice of such assignment is provided to the Receiver, (b) such assignee agrees to be bound by the terms of this Agreement, and (c) such assignment shall not release the Purchaser jointly or severally from any obligation or liability for performance of the Purchaser's obligations under this Agreement, including Closing, subject to the terms and conditions provided for in this Agreement.
Section 9.7 Time of the Essence
Time shall be of the essence of this Agreement.
Section 9.8 Notices
Any notice, demand or other communication required or permitted to be given to any Party hereunder shall be given in writing and addressed as follows:
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(a) In the case of the Receiver:
KPMGinc. 333 Bay St, #4600, Toronto, ON M5H 2S5
Attention:
Telephone: Fax: Email:
Philip Reynolds and Ryan Adlington
416-777-8500 416-777-3364 [email protected] [email protected]
And with a copy to the Receiver's Solicitors:
McMillan LLP Brookfield Place, Suite 4400 181 Bay Street Toronto, ON M5J 2T3
Attention: Wael M. Rostom and Jennifer Cockbill
Telephone: 416-865-7790 Fax: 416-865-7048 Email: [email protected]
(b) In the case of the Purchaser:
RMB Australia Holdings Limited Level15, 60 Castlereagh Street Sydney, New South Wales 2000 Australia
Attention:
Telephone: Fax: Email:
Greg Gay and Arnold Vogel
+612 9256 6204 and +612 9256 6251 +612 9256 6290 [email protected] and [email protected]
And with a copy to the Purchaser's Solicitors:
Stikeman Elliott LLP 5300 Commerce Court West 199 Bay Street Toronto, ON M5L 1B9
Attention:
Telephone: Fax: Email:
Craig Mitchell and Ashley Taylor
416-869-5509 and 416-869-5236 416-947-0866 [email protected] and [email protected]
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Any such notice, if personally delivered (including courier delivery), shall be deemed to have been validly and effectively given and received on the Business Day of such delivery provided such notice is received before 4:00p.m. (addressee's local time); and if such notice is received after 4:00p.m. (addressee's local time) or if the notice is sent by facsimile or other electronic communication, such notice shall be deemed to have been validly and effectively given and received on the Business Day next following the day it was received.
Section 9.9 Solicitors and Agents and Tender
Any notice, approval, waiver, agreement, instrument, document or communication permitted, required or contemplated in this Agreement may be given or delivered and accepted or received by the Purchaser's Solicitors on behalf of the Purchaser and by the Receiver's Solicitors on behalf of the Receiver and any tender of closing documents and the Purchase Price may be made upon the Receiver's Solicitors and the Purchaser's Solicitors, as the case may be.
Section 9.10 Successors and Assigns
This Agreement shall be binding upon, and enure to the benefit of, the Parties hereto and their respective successors and permitted assigns.
Section 9.11 No Brokers
It is understood and agreed that the Purchaser shall not be liable for any commission or other remuneration payable or alleged to be payable to any broker, agent or other intermediary who purports to act or have acted for the Receiver.
Section 9.12 Third Party Beneficiaries
Each Party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the Parties hereto and their successors and permitted assigns, and no Person, other than the Parties hereto and their successors and their permitted assigns shall be entitled to rely on the provisions hereof in any action, suit, proceeding, hearing or other forum, save and except in the event of any action, suit, proceeding, hearing or other forum as it pertains to matters of confidentiality and any particular Representative in connection therewith.
Section 9.13 . Severability
If any provision of this Agreement or any document delivered in connection with this Agreement is partially or completely invalid or unenforceable, the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, all of which shall be construed and enforced as if that invalid or unenforceable provision were omitted. The invalidity or unenforceability of any provision in one jurisdiction shall not affect such provision validity or enforceability in any other jurisdiction.
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Section 9.14 Counterparts
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same agreement. Transmission by facsimile or other electronic means of an executed counterpart of this Agreement shall be deemed to constitute due and sufficient delivery of such counterpart.
Section 9.15 No Strict Construction
The parties have participated jointly in the negotiation and drafting of this Agreement. In the event any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favouring or disfavouring either Party by virtue of authorship of any provision of this Agreement.
[Remainder of Page Intentionally left blank. Signature Page Follows]
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IN WITNESS WHEREOF this Agreement has been properly executed by the Parties hereto as of the date first above written.
KPMG Share Purchase Agreement
KPMG INC., solely in its capacity as lhe Court-appointed Receiver of S LD RESOURCES LTD., and not i
C~L~~j(A.~/II'-~" Fer: -=c-~--n-r=,..-,-rr---A.~"C""r,.,....,,.,...-
Name: f' /.(C(... r:: J) flq;ctii(...tjj' Title: 1 <;r.J~ v..i: C(- (?lf..(-ftJ fi..-'1__....-
I have authority to bind the Receiver.
RMB AUSTRALIA HOLDINGS LIMITED Executed in accordance with section 127 of the Corporations ct 2001 (Cth)
Per: ~~~ -=----Na e: -+-. --t-~-o/--Title: ' eta#. · ay
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SCHEDULEl RECEIVERSHIP ORDER
[See attached]
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146
ONTARIO SUPERIOR COURT OF JUSTICE
(COMMERCIAL LIST)
Court File No.: c.v- IL(- I 0~~ b- GOC:.L
THE HONOURABLE M""R. ) ) )
TUESDAY, THE NINTH
JUSTICE NG:"W:BouL]) DAY OF SEPTEMBER, 2014
BETWEEN:
· RMB AUSTRALIA HOLDINGS LIMITED
-and-
SEAFIELD RESOURCES LTD.
ORDER (Appointment Order)
Applicant
Respondent
THIS APPLICATION made by the Applicant RMB Australia Holdings Limited
("RMB") for an Order pursuant to section 243(1) of the Bankruptcy and Insolvency Act,
R.S.C. "1985, c. B-3, as amended (the "BIA'') and section 101 of the Courts of Justice Act,
R.S.O. 1990, c. C.43, as amended (the "CJA") appointing KPMG Inc. ("KPMG") as
receiver and manager (in such capacities, the "Receiver") without security, of all of the
assets, undertakings and properties of Seafield Resources Ltd. (the "Debtor") acquired
for, or used in relation to a business carried on by the Debtor, was heard this day at 330
University Avenue, Toronto, Ontario.
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ON READING the affidavit of Alvaro Belevan sworn September 8, 2014 and the
Exhibits thereto and on hearing the submissions of counsel for RMB and the Debtor, no
one else appearing although duly served as appears from the affidavit of service, filed,
and on reading the consent of I<PMG to act as the Receiver,
SERVICE
1. THIS COURT ORDERS that the time for service of the Notice of Application
and the Application is hereby abridged and validated so that this Application is
properly returnable today and hereby dispenses with further service thereof.
APPOINTMENT
2. THIS COURT ORDERS that pursuant to section 243(1) of the BIA and section
101 of the CJA, I<PMG is hereby appointed Receiver, without security, of all of the
assets, undertakings and properties of the Debtor acquired for, or used in relation to a
business carried on by the Debtor, including all proceeds thereof (the "Property").
RECEIVER'S POWERS
3. THIS COURT ORDERS that the Receiver is hereby empowered and authorized,
but not obligated, to act at once in respect of the Property and, without in any way
limiting the generality of the foregoing, the Receiver is hereby expressly empowered
and authorized to do any of the following where the Receiver considers it necessary or
desirable:
(a) to take possession of and exercise control over the Property and any and
all proceeds, receipts and disbursements arising out of or from the
Property;
(b) to receive, preserve, and protect the Property, or any part or parts thereof,
including, but not limited to, the changing of locks and security codes, the
relocating of Property to safeguard it, the engaging of independent
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security personnel, the taking of physical inventories and the placement of
such insurance coverage as may be necessary or desirable;
(c) to manage, operate, and carry on the business of the Debtor, including the
powers to enter into any agreements, incur any obligations in the ordinary
course of business, cease to carry on all or any part of the business, or
cease to perform any contracts of the Debtor;
(d) to engage consultants, appraisers, agents, experts, auditors, accountants,
managers, counsel and such other persons from time to time and on
whatever basis, including on a temporary basis, to assist with the exercise
of the Receiver's powers and duties, including without limitation those
conferred by this Order;
(e) to purchase or lease such machinery, equipment, inventories, supplies,
premises or other assets to continue the business of the Debtor or any part
or parts thereof;
(f) to receive and collect all monies and accounts now owed or hereafter
owing to the Debtor and to exercise all remedies of the Debtor in
collecting such monies, including, without limitation, to enforce any
security held by the Debtor;
(g) to settle, extend or compromise any indebtedness owing to the Debtor;
(h) to execute, assign, issue and endorse documents of whatever nature in
respect of any of the Property, whether in the Receiver's name or in the
name and on behalf of the Debtor, for any purpose pursuant to this Order;
(i) to undertake environmental or workers' health and safety assessments of
the Property and operations of the Debtor;
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0) to initiate, prosecute and continue the prosecution of any and all
proceedings and to defend all proceedings now pending or hereafter
instituted with respect to the Debtor, the Property or the Receiver, and to
settle or compromise any such proceedings. The authority hereby
conveyed shall extend to such appeals or applications for judicial review
in respect of any order or judgment pronounced in any such proceeding;
(k) to market any or all of the Property, including advertising and soliciting
offers in respect of the Property or any part or parts thereof and
negotiating such terms and conditions of sale as the Receiver in its
discretion may deem appropriate;
(1) to sell, convey, transfer, lease or assign the Property or any part or parts
thereof out of the ordinary course of business,
(i) without the approval of this Court in respect of any transaction not
exceeding $100,000, provided that the aggregate consideration for
all such transactions does not exceed $1,000,000; and
(ii) with the approval of this Court in respect of any transaction in
which the purchase price or the aggregate purchase price exceeds
the applicable amount set out in the preceding clause;
and in each such case notice under subsection 63(4) of the Ontario Personal
Property Security Act or section 31 of the Ontario Mortgages Act, as the case
may be, shall not be required, and in each case the Ontario Bulk Sales Act
shall not apply.
