Marret Resource Corp. announces participation in Cline Mining restructuring

Trading Symbol: MAR

TORONTO, Jan. 16, 2013 /CNW/ - Marret Resource Corp. (TSX: MAR) (the "Company") is pleased to announce that it is participating in the financial restructuring of Cline Mining Corporation ("Cline") (TSX: CMK) as announced by Cline on December 27, 2012 (the "Restructuring Announcement"). On January 11, 2013, as part of a bridge financing to allow for a comprehensive recapitalization of its balance sheet, Cline issued US$7,000,000 of 10% senior secured bonds (the "Bonds), to be added to the US$50,000,000 of Bonds already outstanding.

The Company held US$6,710,000 of the Bonds prior to the additional issue of Bonds on January 11, 2013. As set out in the Restructuring Announcement, Marret Asset Management Inc. ("Marret"), on behalf of Cline's bondholders, including the Company, agreed to provide additional funding to Cline and to participate in the recapitalization of Cline under a plan proposed by Marret (the "Marret Plan"). The following sets out the Company's participation in the proposed Cline restructuring and the Marret Plan:

  • The Company has received a forbearance and restructuring fee in the amount of US$335,000, which has been satisfied by Cline issuing additional Bonds;

  • The Company purchased US$2,000,000 of additional Bonds (the "New Bonds") on January 11, 2013; the Company has agreed to purchase an additional US$1,000,000 in Bonds subject to Cline meeting various conditions;

  • The Company has received a cash commitment fee in the amount of US$100,000 in respect of the purchase of the New Bonds;

  • As an additional commitment fee for the purchase of the New Bonds, the Company received 400,000 new warrants from Cline, which are exercisable at a price of CDN$0.09 per common share and expire on January 11, 2016;

  • The exercise price on Cline's existing warrants held by the Company was reduced to CDN$0.09 from CDN$1.15;

  • In exchange for participating in a standby underwriting commitment (the "Standby Commitment") for a CDN$35,000,000 rights offering to current common shareholders of Cline at a price of CDN$0.0205 per share (the "Rights Offering Price"), the Company has received a commitment fee of US$642,000, which  was satisfied by the issuance of Bonds. The Company will exchange such Bonds for common shares of Cline at the Rights Offering Price, should the Marret Plan be implemented;

  • The Standby Commitment may require the Company to subscribe for up to CDN$6,400,000 worth of common shares of Cline at the Rights Offering Price; and

  • Under the Marret Plan, up to 40% of the Bonds held by the Company will be exchanged for common shares of Cline at an effective exchange price of approximately US$0.012 per share.

The Marret Plan will proceed unless, by April 30, 2013, Cline implements a transaction which results in any of (i) a takeover bid of, or other business combination with, Cline in which any person or group of persons acting in concert acquires 50% or more of the equity securities of Cline, (ii) the sale of all or substantially all of the assets or business of Cline and its subsidiaries, or (iii) a recapitalization of Cline, subject to certain conditions including that as a result of such recapitalization Cline receives at least CDN$35,000,000 of gross cash proceeds from the issuance of equity securities or, as a result of such sale, Cline receives sufficient net proceeds to repay all amounts (including interest, premium, principal and other fees) owing on or under the Bonds and the other financing documents.

A detailed description of the Marret Plan and timing is set out in the Restructuring Announcement.

On the completion of the purchase of the New Bonds noted above, including the receipt of the various fees paid to the Company in Bonds, the Company's exposure to Cline will increase from approximately 6% to 8.7% of the net asset value of the Company ("NAV"). Assuming the completion of the Marret Plan, the Company's exposure to Cline will increase from an estimated 14% to 18% of NAV, depending on the amount taken up by the Company under the Standby Commitment and based on the current NAV.

The Company has adopted an investment restriction which provides that the net amount invested by the Company in the securities of any one issuer at the time of investment may not exceed 10% of NAV (the "10 Percent Investment Restriction"). To allow the Company to participate in the proposed Cline restructuring and the Marret Plan as outlined above, the non-Marret members of the board of directors of the Company have waived the application of the 10 Percent Investment Restriction in respect of the Company's participation in the proposed Cline restructuring.

About Cline
Cline has metallurgical coal property interests in British Columbia and in Colorado, U.S.A. with NI 43-101 independent Technical Reports. Cline is focused on the exploration and development of metallurgical steel making coals in Canada and the U.S., and on its iron ore property in Madagascar and its Cline Lake gold property in northern Ontario, Canada.

About Marret Resource Corp.
The Company is focused on natural resource lending. The Company's business is primarily directed to investing in public and private debt securities of and making term loans (including bridge and mezzanine debt) to issuers in a broad range of natural resource sectors, including energy, base and precious metals and other commodities, and issuers involved in exploration and development, and may also include financing other resource related businesses and investing in public and private equity and quasi-equity securities. The Company seeks to generate income mainly from its lending activities, while taking advantage of additional upside through equity participation in the companies which it finances. Marret Asset Management Inc. is responsible for implementing Company's investment strategy and managing its investment portfolio.

About Marret Asset Management Inc.
Marret Asset Management Inc. is an employee owned credit fixed income manager based in Toronto. Marret's experienced team of investment professionals led by Barry Allan specialize exclusively in fixed income and, particularly, in high yield debt strategies.


Forward-Looking Information
This news release includes certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, the anticipated completion of the Cline restructuring and the Marret Plan. Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Such risks include, but are not limited to, market conditions and the other risks identified in the Company's annual information form under the heading "Risk Factors". There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE Marret Resource Corp.



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