Mustang settles amended agreement with financier Arena

Published at Aug 15, 2018, in Juniors

This product is classified as ‘very high risk’ in nature due to its location and geopolitical situation of the region. Finfeed advises that extra caution should be taken when deciding whether to engage in this product, however if you are not sure whether it is suitable for you we suggest you seek independent financial advice.

Mustang Resources Limited (ASX:MUS) is pleased to announce that it has obtained key approvals and waivers with Arena Investors L.P in an amendment deed dated 14 August 2018.

As announced on 8 January 2018, Arena — a major institutional investor with more than US$750 million in assets under management on behalf of clients and affiliates — entered into an agreement with MUS, whereby it committed to invest A$19.95 million into the company, under a multi-tranche convertible note facility.

On 17 July 2018, MUS entered into a Merger Agreement to merge its Ruby Assets with Fura Gems Inc. (TSX.V:FURA) for A$10 million in Fura shares over three tranches and a A$25 million funding commitment from Fura.

Under the amendment deed, Arena has provided the required approvals for the Merger Agreement and, importantly, has agreed to waive the 15% termination fee on amounts not drawn under the agreement. It is therefore now at the discretion of the company to decide to which extent it wishes to draw on the finance, if at all.

As at 1 August 2018, Arena held a total of A$2.5 million (face value) of convertible notes in MUS, of which A$1 million is in Tranche 1 notes issued in January 2018 with an 18-month term and A$1.5 million is in Tranche 2A notes issued in July 2018, also with an 18-month term.

At the end of these terms, MUS has the option to repay these convertible notes in cash or in shares at their election. Prior to expiry, Arena is able to convert its notes to shares at the higher of the floor price (1.6 cents and 1.8 cents respectively) or the lowest preceding 20 day VWAP.

MUS Resources Managing Director Bernard Olivier commented: “Given the Company’s renewed focus on the Caula Vanadium-Graphite project and the fact that the Agreement with Arena was entered into by the company only in January 2018, it is important that Arena has been willing to waive the termination fee, thereby allowing Mustang to decide whether or not to continue using this source of funding going forward.”

It should be noted it is still early stages here, so investors should seek professional financial advice if considering this stock for their portfolio.

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