(m) to apply for any vesting order or other orders necessary to convey the
Property or any part or parts thereof to a purchaser or purchasers thereof,
free and clear of any liens or encumbrances affecting such Property;
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(n) to report to, meet with and discuss with such affected Persons (as defined
below) as the Receiver deems appropriate on all matters relating to the
Property and the receivership, and to share information, subject to such
terms as to confidentiality as the Receiver deems advisable;
(o) to register a copy of this Order and any other Orders in respect of the
Property against title to any of the Property;
(p) to apply for any permits, licences, approvals or permissions as may be
required by any governmental authority and any renewals thereof for and
on behalf of and, if thought desirable by the Receiver, in the name of the
Debtor;
(q) to enter into agreements with any trustee in bankruptcy appointed in
respect of the Debtor, including, without limiting the generality of the
foregoing, the ability to enter into occupation agreements for any property
owned or leased by the Debtor;
(r) to exercise any shareholder, partnership, joint venture or other rights
which the Debtor may have, including without limitation, the Debtor's
rights as sole shareholder of Minera Seafield S.A.S. ("Minera") to, among
other things, appoint one or more directors of Minera and to replace any
of the directors of Minera;
(s) to advance monies to Minera; and
(t) to take any steps reasonably incidental to the exercise of these powers or
the performance of any statutory obligations.
and in each case where the Receiver takes any such actions or steps, it shall be
exclusively authorized and empowered to do so, to the exclusion of all other Persons (as
defined below), including the Debtor, and without interference from any other Person.
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DUTY TO PROVIDE ACCESS AND CO-OPERATION TO THE RECEIVER
4. THIS COURT ORDERS that (i) the Debtor, (ii) all of its current and former
directors, officers, employees, agents, accountants, legal counsel and shareholders, and
all other persons acting on its instructions or behalf, and (iii) all other individuals, firms,
corporations, governmental bodies or agencies, or other entities having notice of this
Order (all of the foregoing, collectively, being "Persons" and each being a "Person")
shall forthwith advise the Receiver of the existence of any Property in such Person's
possession or control, shall grant immediate and continued access to the Property to the
Receiver, and shall deliver all such Property to the Receiver upon the Receiver's request.
5. THIS COURT ORDERS that all Persons shall forthwith advise the Receiver of
the existence of any books, documents, securities, contracts, orders, corporate and
accounting records, and any other papers, records and information of any kind related
to the business or affairs of the Debtor, and any computer programs, computer tapes,
computer disks, or other data storage media containing any such information (the
foregoing, collectively, the "Records") in that Person's possession or control, and shall
provide to the Receiver or perm1t the Receiver to make, retain and take away copies
thereof and grant to the Receiver unfettered access to and use of accounting, computer,
software and physical facilities relating thereto, provided however that nothing in this
paragraph 5 or in paragraph 6 of this Order shall require the delivery of Records, or the
granting of access to Records, which may not be disclosed or provided to the Receiver
due to the privilege attaching to solicitor-client communication or due to statutory
provisions prohibiting such disclosure.
6. THIS COURT ORDERS that if any Records are stored or otherwise contained
on a computer or other electronic system of information storage, whether by
independent service provider or otherwise, all Persons in possession or control of such
Records shall forthwith give unfettered access to the Receiver for the purpose of
allowing the Receiver to recover and fully copy all of the information contained therein
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whether by way of printing the information onto paper or making copies of computer
disks or such other manner of retrieving and copying the information as the Receiver in
its discretion deems expedient, and shall not alter, erase or destroy any Records without
the prior written consent of the Receiver. Further, for the purposes of this paragraph, all
Persons shall provide the Receiver with all such assistance in gaining immediate access
to the information in the Records as the Receiver may in its discretion require including
providing the Receiver with instructions on the use of any computer or other system
and providing the Receiver with any and all access codes, account names and account
numbers that may be required to gain access to the information.
7. THIS COURT ORDERS that the Receiver shall provide each of the relevant
landlords with notice of the Receiver's intention to remove any fixtures from any leased
premises at least seven (7) days prior to the date of the intended removal. The relevant
landlord shall be entitled to have a representative present in the leased premises to
observe such removal and, if the landlord disputes the Receiver's entitlement to remove
any such fixture under the provisions of the lease, such fixture shall remain on the
premises and shall be dealt with as agreed between any applicable secured creditors,
such landlord and the Receiver, or by further Order of this Court upon application by
the Receiver on at least two (2) days' notice to such landlord and any such secured
creditors.
NO PROCEEDINGS AGAINST THE RECEIVER
8. THIS COURT ORDERS that no proceeding or enforcement process in any court
or tribunal (each, a "Proceeding"), shall be commenced or continued against the
Receiver except with the written consent of the Receiver or with leave of this Court.
NO PROCEEDINGS AGAINST THE DEBTOR OR THE PROPERTY
9. THIS COURT ORDERS that no Proceeding against or in respect of the Debtor
or the Property shall be commenced or continued except with the written consent of the
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Receiver or with leave of this Court and any and all Proceedings currently under way
against or in respect of the Debtor or the Property are hereby stayed and suspended
pending further Order of this Court.
NO EXERCISE OF RIGHTS OR REMEDIES
10. THIS COURT ORDERS that all rights and remedies against the Debtor, the
Receiver, or affecting the Property, are hereby stayed and suspended except with the
written consent of the Receiver or leave of this Court, provided that nothing in this
paragraph shall (ij empower the Receiver or the Debtor to carry on any business which
the Debtor is not lawfully entitled to carry on, (ii) exempt the Receiver or the Debtor
from compliance with statutory or regulatory provisions relating to health, safety or the
environment, (iii) prevent the filing of any registration to preserve or perfect a security
interest, or (iv) prevent the registration of a claim for lien.
NO INTERFERENCE WITH THE RECEIVER
11. THIS COURT ORDERS that no Person shall discontinue, fail to honour, alter,
interfere with, repudiate, terminate or cease to perform any right, renewal right,
contract, agreement, licence or permit in favour of or held by the Debtor, without
written consent of the Receiver or leave of this Court.
CONTINUATION OF SERVICES
12. THIS COURT ORDERS that all Persons having oral or written agreements with
the Debtor or statutory or regulatory mandates for the supply of goods and/ or services,
including without limitation, all computer software, communication and other data
services, centralized banking services, payroll services, insurance, transportation
services, utility or other services to the Debtor are hereby restrained until further Order
of this Court from discontinuing, altering, interfering with or terminating the supply of
such goods or services as may be required by the Receiver, and that the Receiver shall
be entitled to the continued use of the Debtor's current telephone numbers, facsimile
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numbers, internet addresses and domain names, provided in each case that the normal
prices or charges for all such goods or services received after the date of this Order are
paid by the Receiver in accordance with normal payment practices of the Debtor or
such other practices as may be agreed upon by the supplier or service provider and the
Receiver, or as may be ordered by this Court.
RECEIVER TO HOLD FUNDS
13. THIS COURT ORDERS that all funds, monies, cheques, instruments, and other
forms of payments received or collected by the Receiver from and after the making of
this Order from any source whatsoever, including without limitation the sale of all or
any of the Property and the collection of any accounts receivable in whole or in part,
whether in existence on the date of this Order or hereafter coming into existence, shall
be deposited into one or more new accounts to be opened by the Receiver (the "Post
Receivership Accounts") and the monies standing to the credit of such Post
Receivership Accounts from time to time, net of any disbursements provided for herein,
shall be held by the Receiver to be paid in accordance with the terms of this Order or
any further Order of this Court.
EMPLOYEES
14. THIS COURT ORDERS that all employees of the Debtor shall remain the
employees of the Debtor until such time as the Receiver, on the Debtor's behalf, may
terminate the employment of such employees. The Receiver shall not be liable for any
employee-related liabilities, including any successor employer liabilities as provided for
in section 14.06(1.2) of the BIA, other than such amounts as the Receiver may
specifically agree in writing to pay, or in respect of its obligations under sections 81.4(5)
or 81.6(3) of the BIA or under the Wage Earner Protection Program Act.
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PIPED A
15. THIS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal
Information Protection and Electronic Documents Act, the Receiver shall disclose personal
information of identifiable individuals to prospective purchasers or bidders for the
Property and to their advisors, but only to the extent desirable or required to negotiate
and attempt to complete one or more sales of the Property (each, a "Sale"). Each
prospective purchaser or bidder to whom such personal information is disclosed shall
maintain and protect the privacy of such information and limit the use of such
information to its evaluation of the Sale, and if it does not complete a Sale, shall return
all such information to the Receiver, or in the alternative destroy all such information.
The purchaser of any Property shall be entitled to continue to use the personal
information provided to it, and related to the Property purchased, in a manner which is
in all material respects identical to the prior use of such information by the Debtor, and
shall return all other personal information to the Receiver,. or ensure that all other
personal information is destroyed.
LIMITATION ON ENVIRONMENTAL LIABILITIES
16. THIS COURT ORDERS that nothing herein contained shall require the Receiver
to occupy or to take control, care, charge, possession or management (separately and/ or
collectively, "Possession") of any of the Property that might be environmentally
contaminated, might be a pollutant or a contaminant, or might cause or contribute to a
spill, discharge, release or deposit of a substance contrary to any federal, provincial or
other law respecting the protection, conservation, enhancement, remediation or
rehabilitation of the environment or relating to the disposal of waste or other
contamination including, without limitation, the Canadian Environmental Protection Act,
the Ontario Environmental Protection Act, the Ontario Water Resources Act, or the Ontario
Occupational Health and Safety Act and regulations thereunder (the "Environmental
Legislation"), provided however that nothing herein shall exempt the Receiver from
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any duty to report or make disclosure imposed by applicable Environmental
Legislation. The Receiver shall not, as a result of this Order or anything done in
pursuance of the Receiver's duties and powers under this Order, be deemed to be in
Possession of any of the Property within the meaning of any Environmental Legislation,
unless it is actually in possession.
LIMITATION ON THE RECEIVER'S LIABILITY
17. THIS COURT ORDERS that the Receiver shall incur no liability or obligation as
a result of its appointment or the carrying out the provisions of this Order, save and
except for any gross negligence or wilful misconduct on its part, or in respect of its
obligations under sections 81.4(5) or 81.6(3) of the BIA or under the Wage Earner
Protection Program Act. Nothing in this Order shall derogate from the protections
afforded the Receiver by section 14.06 of the BIA or by any other applicable legislation.
