Magnetation Announces Commencement of Solicitations for Participation in Debtor-In-Possession Financing Facility

GRAND RAPIDS, Minn., May 12, 2015 /PRNewswire/ -- Magnetation LLC. ("Magnetation") announced today the commencement of solicitations to eligible holders of its 11.000% Senior Secured Notes due 2018 (the "Notes") to purchase by assignment certain loans and commitments outstanding under its Debtor-in-Possession Credit Agreement (the "DIP Credit Agreement") dated as of May 7, 2015, among Magnetation, the lenders party thereto (the "Lenders") and Wilmington Trust, National Association as administrative agent (the "DIP Solicitation"). 

On May 5, 2015, Magnetation and its subsidiaries commenced voluntary cases under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Minnesota.

The DIP Credit Agreement provides for a senior secured super-priority debtor-in-possession term loan facility in an aggregate principal amount of up to $135,000,000 (plus capitalized fees and interest) (the "DIP Loans"), consisting of approximately $3.8 million of loans rolled up from existing term loans held by the Lenders, approximately $63.7 million of  new term loans made by the Lenders and up to $67.5 million of loans rolled up from eligible holders of Notes.

Eligible holders of Notes as of May 12, 2015 (the "DIP Solicitation Record Date") (Rule 144A Notes: CUSIP 559417AA8 and ISIN US559417AA83 and Regulation S Notes: CUSIP U5565PAA5 and ISIN USU5565PAA58) will have the opportunity to purchase by assignment and assume an aggregate principal amount of DIP Loans and commitments equal to the aggregate principal amount of all DIP Loans and commitments multiplied by a fraction (expressed as a percentage) (i) the numerator of which is the aggregate outstanding principal amount of Notes owned by, and subscribed under by, such holder, and (ii) the denominator of which is the aggregate outstanding principal amount of all Notes held by the Lenders plus the aggregate outstanding principal amount of Notes owned by eligible holders that participate the DIP Solicitation and subscribed under, in each case, as of the DIP Solicitation Record Date.

This press release does not constitute a solicitation of participation in the DIP Loans. The DIP Solicitation is being made solely on the terms and subject to the conditions set forth in the DIP Solicitation Notice (as defined below).  The DIP Solicitation is scheduled to expire at 5:00 p.m., New York time, on May 27, 2015, unless extended by Magnetation (the "Expiration Date").  Any eligible holder of Notes as of the DIP Solicitation Record Date that wants to participate as a Lender in the DIP Loans must provide a completed subscription form and an executed assignment agreement to the information agent on or prior to the Expiration Date in accordance with the instructions in the DIP Solicitation Notice.  Holders that by the DIP Solicitation Expiration Date do not return the subscription form and executed assignment agreement to the information agent will not be permitted to participate as a Lender under the DIP Credit Agreement.

Subscription to the DIP Solicitation will be irrevocable and may not be withdrawn.  In the event that the terms of the DIP Solicitation are amended in a manner materially adverse to the holders of Notes, withdrawal rights will be provided in accordance with applicable law.

The complete terms and conditions of the DIP Solicitation are set forth in the DIP Solicitation Notice dated May 12, 2015, (the "DIP Solicitation Notice") that is being sent to registered holders of the Notes. Requests for DIP Solicitation documents may be directed to Wilmington Trust, National Association, the information agent, at the following address: 166 Mercer Street, Suite 2-R, New York, NY 10012.  The information agent may be telephoned at (212) 941-4439 or emailed at [email protected].

This press release is neither an offer to purchase nor a solicitation of an offer to sell the Notes or any other securities. The DIP Solicitation is being made only by and pursuant to the terms of the DIP Solicitation Notice.  Holders are urged to read the DIP Solicitation Notice carefully before making any decision with respect to the DIP Solicitation. Holders must make their own decisions as to whether to participate in the DIP Solicitation. None of Magnetation or any of its subsidiaries or the information agent makes any recommendations as to whether holders should participate in the DIP Solicitation, and no one has been authorized to make such a recommendation.

Davis Polk & Wardwell LLP is serving as legal advisor and Blackstone Advisory Partners LP is serving as financial advisor in connection with the reorganization.  Additional information about the reorganization can be found at www.donlinrecano.com/mag.

Magnetation is a joint venture between Magnetation Inc. (50.1% owner) and AK Steel Corporation (49.9% owner).  Magnetation recovers high-quality iron ore concentrate from previously abandoned iron ore waste stockpiles and tailings basins.  Magnetation owns three iron ore concentrate plants located in Keewatin, MN, Bovey, MN and Grand Rapids, MN, and a 3.0 million tonne per year iron ore pellet plant in Reynolds, IN. Additional information about the company is available at www.magnetation.com.

Cautionary Note Regarding Forward Looking Statements

Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995.  These statements involve certain risks and uncertainties that may be beyond our control and may cause our actual future results to differ materially from our current expectations both in connection with the Chapter 11 filings Magnetation previously announced and our business and financial prospects.  Statements of management's expectations, including its desire to successfully restructure in order to position Magnetation for long term viability and success, to address its financial challenges, to address important issues in an orderly way and to make Magnetation stronger and more competitive are based on current assumptions and expectations.  No assurance can be made that these events will come to fruition.  We do not undertake to update our forward-looking statements.  Factors that could affect our results include, but are not limited to: (i) the ability of Magnetation and its subsidiaries to continue as a going concern, (ii) the ability of Magnetation and its subsidiaries to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 cases, (iii) the ability of Magnetation and its subsidiaries to prosecute, develop and consummate one or more plans of reorganization with respect to the Chapter 11 cases, (iv) the effects of the bankruptcy filing on Magnetation and its subsidiaries and the interests of various creditors, equity holders and other constituents, (v) Bankruptcy Court rulings in the Chapter 11 cases and the outcome of the cases in general, (vi) the length of time Magnetation and its subsidiaries will operate under the Chapter 11 cases, (vii) risks associated with third-party motions in the Chapter 11 cases, which may interfere with the ability of Magnetation and its subsidiaries to develop one or more plans of reorganization and consummate such plans once they are developed, (viii) the potential adverse effects of the Chapter 11 proceedings on Magnetation's liquidity or results of operations, (ix) the ability to execute Magnetation's business and restructuring plans, (x) increased legal costs related to Magnetation's bankruptcy filing and other litigation, and (xi) the ability of Magnetation and its subsidiaries to maintain contracts that are critical to their operation, including to obtain and maintain normal terms with their vendors, customers, lessors and service providers and to retain key executives, managers and employees.  In the event that the risks disclosed in Magnetation's public filings and those discussed above cause results to differ materially from those expressed in Magnetation's forward-looking statements, Magnetation's business, financial condition, results of operations or liquidity, and the interests of creditors, equity holders and other constituents, could be materially adversely affected.  Magnetation undertakes no obligation (and expressly disclaims any such obligation) to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact:
Griffin Moe
1-218-966-9519
[email protected]

SOURCE Magnetation LLC

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