RECEIVER'S ACCOUNTS
18. THIS COURT ORDERS that the Receiver and counsel to the Receiver shall be
paid their reasonable fees and disbursements, in each case at their standard rates and
charges unless otherwise ordered by the Court on the passing of accounts, and that the
Receiver and counsel to the Receiver shall be entitled to and are hereby granted a
charge (the "Receiver's Charge") on the Property, as security for such fees and
disbursements, both before and after the making of this Order in respect of these
proceedings, and that the Receiver's Charge shall form a first charge on the Property in
priority to all security interests, trusts, liens, charges and encumbrances, statutory or
otherwise, in favour of any Person, but subject to sections 14.06(7), 81.4(4), and 81.6(2) of
the BIA.
19. THIS COURT ORDERS that the Receiver and its legal counsel shall pass its
accounts from time to time, and for this purpose the accounts of the Receiver and its
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legal counsel are hereby referred to a judge of the Commercial List of the Ontario
Superior Court of Justice.
20. THIS COURT ORDERS that prior to the passing of its accounts, the Receiver
shall be at liberty from time to time to apply reasonable amounts, out of the monies in
its hands, against its fees and disbursements, including legal fees and disbursements,
incurred at the standard rates and charges of the Receiver or its counsel, and such
amounts shall constitute advances against its remuneration and disbursements when
and as approved by this Court.
FUNDING OF THE RECEIVERSHIP
21. THIS COURT ORDERS that the Receiver be at liberty and it is hereby
empowered to borrow by way of a revolving credit or otherwise, such monies from
time to time as it may consider necessary or desirable, provided that the outstanding
principal amount does not exceed $750,000 (or such greater amount as this Court may
by further Order authorize) at any time, at such rate or rates of interest as it deems
advisable for such period or periods of time as it may arrange, for the purpose of
funding the exercise of the powers and duties conferred upon the Receiver by this
Order, including interim expenditures. The whole of the Property shall be and is hereby
charged by way of a fixed and specific charge (the "Receiver's Borrowings Charge") as
security for the payment of the monies borrowed, together with interest and charges
thereon, in priority to all security interests, trusts, liens, charges and encumbrances,
statutory or otherwise, in favour of any Person, but subordinate in priority to the
Receiver's Charge and the charges as set out in sections 14.06(7), 81.4(4), and 81.6(2) of
the BIA.
22. THIS COURT ORDERS that neither the Receiver's Borrowings Charge nor any
other security granted by the Receiver in connection with its borrowings under this
Order shall be enforced without leave of this Court.
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23. THIS COURT ORDERS that the Receiver is at liberty and authorized to issue
certificates substantially in the form annexed as Schedule "A" hereto (the "Receiver's
Certificates") for any amount borrowed by it pursuant to this Order.
24. THIS COURT ORDERS that the monies from time to time borrowed by the
Receiver pursuant to this Order or any further order of this Court and any and all
Receiver's Certificates evidencing the same or any part thereof shall rank on a pari passu basis, unless otherwise agreed to by the holders of any prior issued Receiver's
Certificates.
SERVICE AND NOTICE
25. THIS COURT ORDERS that the E-Service Protocol of the Commercial List (the
"Protocol") is approved and adopted by reference herein and, in this proceeding, the
service of documents made in accordance with the Protocol (which can be found on the
Commercial List website at http:/ jwww.ontariocourts.cafscj/practicefpractice-
directionsjtoronto/ e-service-protocol/) shall be valid and effective service. Subject to
Rule 17.05 this Order shall constitute an order for substituted service pursuant to Rule
16.04 of the Rules of Civil Procedure. Subject to Rule 3.01(d) of the Rules of Civil
Procedure and paragraph 21 of the Protocol, service of documents in accordance with
the Protocol will be effective on transmission. This Court further orders that a Case
Website shall be established in accordance with the Protocol with the following URL
'www.kpmg.ca/ seafieldresources'.
26. THIS COURT ORDERS that if the service or distribution of documents in
accordance with the Protocol is not practicable, the Receiver is at liberty to serve or
distribute this Order, any other materials and orders in these proceedings, any notices
or other correspondence, by forwarding true copies thereof by prepaid ordinary mail,
courier, personal delivery or facsimile transmission to the Debtor's creditors or other
interested parties at their respective addresses as last shown on the records of the
Debtor and that any such service or distribution by courier, personal delivery or
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facsimile transmission shall be deemed to be received on the next business day
following the date of forwarding thereof, or if sent by ordinary mail, on the third
business day after mailing.
GENERAL
27. THIS COURT ORDERS that the Receiver may from time to time apply to this
Court for advice and directions in the discharge of its powers and duties hereunder.
28. THIS COURT ORDERS that nothing in this Order shall prevent the Receiver
from acting as a trustee in bankruptcy of the Debtor.
29. THIS COURT HEREBY REQUESTS the aid and recognition of any court,
tribunal, regulatory or administrative body having jurisdiction in Canada, in the United
States or in the Republic of Colombia to give effect to this Order and to assist the
Receiver and its agents in carrying out the terms of this Order. All courts, tribunals,
regulatory and administrative bodies are hereby respectfully requested to make such
orders and to provide such assistance to the Receiver, as an officer of this Court, as may
be necessary or desirable to give effect to this Order or to assist the Receiver and its
agents in carrying out the terms of this Order.
30. THIS COURT ORDERS that the Receiver be at liberty and is hereby authorized
and empowered to apply to any court, tribunal, regulatory or administrative body,
wherever located, for the recognition of this Order and for assistance in carrying out the
terms of this Order, and that the Receiver is authorized and empowered to act as a
representative in respect of the within proceedings for the purpose of having these
proceedings recognized in a jurisdiction outside Canada.
31. THIS COURT ORDERS that the Applicant shall have its costs of this
Application, up to and including entry and service of this Order, provided for by the
terms of the Applicant's security or, if not so provided by the Applicant's security, then
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on a substantial indemnity basis to be paid by the Receiver from the Debtor's estate
with such priority and at such time as this Court may determine.
32. THIS COURT ORDERS that any interested party may apply to this Court to
vary or amend this Order on not less than seven (7) days' notice to the Receiver and to
any other party likely to be affected by the order sought or upon such other notice, if
any, as this Court may order.
;· ..• •
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161
SCHEDULE "A"
RECEIVER CERTIFICATE
CERTIFICATE NO. ____ _
AMOUNT$ ______ _
1. THIS IS TO CERTIFY that KPMG Inc., the receiver (the "Receiver") of the assets,
undertakings and properties Seafield Resources Ltd. acquired for, or used in relation to
a business carried on by the Debtor, including all proceeds thereof (collectively, the
"Property") appointed by Order of the Ontario Superior Court of Justice (Commercial
List) (the "Court") dated the [9th] day of September, 2014 (the "Order") made in an
action having Court file number 14-CL-'--------' has received as such Receiver from the
holder of this certificate (the "Lender") the principal sum of $ being part of
the total principal sum of $ which the Receiver is authorized to borrow
under and pursuant to the Order.
2. The principal sum evidenced by this certificate is payable on demand by the
Lender with interest thereon calculated and compounded [daily][monthly not in
advance on the ___ day of each month] after the date hereof at a notional rate per
annum equal to the rate of per cent above the prime commercial lending rate of
Bank of from time to time.
3. Such principal sum with interest thereon is, by the terms of the Order, together
with the principal sums and interest thereon of all other certificates issued by the
Receiver pursuant to the Order or to any further order of the Court, a charge upon the
whole of the Property, in priority to the security interests of any other person, but
subject to the priority of the charges set out in the Order and in the Bankruptcy and
Insolvency Act, and the right of the Receiver to indemnify itself out of such Property in
respect of its remuneration and expenses.
4. All sums payable in respect of principal and interest under this certificate are
payable at the main office of the Lender at Toronto, Ontario.
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5. Until all liability in respect of this certificate has been terminated, no certificates
creating charges ranking or purporting to rank in priority to this certificate shall be
issued by the Receiver to any person other than the holder of this certificate without the
prior written consent of the holder of this certificate.
6. The charge securing this certificate shall operate so as to permit the Receiver to
deal with the Property as authorized by the Order and as authorized by any further or
other order of the Court.
7. The Receiver does not undertake, and it is not under any personal liability, to
pay any sum in respect of which it may issue certificates under the terms of the Order.
DATED the __ day of ____ ~2014.
KPMG Inc., solely in its capacity as Receiver of the Property, and not in its
personal capacity
Per: Name: Title:
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164
SCHEDULEZ BIDDING PROCEDURES ORDER
[See attached]
2-1
165
Court File No. CV -14-1 0686-00CL
ONTARIO SUPERIOR COURT OF JUSTICE (COMMERCIAL LIST)
THE HONOURABLE
JUSTICE WILTON-SIEGEL
/;<:~
) WEDNESDAY, THE 20TH ) ) DAYOFMAY,2015
/.,,o 0_..:.~ /t ~fi--_ ~~ATTER OF RECEIVERSHIP OF SEAFIELD RESOURCES LTD.
;·' •I , ; 1~ ' rn ·Y. :·--~ { 41 \-~; '-fi\.~~· ~ \-..';:_ !,~ ~ ORDER
'·-~,¢- '.l..;j '-._'iTifiitJ E \:&.< ~~--!!.-•ntiS MOTION, made by KPMG Inc. in its capacity as the Court-appointed
receiver pursuant to Section 243(1) of the Bankruptcy and Insolvency Act ("BIA'') and
Section 101 of the Courts of Justice Act (the "Receiver") of Seafield Resources Ltd.
("Seafield"), was heard th!s day at 330 University Avenue, Toronto, Ontario.
ON READING the Motion Record of the Receiver, the Factum of the Receiver,
the Responding Motion Record of David Prins, the Factum of David Prins, the
Supplement to the First Report of the Receiver to the Court, dated May 18, 2015, the
Affidavit of David Prins, dated May 19, 2015 and on hearing the submissions of counsel
for the Receiver and counsel for RMB Australia Holdings Ltd. and RMB Resources Inc.,
the principal secured creditor of Seafield, and no one appearing for any other parties,
although properly served as appears from proof of service:
1. THIS COURT ORDERS that the time for service of the Notice of Motion and
the Motion Record of the Receiver is hereby abridged and validated so that this motion
is properly returnable today and hereby dispenses with further service thereof.
2. TillS COURT ORDERS that the Sales and Investor Solicitation Procedure,
attached as Schedule "A" to this Order (the "SISP"), is hereby approved.
3. THIS COURT ORDERS that the Receiver is hereby authorized to take the steps
that are reasonably necessary or desirable to carry out the SISP, including, without
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limitation, all steps as the legal representative of Seafield as sole shareholder of Minera
Seafield S.A.S. ("Minera").
4. TillS COURT ORDERS that the permitted amount of the Receiver's Borrowings
Charge, provided for at paragraph 21 of the Order of Justice Newbould, dated September
9, 2014 (the "Receivership Order"), shall be and is increased from $750,000 to USD
$3,000,000.
5. THIS COURT ORDERS that the Receiver is hereby authorized to assign
Seafield Resources Ltd. into bankruptcy if it reasonably determines that such step is
necessary to preserve any rights to challenge the Labour Agreement Amendments (as
defined in the First Report) and any other reviewable transactions undertaken by
Seafield or any other person.
6. TillS COURT ORDERS that this Order, the Receivership Order and the SISP
shall remain valid and binding notwithstanding any assignment into bankruptcy of
Seafield.
7. This Court hereby requests the aid and recognition of any other Canadian and
foreign court, tribunal, regulatory or administrative body ("Judicial Body"), including
any Judicial Body of the Republic of Colombia, to give effect to this Order and to assist
the Receiver and its respective agents in carrying out the terms of this Order. All
Judicial Bodies are hereby respectfully requested to make such orders and to provide
such assistance to the Receiver as an officer of this Court, as may be necessary or
desirable to give effect to this Order, to grant representative status to the Receiver in any
foreign proceeding, or to assist the Receiver and its respective agents in carrying out the
terms of this Order.
ENiEh2C AT/ i;\SC8iT A TORO~TO ON I 8001~ "lO: LEI DANS LE f1EG·~~TRE NO.:
MAY 2 ·J 2015
167
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SCHEDULE "A"
168
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SALE AND INVESTOR SOLICITATION PROCEDURES
SEAFIELD RESOURCES LTD.
RECITALS
A. Pursuant to an Order (the "Receivership Order") granted by the Ontario Superior Court of Justice (the "Court") on September 9, 2014, KPMG Inc. was appointed as receiver (the "Receiver") of all of the assets, undertakings and properties of Seafield Resources Ltd. ("Seafield").
B. On May 19, 2015, the Court granted an order (the "SISP Approval Order") approving a sale and investor solicitation process (the "SISP") and the SISP procedures set forth herein (these "SISP Procedures").
C. The SISP Approval Order, the SISP and these SISP Procedures shall govern the process for soliciting and selecting bids for (i) the sale of all or substantially all of the property, assets and undertakings of Seafield (the "Seafield Property"), including without limitation (a) all of the share capital of Minera (the "Minera Shares"), and (IJ) the Elora gold mine and related assets located in the Kenora Mining Division in Northwestern Ontario (the "Elora Property") (a "Sale"); (ii) the sale of all or substantially all of the property, assets, and undertakings of Minera (the "Minera Property") by Minera, subject to compliance with applicable Colombian law and approval by the Receiver acting as the authorized representative of the sole shareholder ofMinera; and (iii) for the restructuring, recapitalization or refinancing of Seafield or Minera (an "Investment").
D. All dollar amounts expressed herein, unless otherwise noted, are in Canadian currency. Unless otherwise indicated herein any event that occurs on a day that is not a Business Day shall be deemed to occur on the next Business Day.
ARTICLE 1- DEFINED TERMS
In these SISP Procedures:
(I) "Approval Hearing" has the meaning ascribed thereto in Section 5.8(1).
(2) "Backup Bid" has the meaning ascribed thereto in Section 5.6(4).
(3) "Backup Bid Expiration Date" has the meaning ascribed thereto in Section 5.6(6).
( 4) "Backup Bidder" has the meaning ascribed thereto in Section 5.6( 4).
(5) "Bid Notice" has the meaning ascribed to it in Section 4.3(5).
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..
(6) "Business Day" means any day other than (i) a Saturday or Sunday or (ii) a day which is a statutory holiday in either Toronto, Ontario or Medellin, Colombia.
(7) "Court" has the meaning ascribed thereto in Recital A.
(8) "Confidentiality Agreement" has the meaning ascribed thereto in Section 2.4(2).
(9) "Creditor Consultation Rights" has the meaning ascribed to it in Section 5.7.
(10) "Definitive Investment Agreement" has the meaning ascribed thereto in Section 5.3(a).
(11) "Deposit" has the meaning ascribed thereto in Section 5.2(i).
(12) "Elora Property" has the meaning ascribed thereto in Recital C.
(13) "Form of Purchase Agreement" means the form of purchase and sale agreement to be developed by the Receiver and provided to Qualified Phase 2 Bidders that submitted a Qualified Non-Binding Indication of Interest that is a Sale Proposal prior to the Phase 1 Bid Deadline.
(14) "Investment" has the meaning ascribed thereto in Recital C.
(15) "Investment Proposal" has the meaning ascribed thereto in Section 2.5(1)(d).
(16) "Known Potential Bidders" has the meaning ascribed thereto in Section 2.4(1).
(17) "Minera" means Seafield's wholly-owned Colombian subsidiary, Minera Seafield S.A.S.
(18) "Minera Property" has the meaning ascribed thereto in Recital C.
(19) "Minera Shares" has the meaning ascribed thereto in Recital C.
(20) "New Potential Bidder" has the meaning ascribed thereto in Section 2.4(1).
(21) "Non-Binding Indication of Interest" has the meaning ascribed thereto in Section 4.1(1).
(22) "Phase 1 Bid Deadline" has the meaning ascribed thereto in Section 4.1 (2).
(23) "Phase~ Bid Deadline" has the meaning ascribed thereto in Section 5.1.
(24) "Potential Bidder" has the meaning ascribed thereto in Section 2.5(1).
(25) "Potential Bidder Deadline" has the meaning ascribed thereto in Section 2.5(1 ).
(26) "Purchase Price" has the meaning ascribed thereto in Section 5.2(b).
(27) "Qualified Bidder" has the meaning ascribed thereto in Section 5.4(1).
(28) "Qualified Bids" has the meaning ascribed thereto in Section 5.4(1).
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(29) "Qualified Investment Bid" has the meaning ascribed thereto in Section 5.3.
(30) "Qualified Non-Binding Indication of Interest" has the meaning ascribed thereto in Section 4.2(1 ).
(31) "Qualified Phase 1 Bidder" has the meaning ascribed thereto in Section 2.5(2).
(32) "Qualified Phase 2 Bidder" has the meaning ascribed thereto in Section 4.3( 4).
(33) "Qualified Purchase Bid" has the meaning ascribed thereto in Section 5.2.
(34) "Receiver" means KPMG Inc., in its capacity as receiver of Seafield pursuant to the Receivership Order.
(35) "Receivership Order" has the meaning ascribed thereto in Recital A.
(36) "RMB" means RMB Australia Holdings Limited.
(37) "RMB Facility" means the lending facility made available to Seafield by RMB pursuant to that certain Credit Agreement dated February 21, 2013, as amended, restated, or supplemented from time to time.
(38) "Sale" has the meaning ascribed thereto in Recital C.
(39) "Sale Proposal" has the meaning ascribed thereto in Section 2.5(l)(d).
( 40) "Seafield" has the meaning ascribed thereto in Recital A.
(41) "Secured Claims Amount" means the aggregate amount owing (whether for principal, interest, fees and recoverable expenses) to the Secured Creditor, as at the date which the transactions contemplated by the Qualified Bid or Successful Bid, if any, are completed, under the RMB Facility and validly secured by the Seafield Property, all as determined by the Receiver, Court or other court of competent jurisdiction.
( 42) "Secured Creditor" means RMB or any purchaser or assignee of the RMB Facility, related security documents and indebtedness outstanding thereunder.
(43) "SISP" has the meaning ascribed thereto in Recital B.
( 44) "SISP Approval Order" has the meaning ascribed thereto in Recital B.
(45) "SISP Procedures" has the meaning ascribed thereto in Recital B.
(46). "Solicitation Process" has the meaning ascribed thereto in Section 2.1(1).
(47) "Successful Bid" has the meaning ascribed thereto in Section 5.6(4).
(48) "Successful Bidder" has the meaning ascribed thereto in Section 5.6(4).
(49) "Target Closing Date" means September 30,2015.
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,.
(50) "Teaser Letter" has the meaning ascribed thereto in Section 2.4(1).
ARTICLE 2- SOLICITATION
Section 2.1 Solicitation Process
(1) These SISP Procedures describe, among other things, the Seafield Property and the Minera Property available for sale, the opportunity for an investment in Seafield or Minera, the debts and equity interests of Seafield in need of restructuring, the manner in which prospective bidders may gain access to or continue to have access to due diligence materials concerning Seafield, the Seafield Property, the Minera Shares, the Minera Property, and the Elora Property, the manner in which bidders and bids become Qualified Bidders and Qualified Bids, respectively, the receipt and negotiation of bids received, the ultimate selection of one or more Successful Bids and a Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures), and the approval thereof by the Court (collectively, the "Solicitation Process").
(2) The Receiver, shall conduct the Solicitation Process as outlined herein. In the event that there is a disagreement or clarification required as to the interpretation or application of these SISP Procedures, the Court will have the jurisdiction to hear such matter and provide directions, upon application of the Receiver, or any other party, with a hearing on no less than three (3) Business Days notice.
Section 2.2 Sale and Investment Opportunity
These SISP Procedures provide for (i) a sale of all or part of the Seafield Property, (ii) a sale of all or part of the Minera Property and (iii) an investment in Seafield and/or Minera, in each case structured in a manner acceptable to the Receiver.
Section 2.3 "As Is, Where Is"
Any Sale or Investment will be on an "as is, where is" basis and without surviving representations, warranties, covenants or indemnities of any kind, nature, or description by the Receiver, Seafield or Minera or any of their agents, estates, advisors, professionals or otherwise, except to the extent set forth in the relevant agreement with the Successful Bidder.
Section 2.4 Solicitation of Interest
(1) As soon as reasonably practicable after the granting of the SISP Approval Order, the Receiver, will prepare a list of potential bidders in respect of a Sale or Investment (the "Known Potential Bidders"). The Secured Creditor may on a timely basis identify any parties to the Receiver which shall be included in the list of Known Potential Bidders. Concurrently, the Receiver, will prepare .an initial offering summary (the "Teaser Letter") notifying Known Potential Bidders of the existence of the Solicitation Process and inviting the Known Potential Bidders to express their interest in participating in a Sale or an Investment.
(2) Promptly after the granting of the SISP Approval Order, the Receiver shall distribute to the Known Potential Bidders the Teaser Letter and a form of confidentiality agreement satisfactory to the Receiver (a "Confidentiality Agreement"). The Receiver shall also issue a press release announcing this SISP.
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Section 2.5 Participation Requirements
(1) Unless otherwise provided for herein, ordered by the Court or agreed by the Receiver, in order to participate in the Solicitation Process and be considered for qualification as a Qualified Phase I Bidder, an interested party (a "Potential Bidder") must deliver the following:
(a) an executed Confidentiality Agreement, which shall inure to the benefit of any purchaser of any part of the Seafield Property or the Minera Property or any investor in Seafield or Minera;
(b) a specific indication of the anticipated sources of capital for such Potential Bidder and preliminary evidence of the availability of such capital, or such other form of financial disclosure and credit support or enhancement that will allow the Receiver and its legal and financial advisors, to make, in their reasonable business or professional judgment, a reasonable determination as to the Potential Bidder's financial and other capabilities to consummate a Sale or an Investment;
(c) a letter setting forth the identity of the Potential Bidder, the contact information for such Potential Bidder, full disclosure of the direct and indirect owners· of the Potential Bidder and their principals;
(d) an indication of whether the Potential Bidder is offering to (i) acquire all or substantially all of the Seafield Property and/or the Minera Property (a "Sale Proposal"); or (ii) make an investment in Seafield and/or Minera (an "Investment Proposal"); and
(e) a written acknowledgment of receipt of a copy of the SISP Approval Order (including these SISP Procedures) and agreeing to accept and be bound by the provisions contained therein.
(2) A Potential Bidder will be deemed a "Qualified Phase 1 Bidder" if: (a) such Potential Bidder has satisfied all of the requirements described in Section 2.5(1) above; and (b) such Potential Bidder's fmancial information and credit support or enhancement demonstrate to the satisfaction of the Receiver in its reasonable business judgment, the fmancial capability of such Potential Bidder to consummate a transaction and that such Potential Bidder is likely (based on availability of fmancing, experience and other considerations) to consummate either a Sale or an Investment. Notwithstanding the requirements set out in Section 2.5(1) (a) to (e), the Receiver may designate any Potential Bidder as a Qualified Phase I Bidder. Upon executing the Confidentiality Agreement, the Secured Creditor shall be deemed to be a Qualified Phase I Bidder.
(3) The determination as to whether a Potential Bidder is a Qualified Phase 1 Bidder pursuant to Section 2.5(2) will be made as promptly as practicable but no later than five (5) Business Days after a Potential Bidder delivers· all of the materials required above. If it is determined that a Potential Bidder is a Qualified Phase 1 Bidder, the Receiver will promptly notifY the Potential Bidder that it is a Qualified Phase 1 Bidder.
( 4) If it is determined in accordance with Section 2.5(2) above, that there are no Qualified Phase 1 Bidders and that, as a consequence, proceeding with these SISP Procedures is not in the
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best interests of Seafield or its stakeholders, the Receiver shall notify the Secured Creditor forthwith, and within five (5) Business Days of such determination, file an application with the Court seeking directions with respect to the conduct of the SISP.
ARTICLE 3- DUE DILIGENCE
(1) As soon as practicable after the determination that a party is a Qualified Phase 1 Bidder, the Receiver will make available to such Qualified Phase 1 Bidder in a secure online electronic data room confidential due diligence information regarding (i) the Seafield Property and the Minera Property available for sale, and (ii) the debt and equity interests in Seafield and Minera. At the request of a Qualified Phase 1 Bidder, such confidential due diligence information shall also be provided on a confidential basis to a proposed lender of such Qualified Phase 1 Bidder that is reasonably acceptable to the Receiver.
(2) Each Qualified Phase I Bidder shall have such access to due diligence materials and information relating to the Seafield Property, the Minera Property and the debt and equity interests in Seafield and Minera, as the Receiver deems appropriate ..
(3) At the discretion of the Receiver due diligence access may include presentations (as may be scheduled by the Receiver), access to physical and secure online electronic data rooms, on-site inspections and such other matters as a Qualified Phase I Bidder or Qualified Phase 2 Bidder may reasonably request and as to which the Receiver, in its reasonable business judgment deems appropriate. The Receiver shall not be obligated to furnish any due diligence materials or information after the Phase 2 Bid Deadline.
(4) Without limiting the generality of any term or condition of any confidentiality agreement between the Receiver and any Potential Bidder, Qualified Phase 1 Bidder, Qualified Phase 2 Bidder, Successful Bidder or Backup Bidder, unless otherwise agreed by the Receiver or by further order of the Court, no Potential Bidder, Qualified Phase 1 Bidder, Qualified Phase 2 Bidder, Successful Bidder or Backup Bidder shall be permitted to have any discussions with any counterparty to any contract with Seafiled or Minera, any current or former director, officer or employee of Seafield or Minera, or with any regulatory authority responsible for Seafield, Minera or any of their businesses or any other Potential Bidder, Qualified Phase 1 Bidder or Qualified Phase 2 Bidder in connection with a Non-Binding Indication of Interest or any other bid submitted in accordance with the terms hereof or in contemplation thereof.
(5) The Receiver is not responsible for, and will have no liability with respect to, any information obtained by any Known Potential Bidder, Potential Bidder or Qualified Bidder in connection with the Seafield Property, Minera Property, a Sale Transaction or Investment. The Receiver does not make any representations or warranties whatsoever as to the information or the materials provided, except, to the extent the information is provided under any definitive sale or investment agreement executed and delivered by a Successful Bidder or Backup Bidder.
ARTICLE 4- PHASE 1
Section 4.1 Seeking Non-Binding Indications of Interest by Qualified Phase 1 Bidders
(1) From the date of the SISP Approval Order until the Phase 1 Bid Deadline, in accordance with the terms of the SISP Approval Order and these SISP Procedures, the Receiver will seek to
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identifY and qualifY Qualified Phase 1 Bidders, and will solicit non-binding indications of interest from Qualified Phase 1 Bidders to acquire all, or substantially all of the Seafield Property or the Minera Property or to invest in Seafield and/or Minera (each a "Non-Binding Indication of Interest").
(2) Subject to Section 4.3(5), in order to continue to participate in the SISP Process, a Qualified Phase 1 Bidder must deliver a Non-Binding Indication of Interest to the Receiver so as to be received by the Receiver not later than 5:00p.m. (Toronto time) on July 15, 2015, or such later date or time as the Receiver may determine appropriate (the "Phase 1 Bid Deadline").
Section 4.2 Non-Binding Indications of Interest by Qualified Phase 1 Bidders
(1) Unless otherwise ordered by the Court or agreed by the Receiver, a Non-Binding Indication of Interest will be considered a "Qualified Non-Binding Indication oflnterest" only if it is submitted by a Qualified Phase 1 Bidder, received on or before the Phase 1 Bid Deadline, and contains the following information:
(a) An indication of whether the Qualified Phase 1 Bidder is offering to (i) make a Sale Proposal; or (ii) make an Investment Proposal;
(b) In the case of a Sale Proposal, it shall identifY
i. the purchase price (including liabilities to be assumed by the Qualified Phase 1 Bidder);
n. the assets included, any of the assets expected to be excluded, and/or any additional assets desired to be included in the transaction;
111. the structure and financing of the transaction (including, but not limited to, the sources of financing for the purchase price, preliminary evidence of the availability of such financing and the steps necessary and associated timing to obtain the financing and consummate the proposed transaction and any related contingencies, as applicable);
iv. an acknowledgement that the contemplated sale will be made on an "as is where is" basis;
v. the proposed treatment of employees of Minera;
VI. the key material contracts and leases, if any, the Qualified Phase 1 Bidder wishes to acquire and the Qualified Phase 1 Bidder's proposed treatment of related cure costs, if any;
vii. any anticipated corporate, shareholder, internal or regulatory approvals, including without limitation any approvals with respect to the grant or transfer of any mining permits or licenses, required to close the transaction and the anticipated time frame and any anticipated impediments for obtaining such approvals;
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viii. a timeline to closing with critical milestones and a statement with respect to the Qualified Phase I Bidder's ability to consummate the contemplated transaction by the Target Closing Date;
ix. a detailed description of any additional due diligence required or desired to be conducted prior to the Phase 2 Bid Deadline, if any;
x. contact information for any business, financial or legal advisors retained or to be retained in connection with the contemplated transaction;
x1. a specific indication of sources of capital for the Qualified Phase I Bidder and preliminary evidence of the availability of such capital, or such other form of financial disclosure and credit-quality support or enhancement, including contact information for capital/fmancing sources, that will allow the Receiver to make a reasonable business judgement as to the Qualified Phase 1 Bidder's financial or other capabilities to consummate the contemplated transaction;
xii. any conditions to closing that the Qualified Phase 1 Bidder may wish to impose; and
xiii. any other terms or conditions of the Sale Proposal which the Qualified Phase 1 Bidder believes are material to the transaction;
(c) In the case of an Investment Proposal, it shall identify:
(i) the aggregate amount of the equity and debt investment (including, the sources of such capital, preliminary evidence of the availability of such capital and the steps necessary and associated timing to obtain the capital and consummate the proposed transaction and any related contingencies, as applicable) to be made in Seafield or Minera;
(ii) the underlying assumptions regarding the pro forma capital structure (including, the anticipated debt levels, debt service fees, interest and amortization);
(iii) the consideration to be allocated to the stakeholders including claims of any secured or unsecured creditors of Seafield and Minera and the proposed treatment of employees;
(iv) the structure and fmancing of the transaction including all requisite fmancial assurance including a specific indication of sources of capital for the Qualified Phase 1 Bidder and preliminary evidence of the availability of such capital, or such other form of financial disclosure and credit-quality support or enhancement, including contact information for capital/financing sources, that will allow the Receiver to make a reasonable business judgement as to the Qualified Phase 1 Bidder's financial or other capabilities to consummate the contemplated transaction;
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(v) any anticipated corporate, shareholder, internal or regulatory approvals, including without limitation any approvals with respect to the grant or transfer of any mining permits or licenses, required to close the transaction, the anticipated time frame and any anticipated impediments for obtaining such approvals;
(vi) the proposed corporate goverance structure of the entity or entities owning/operating the business, following implementation of the investment
(vii) contact information for any business, financial or legal advisors retained or to be retained in connection with the contemplated transaction;
(viii) additional due diligence required or desired to be conducted prior to the Phase 2 Bid Deadline, if any;
(ix) a timeline to closing with critical milestones and a statement with respect to the Qualified Phase 1 Bidder's ability to consummate the contemplated transaction by the Target Closing Date;
(x) to the extent not addressed elsewhere, the proposed treatment of stakeholders, including lenders, trade creditors, shareholders and employees;
(xi) any conditions to closing that the Qualified Phase 1 Bidder may wish to impose;
(xii) any other terms or conditions of the Investment Proposal which the Qualified Phase 1 Bidder believes are material to the transaction; and
(d) Such other information reasonably requested by the Receiver.
(2) The Receiver may waive compliance with any one or more of the requirements specified herein and deem any non-compliant Non-Binding Indication of Interest to be a Qualified Non-Binding Indication of Interest.
Section 4.3 Assessment of Qualified Non-Binding Indications of Interest and Determination of Qualified Phase 2 Bidders
(1) Subject to Section 4.3(7) and Section 5.7, the Receiver will provide copies of any Qualified Non-Binding Indications of Interest received to the Secured Creditor.
(2) The Receiver will assess any Qualified Non-Binding Indications of Interest received, and will determine whether proceeding with these SISP Procedures on the basis of such Qualified Non-Binding Indications of Interest is in the best interests of Seafield and its stakeholders. Such assessment will be made as promptly as practicable after the Phase I Bid Deadline.
(3) If the Receiver, in accordance with Section 4.2 above, determines that no Qualified Non-Binding Indication of Interest was received, the Receiver shall advise the Secured Creditor
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forthwith, and within five ( 5) Business Days of the Phase 1 Bid Deadline, file an application with the Court seeking directions.
( 4) If the Receiver, in accordance with Section 4.2 above, determines that (i) one or more Qualified Non-Binding Indications oflnterest were received, and (ii) proceeding with these SISP Procedures is in the best interests of Seafield and its stakeholders, these SISP Procedures will continue and each Qualified Phase 1 Bidder who has submitted a Qualified Non-Binding Indication of Interest that is determined by the Receiver on consideration of the information delivered at Section 4.2(1), likely be consummated, shall be deemed to be a "Qualified Phase 2· Bidder". Subject to the restrictions set out in Section 5.7, the Receiver shall provide advance written notice of the commencement of Phase 2 and the names of the Qualified Phase 2 Bidders to the Secured Creditor.
(5) Notwithstanding any other provision in these SISP Procedures, the Secured Creditor shall, subject to executing the Confidentiality Agreement, be deemed to be a Qualified Phase 2 Bidder even if it did not submit a Non-Binding Indication of Interest. Subject to the restrictions and limitations set out in Section 4.3(7) and Section 5.7, the Secured Creditor shall be permitted to submit a Qualified Purchase Bid or Qualified Investment Bid, provided that the Secured Creditor declares its intention to do so within 5 business days of the commencement of Phase 2 by delivering written notice thereof to the Receiver (the "Bid Notice"). The Bid Notice shall contain the amount of the Secured Creditor's bid together with a summary of all material terms of the bid. The Secured Creditor shall not be entitled to increase the amount of its bid following delivery of the Bid Notice. The Receiver shall forthwith provide a copy of the Secured Creditor's Bid Notice to all Qualified Phase 1 Bidders.
(6) If the Secured Creditor does not submit a Bid Notice within 5 business days of the commencement of Phase 2 then the Secured Creditor will not be permitted to submit any bid thereafter, save and except for in the circumstances described in Section 5.5(2).
(7) Notwithstanding any other provision of this SISP, to the extent that the Secured Creditor or any employee, officer, director or partner of the Secured Creditor or any of its affiliates, at any time received copies of any Qualified Non-Binding Indication of Interest or information regarding the proposed consideration to be paid by the bidder in such a Qualified Non-Binding Indication oflnterest, the Secured Creditor shall not be permitted to submit any bid that provides for consideration that exceeds the amount of the Secured Claims Amount.
ARTICLE 5- PHASE 2
Section 5.1 Seeking Qualified Bids by Qualified Phase 2 Bidders
In order to continue to participate in the Solicitation Process, a Qualified Phase 2 Bidder must deliver a Qualified Purchase Bid or Qualified Investment Bid to the Receiver and such bids must be received by the Receiver by no later than 5:00p.m. (Toronto time) on August 19, 2015, or such later date or time as the Receiver may determine appropriate (the "Phase 2 Bid Deadline").
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Section 5.2 Qualified Purchase Bids
A Sale Proposal submitted by a Qualified Phase 2 Bidder will be considered a "Qualified Purchase Bid" only if the Sale Proposal complies with all of the following:
(a) it includes a letter stating that the Sale Proposal is irrevocable until the earlier of (a) the approval by the Court of a Successful Bid, and (b) 45 Business Days following the Phase 2 Bid Deadline; provided, however, that if such Sale Proposal is selected as the Successful Bid or the Backup Bid, it shall remain irrevocable until the closing of the Successful Bid or the Backup Bid, as the case may be;
(b) it includes a duly authorized and executed purchase and sale agreement substantially in the Form of Purchase Agreement specifying the purchase price, expressed in Canadian dollars (the "Purchase Price"), together with all exhibits and schedules thereto, and such ancillary agreements as may be required by the Qualified Phase 2 Bidder with all exhibits and schedules thereto (or term sheets that describe the material tenus and provisions of such ancillary agreements) and such ancillary agreements and the proposed orders to approve the sale by the Court, as well as copies of such materials marked to show the amendments and modifications to the Form of Purchase Agreement;
(c) it does not include any request or entitlement to any break-fee, expense reimbursement or similar type of payment. Further, by submitting a Sale Proposal, a Qualified Phase 2 Bidder shall be deemed to waive its right to pursue a substantial contribution claim in any way related to the submissions of its Sale Proposal or these SISP Procedures;
(d) it includes evidence sufficient to allow the Receiver to make a reasonable determination as to the bidder's (and its direct and indirect owners' and their principals') financial and other capabilities to consummate the transaction contemplated by the Sale Proposal, which evidence could include but is not limited to evidence of a firm, irrevocable commitment for all required funding and/or fmancing from a creditworthy bank or financial institution;
(e) it is not conditioned on (i) the outcome of unperformed due diligence by the bidder and/or (ii) obtaining any financing capital and includes an acknowledgement and representation that the bidder has had an opportunity to conduct any and all required due diligence prior to making its Sale Proposal;
(f) it fully discloses the identity of each entity that is bidding or otherwise that will be sponsoring or participating in the Sale Proposal, including the identification of the Qualified Phase 2 Bidder's direct and indirect owners and their principals, and the complete terms of any such participation;
(g) it includes an acknowledgement and representation that the Qualified Phase 2 Bidder: (i) has relied solely upon its own independent review, investigation and/or inspection of any documents and/or the assets to be acquired and liabilities to be assumed in making its Sale Proposal; (ii) did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever,
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whether express or implied (by operation of law or otherwise), regarding the assets to be acquired or liabilities to be assumed or the completeness of any information provided in connection therewith, including by the Receiver, or any of its advisors, except as expressly stated in the purchase and sale agreement submitted by it; (iii) is a sophisticated party capable of making its own assessments in respect of making its Sale Proposal; and (iv) has had the benefit of independent legal advice in connection with its Sale Proposal;
(h) it includes evidence, in form and substance reasonably satisfactory to the Receiver, of authorization and approval from the Qualified Phase 2 Bidder's board of directors (or comparable governing body) with respect to the submission, execution, delivery and closing of the transaction contemplated by the Sale Proposal;
(i) it is accompanied by a refundable deposit (the "Deposit") in the form of a wire transfer (to a trust account specified by the Receiver), or such other form acceptable to the Receiver, payable to the order of KPMG Inc., in trust, in an amount equal to 5% of the proposed gross purchase price, to be held and dealt with in accordance with these SISP Procedures;
G) it contains full details of the proposed number of employees of Minera who will become employees of the Qualified Phase 2 Bidder and the proposed terms and conditions of employment to be offered to those employees;
(k) it includes an acknowledgement and representation that the Qualified Phase 2 Bidder will assume the obligations of Seafield or Minera under executory contracts, unexpired leases, and licences proposed to be assigned (or identifies with particularity which of such contracts, leases, and licenses of Seafield or Minera, as applicable, that the Qualified Phase 2 Bidder wishes not to assume, or alternatively wishes to assume), contains full details of the Qualified Phase 2 Bidder's proposal for the treatment of related cure costs; and which of these the assumption of which is a condition of closing;
(1) it provides for closing of the Qualified Purchase Bid by no later than the Target Closing Date;
(m) if the Qualified Phase 2 Bidder is an entity newly formed for the purpose of the transaction, the bid shall contain an equity or debt commitment letter from the parent entity or sponsor, which is satisfactory to the Receiver, that names the Receiver as a third party beneficiary of any such commitment letter with recourse against such parent entity or sponsor;
(n) it includes evidence, in form and substance reasonably satisfactory to the Receiver, of compliance or anticipated compliance with any and all applicable Canadian, Colombian and any foreign regulatory approvals (including, if applicable, anti-trust regulatory approval and any approvals with respect to the grant or transfer of any mining permits or licenses), the anticipated time frame for such compliance and any anticipated impediments for obtaining such approvals;
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( o) it contains other information reasonably requested by the Receiver; and
(p) it is received by no later than the Phase 2 Bid Deadline.
Section 5.3 Qualified Investment Bids
An Investment Proposal submitted by a Qualified Phase 2 Bidder will be considered a "Qualified Investment Bid" only if the Investment Proposal complies with all of the following:
(a) it includes duly authorized and executed binding definitive documentation setting out the terms and conditions of the proposed transaction, including the aggregate amount of the proposed equity and/or debt investment and details regarding the proposed equity and/or debt structure of Seafield and/or Minera, if applicable, following completion of the proposed transaction (a "Definitive Investment Agreement");
(b) it includes a letter stating that the Investment Proposal is irrevocable until the earlier of (a) approval by the Court of a Successful Bid, and (b) 45 Business Days following the Phase 2 Bid Deadline; provided, however, that if such Investment Proposal is selected as the Successful Bid or Backup Bid, it shall remain irrevocable until the earlier of (i) the closing of the Successful Bid or the Backup Bid, as the case may be, and (ii) the outside date stipulated in the Successful Bid or the Backup Bid, as applicable;
(c) it does not include any request or entitlement to any break-fee, expense reimbursement or similar type of payment. Further, by submitting an Investment Proposal, the Qualified Phase 2 Bidder shall be deemed to waive its right to pursue a substantial contribution claim in any way related to the submission of its Investment }'roposal or these SISP Procedures;
(d) it includes written evidence of a firm, irrevocable commitment for all required funding and/or financing from a creditworthy bank or financial institution to consummate the proposed transaction, or other evidence satisfactory to the Receiver, to allow the Receiver to make a reasonable determination as to the Qualified Phase 2 Bidder's financial and other capabilities to consurmnate the transaction contemplated by the Investment Proposal;
(e) it is not conditioned on (i) the outcome of unperformed due diligence by the Qualified Phase 2 Bidder and/or (ii) obtaining any financing capital and includes an acknowledgement and representation that the Qualified Phase 2 Bidder has had an opportunity to conduct any and all required due diligence prior to making its bid;
(f) it fully discloses the identity of each entity that is bidding or otherwise that will be sponsoring or participating in the Investment Proposal, including the identification of the Qualified Phase 2 Bidder's direct and indirect owners and their principals, and the complete terms of any such participation;
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(g) it includes an acknowledgement and representation that the Qualified Phase 2 Bidder: (i) has relied solely upon its own independent review, investigation and/or inspection of any documents in making its Investment Proposal; (ii) did not rely upon any written or oral statements, representations, promises, warranties or guaranties whatsoever, whether express or implied (by operation of law or otherwise), regarding the business of Seafield or Minera, or the completeness of any information provided in connection therewith, including by the Receiver or any of its advisors, except as expressly stated in the Definitive Investment Agreement; (iii) is a sophisticated party capable of making its own assessments in respect of making its Investment Proposal; and (iv) has had the benefit of independent legal advice in connection with its Investment Proposal;
(h) it includes evidence, in form and substance reasonably satisfactory to the Receiver, of authorization and approval from the Qualified Phase 2 Bidder's board of directors (or comparable governing body) with respect to the submission, execution, delivery and closing of the transaction contemplated by the Investment Proposal;
(i) it is accompanied by a Deposit in the form of a wire transfer (to a trust account specified by the Receiver), or such other form acceptable to the Receiver, payable to the order of KPMG Inc., in trust, in an amount equal to 5% of the total proposed investment, to be held and dealt with in accordance with these SISP Procedures;
G) it provides for closing of the Qualified Investment Bid by no later than the Target Closing Date;
(k) if the Qualified Phase 2 Bidder is an entity newly formed for the purpose of the transaction, the Investment Proposal shall contain an equity or debt commitment letter from the parent entity or sponsor, and satisfactory to the Receiver, that names the Receiver as a third party beneficiary of any such commitment letter with recourse against such parent entity or sponsor;
(1) it includes evidence, in form and substance reasonably satisfactory to the Receiver, of compliance or anticipated compliance with any and all applicable Canadian, Colombian, and foreign regulatory approvals (including, if applicable, anti-trust regulatory approval), the anticipated time frame for such compliance and any anticipated impediments for obtaining such approvals;
(m) it contains other information reasonably requested by the Receiver; and
(n) it is received by no later than the Phase 2 Bid Deadline.
Section 5.4 Qualified Bids
(1) Qualified Purchase Bids and Qualified Investment Bids shall hereinafter be referred to as "Qualified Bids" and each a "Qualified Bid" and each bidder who has submitted a Qualified Bid shall hereinafter be referred to as a "Qualified Bidder".
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(2) Notwithstanding Section 5.2 and Section 5.3 hereof, the Receiver may waive compliance with any one or more of the Qualified Bid requirements specified herein, and deem such non-compliant bids to be Qualified Purchase Bids or Qualified Investment Bids, as the case may be.
Section 5.5 No Qualified Bids
(I) The Receiver will assess the Qualified Bids received, if any, and will determine whether it is likely that the transactions contemplated by such Qualified Bids are likely to be consummated and whether proceeding with these SISP Procedures is in the best interests of Seafield and its stakeholders. Such assessments will be made as promptly as practicable but no later than five (5) Business Days after the Phase 2 Bid Deadline, provided that such time period may be extended upon the consent of the Receiver or order of the Court upon application and appropriate notice.
(2) If the Receiver, in accordance with Section 5.5(1) above, detennines that (a) no Qualified Bid was received, or (b) at least one Qualified Bid was received but it is not likely that the transactions contemplated in any such Qualified Bids will be consummated, the Receiver shall notifY the Secured Creditor forthwith, and within ten (1 0) Business Days of such detennination, file ·an application with the _Court seeking directions. In the circumstances described in this subsection, the Secured Creditor shall have the option within five (5) business days from such determination to submit a credit bid (that would constitute a binding agreement if accepted) even if they did not submit a credit bid at any other point during Phase 1 or Phase 2, and notwithstanding the receipt of any new information regarding bids or offers after the commencement of Phase 2.
Section 5.6 Selection Criteria
(1) In selecting the Successful Bid, the Receiver will review each Qualified Bid. Evaluation criteria with respect to a Sale Proposal may include, but are not limited to items such as: (a) the purchase price and the net value (including assumed liabilities and other obligations to be perfonned or assumed by the bidder) provided by such bid; (b) the claims likely to be created by such bid in relation to other bids; (c) the counterparties to the transaction; (d) the proposed revisions to the Fonn of Purchase Agreement and the tenns of the transaction documents; (e) other factors affecting the speed, certainty and value of the transaction (including any regulatory approvals required to close the transaction); (f) the assets included or excluded from the bid and the transaction costs and risks associated with closing multiple transactions versus a single transaction for all or substantially all of the Seafield Property and/or the Minera Property; (g) the estimated number of employees of Minera that will be offered post closing employment by the bidder and any proposed measures associated with their continued employment; (h) the transition services required from Seafield or Minera post-closing and any related restructuring costs; and (i) the likelihood and timing of consummating the transaction by the Target Closing Date.
(2) Evaluation criteria with respect to an Investment Proposal may include, but are not limited to items such as: (a) the amount of equity and debt investment and the proposed sources and uses of such capital; (b) the debt to equity structure post-closing; (c) the counterparties to the transaction; (d) the tenus of the transaction documents; (e) other factors affecting the speed, certainty and value of the transaction; (f) planned treatment of stakeholders; and (g) the. likelihood and timing of consummating the transaction by the Target Closing Date ..
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(3) The Receiver may select Qualified Bids for further negotiation and/or clarification of any terms or conditions of such Qualified Bids, including the amounts offered, before identifYing the highest or otherwise best Qualified Bid(s) received (the "Successful Bid").
(4) Upon completion of any further negotiations or clarifications that may be conducted pursuant to Section 5.4(3) above, the Receiver will identify the Successful Bid and may identify a next highest or otherwise best Qualified Bid received (such offer, the "Backup Bid"). The Qualified Bidders(s) who made the Successful Bid is/are the "Successful Bidder" and the Qualified Bidder( s) who made the Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures) is/are .the "Backup Bidder"). The Receiver will notify the Successful Bidder and any Backup Bidder that they are, respectively, the Successful Bidder and the Backup Bidder.
(5) The Receiver will finalize definitive agreements in respect of the Successful Bid and the Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures), if any, conditional upon approval by the Court.
(6) If a Backup Bid is identified in accordance with these SISP Procedures, then such Backup Bid shall remain open until the consummation of the transaction contemplated by the Successful Bid (the "Backup Bid Expiration Date").
(7) All Qualified Bids (other than the Successful Bid and any Backup Bid identified in accordance with these SISP Procedures) shall be deemed rejected by the Receiver on and as of the date of approval of the Successful Bid or any Backup Bid by the Court.
Section 5. 7 Secured Creditor Consultation and Consent
(1) For the purposes of the Solicitation Process and these SISP Procedures, and notwithstanding any other provision in these SISP Procedures, any requirement for the Receiver to: (a) consult with the Secured Creditor, and (b) provide copies of any expressions of interest, bids or other offers submitted in connection with the Solicitation Process or these SISP Procedures (collectively, the "Creditor Consultation Rights") shall all be subject to the terms, conditions and limitations contained in this Section 5.7.
(2) Subject to subsection 5.7(3), the Creditor Consultation Rights shall be suspended for the period commencing on the earlier of (x) the date that a Non-Binding Indication of Interest Qualified Purchase Bid, Qualified Investment Bid (including any credit bid) is actually s · <01 ..JJUJ by the Secured Creditor (y) the date that a Bid Notice is issued by the Secured Cr itor as e.¥>\1·~12-l required by Section 4.3(5); provided, however, such Creditor Consultation Rights shal resume o-/ ,e.cl on the date when the Non-Binding Indication of Interest, Qualified Purchase Bid or ualified SJ_I).IAI Investment Bid, as applicable, submitted by the Secured Creditor has been rejected d is no Gr~ longer being considered by the Receiver, as evidenced by written notice to the Secur Creditor ot from the Receiver. F<ir greater certainty, during any period of time during which e Secured Creditor's Creditor Consultation Rights are suspended, no officer, directol).er partner er any of its affiliates shall be entitled to receive any information contemplate([ under the Credito~(~ Consultation Rights, unless and until the Receiver has selected a Successful Bid. r ·
(3) The suspension of Creditor Consultation Rights pursuant to Section 5.7(2) will not apply in the case of an Indication of Interest, Qualified Purchase Bid or Qualified Investment Bid that
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is submitted by the Secured Creditor which (a) is a credit bid that involves consideration (excluding assumed obligations) that does not exceed the Secured Claims Amount as determined by the Receiver, and (b) is delivered with a binding covenant and undertaking by the Secured Creditor in favour of the Receiver covenanting and undertaking that no change shall be made to the economic terms of the offer or bid from and after the date of its submission and the key terms of such bid are disclosed to other interested parties.
(4) For the purposes of the Solicitation Process and these SISP Procedures, prior to obtaining any Creditor Consultation Rights the Secured Creditor shall be required to execute a confidentiality agreement with the Receiver.
(5) The Receiver will not provide to the Secured Creditor any new information regarding bids obtained from the commencement of Phase 2 until the expiry of the period to submit a Bid Notice.
Section 5.8 Approval Hearing
(1) After definitive agreements in respect of a Successful Bid and Backup Bid (if a Backup Bid is identified in accordance with these SISP Procedures) have been finalized, in the case of the Successful Bid, signed (conditional on court approval) and, in the case of the Backup Bid signed (conditional on non-completion of the Successful Bid and on court approval) in accordance with these SISP Procedures, Seafield shall seek a hearing as soon as practicable on a date to be scheduled by the Court that will permit not less than 2 full business Days' notice to the service list (the "Approval Hearing") to approve the Successful Bid or to approve Seafield causing Minera to enter into an agreement with respect to the Successful Bid and to enter into an agreement with respect to the Backup Bid. The Approval Hearing may be adjourned or rescheduled by the Receiver, without further notice, by an announcement of the adjourned date at the Approval Hearing.
(2) If, following approval of the Successful Bid transaction by the Court, the Successful Bidder fails to consummate the transaction for any reason, then the Backup Bid, if there is one, will be deemed to be the Successful Bid hereunder and the Receiver shall effectuate a transaction with the Backup Bidder subject to the terms of the Backup Bid, without further order of the Court.
Section 5.9 Deposits
(1) All Deposits shall be retained by the Receiver and invested in an interest bearing trust account in a Schedule I Bank in Canada. If there is a Successful Bid, the Deposit (plus accrued interest) paid by the Successful Bidder whose bid is approved pursuant to the Approval Hearing shall be applied to the purchase price to be paid or investment amount to be made by the Successful Bidder upon closing of the Successful Bid. The Deposit (plus accrued interest) paid by the Backup Bidder, if there is one, shall be retained by the Receiver until the Backup Bid Expiration Date or, if the Backup Bid becomes the Successful Bid, shall be applied to the purchase price to be paid or investment amount to be made by the Backup Bidder upon closing of the Backup Bid. The Deposits (plus applicable interest) of all Phase 2 Bidders not selected as the Successful Bidder or Backup Bidder shall be returned to such bidders without interest within five (5) Business Days of the later of the date upon which the Successful Bid and any Backup Bid are approved by the Court. If these SISP Procedures are terminated in accordance with the
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provisions hereof, all Deposits shall be returned to the bidders without interest within five (5) Business Days of the date upon which these SISP Procedures are terminated.
(2) If an entity selected as the Successful Bidder or Backup Bidder breaches its obligations to close, it shall forfeit its Deposit to the Receiver; provided. however. that the forfeiture of such Deposit shall be in addition to, and not in lieu of, any other rights in law or equity that the Receiver has or may have against such breaching entity.
Section 5.10 Approvals
For greater certainty, the approvals required pursuant to the terms hereof are in addition to, and not in substitution for, any other approvals required by any Canadian, Colombian, or other foreign statute or are otherwise required at law in order to implement a Successful Bid or Backup Bid, as the case may be.
Section 5.11 Notice to the Receiver
Any notice or other communication to be given to the Receiver in connection with this SISP shall be given in writing and shall be given by personal delivery (in which case it shall be left with a responsible officer of the recipient) or by electronic communication addressed to the Receiver as follows:
KPMGinc. 333 Bay Street- Suite 4600 Toronto, ON M5H 2S5 Attention: Phil Reynolds and Ryan Adlington Telephone No.: 416-777-8500 Facsimile No.: 416-777-3364 Email: [email protected]
with a copy to:
McMillan LLP Brookfield Place, Suite 4400 181 Bay Street Toronto, ON M5J 2T3 Attention: Wae1 M. Rostom and Jennifer Cockbill Telephone No.: 416.865.7790 Facsimile No.: 416.865.7048 Email: [email protected]
Section 5.12 Reservation of Rights
(1) The Receiver (a) reject, at any time any bid that is (i) inadequate or insufficient, (ii) not in conformity with the requirements of these SISP Procedures or any orders of the Court applicable to Seafield, or (iii) contrary to the best interests of Seafield, its estate, and stakeholders as determined by the Receiver; (b) in accordance with the terms hereof accept bids not in
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conformity with these SISP Procedures to the extent that the Receiver determines, in its reasonable business judgment, that doing so would benefit Seafield, its estate, and stakeholders; and (c) in accordance with the terms hereof extend the Potential Bidder Deadline, Phase 1 Bid Deadline or Phase 2 Bid Deadline; and (d) reject all bids. The Receiver shall not be required to accept the highest bid, but shall be entitled to recommend to the Court a transaction that in its view maximizes value for all stakeholders.
(2) These SISP Procedures do not, and shall not be interpreted to, create any contractual or other legal relationship between the Receiver on the one hand and any Known Potential Bidder, Potential Bidder, Qualified Potential Bidder, Qualified Phase 1 Bidder, Qualified Phase 2 Bidder, Qualified Bidder, Successful Bidder or Backup Bidder, on the other hand, except as specifically set forth in definitive agreements that may be executed by the Receiver.
(3) Subject to the restrictions and limitations set out in Section 5.7, the Receiver will consult with the Secured Creditor.
Section 5.13 Further Orders
At any time during the SISP, the Receiver may apply to the Court for directions with respect to the discharge of its powers and duties hereunder.
Section 5.14 Credit Bid
These SISP Procedures permit the Secured Creditors to submit a credit bid, provided such credit bid is in accordance with the terms and conditions of these SISP Procedures and in accordance with applicable law.
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AppendixJ
Summary schedule of Receiver and Receiver's counsel professional fees
PagellO
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~lfffie~taftCF:Orflt~WC~~eiifRCSot~ft~L~ ~~~~--~~---- ~~-~~------ ~----~~----, ~--'Sj
Summa~· ofRec~\\'4,"r :~nU ke£eh~Fs: toullstljli;'(lf'csslnliAl fees -._-;j :PeriOd Stptcmlilir2J1N "F~bruary 2016 In CAD Fees altd I ' Sen·ice Perind Dl'!bui'$CUICtU Status Notes DisbU:rwmcnts SlllC:J Tax TofatAiiiQunt
KPMG Inc. September 9, 2014- September 30,2014 Paid 114,078 14,830 128,908 October 1, 2014 to November 30,2014 Paid 77,929 10,131 88,060 December 1, 2014- April 30,2015 Fees Paid HST Undisbursed 242,631 31,542 274,173 May l, 2015- May 31, 2015 Fees Paid HST Undisbursed 113,221 14,719 127,940 June l,2015-June30,20I5 Fees Paid HST Undisbursed 72,180 9,383 81,564 July I, 2015- Dec 31, 2015 Undisbursed 194,573 22,253 216,825 Month of January 2016 Undisbursed 2 50,000 6,500 56,500
Total KPMG Inc. 864,612 109,358 973,970
McMillan Fees September 9, 2014 ·September 30, 2014 Paid 88,554 11,228 99,782 October I, 2014 ·October 31,2014 Paid 45,263 5,866 51,129 November 1, 2014- November 30,2014 Paid 30,152 3,920 34,072 November26, 2014- December 31,2014 Paid 47,999 6,240 54,239 January I, 2015- March 30, 2015 Paid 16,713 2,173 18,886 April!, 2015 ·April 30,2015 Paid 32,591 4,237 36,828 May I, 2015 ·May 29, 2015 Paid 62,969 8,186 71,155 June I, 2015- June 30, 20I5 Paid 9,997 1,300 11,296 July 2, 2015- July 31,2015 Undisbursed 13,382 1,740 15,122 August 3, 2015- August 28,2015 Undisbursed 6,135 798 6,933 August 21, 2015- September 30, 2015 Undisbursed 30,034 3,882 33,917 November I, 2015 ·November 30, 20I5 Undisbl!rsed 5,781 751 6,532 December I, 2015- December 31,2015 Undisbursed 18,711 2,431 21,142 Month of Jaimary 2016 Undisbursed 2 30,000 3,900 33,900
Total McMillan 438,280 56,651 494,931
PPU Fees September 12, 2014- September 19, 2014 Paid 14,787 2,366 17,153 September 22,2014- October 2, 2014 Paid 22,965 3,674 26,639 October 3, 2014 ·October 31, 20I4 Paid 49,915 7,986 57,901 November 4, 2014- November 27, 2014 Paid 25,001 4,000 29,001 December I, 20I4- December 30,2014 Paid 44,630 7,14I 51,771 January l, 2015- January 30, 2015 Paid 7,119 1,139 8,258 February 2, 2015- February 27, 2015 Paid 9,721 1,555 11,277 March 3, 2015 ·March 3I, 2015 Paid 17,800 2,848 20,648 Apri11,2015-Apri129,2015 Paid 19,012 3,042 22,054 May 5, 20I5- May 23, 2015 Paid 2,577 412 2,990 June 3, 2015- June 22,2015 Paid 4,981 797 5,778 July 2, 2015 ·July 31,2015 Undisbursed 26,153 4,184 30,337 August 3, 2015- August 31, 2015 Undisbursed 18,I41 2,903 21,044 September 18, 2015- September 30, 2015 Undisbursed I1,942 I,9I1 13,853 October I, 2015- October 30,20I5 Undisbursed 2,417 387 2,804 November 19, 2015- November 20,2015 Undisbursed 2,760 442 3,202 November 21,2015- December23, 20I5 Undisbursed 2 5,742 919 6,66I December 24, 2015- mid January2016 Undisbursed 2 23,810 3,8IO 27,620 Handling Undisbursed 137 137
TotalPPU 309,612 49,516 359,128
Total Professional Fees 1,612,504 215,525 I,828,D28
Note 1 PPU invoices were converted from USD to CAD at 1.4006. Note2 Estimated fees until discharge.
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