DENVER, CO -- (Marketwire) -- 01/13/09 -- Apex Silver Mines Limited (AMEX: SIL) (the
"Company") and its wholly-owned subsidiary, Apex Silver Mines Corporation
("ASMC"), filed voluntary petitions for reorganization under Chapter 11 of
the United States Bankruptcy Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the Southern District of New York ("Bankruptcy
Court") on January 12, 2009. The Company and ASMC will continue to manage
their properties and operate their businesses as "debtors-in-possession"
under the jurisdiction of the Bankruptcy Court.
Plan Support Agreement
On January 12, 2009, the Company and ASMC entered into a Plan Support
Agreement (the "Plan Support Agreement") with Sumitomo Corporation
("Sumitomo"), eleven of the twelve lenders under the San Cristobal project
finance facility (the "Senior Lenders"), and the holders of approximately
65% of the outstanding principal amount of the Company's 2.875% and 4.0%
Convertible Senior Subordinated Notes due 2024 (together, the "Subordinated
Noteholders"). Under the terms of the Plan Support Agreement, each of the
parties thereto has agreed, following receipt of a Bankruptcy
Court-approved disclosure statement, to vote in favor of a joint plan of
reorganization of the Company and ASMC on the terms and conditions set
forth in the Plan Term Sheet attached as part of the Plan Support
Agreement.
Under the proposed plan of reorganization contemplated by the Plan Term
Sheet, if the class of Subordinated Noteholders accepts the plan, the
Senior Lenders will waive and release their senior claims and Subordinated
Noteholders will receive a pro rata share of approximately $45 million in
cash plus common stock in the reorganized Company. However, if the class
of Subordinated Noteholders rejects the proposed plan, the class would
receive an allocation of cash only after payment in full under the project
financing facility of Sumitomo and the Senior Lenders. In such
circumstances, the Subordinated Noteholders would receive common stock of
the reorganized company, but might not receive any cash distributions under
the proposed plan. The Company's existing shareholders would receive no
distributions under the proposed plan.
San Cristobal Purchase and Sale Agreement
On January 12, 2009, the Company, ASMC and certain other wholly-owned
subsidiaries of the Company entered into a Purchase and Sale Agreement with
Sumitomo and one of its wholly-owned subsidiaries (the "Purchase
Agreement") pursuant to which Sumitomo has agreed to purchase all of the
Company's direct and indirect interests in the San Cristobal mine for a
cash purchase price of $27.5 million. Under the terms of the Purchase
Agreement, the Company will be released from liabilities associated with
the San Cristobal mine, including its guarantee of San Cristobal
indebtedness, and will be reimbursed for $2.5 million in expenses which
were previously paid by the Company for the benefit of the San Cristobal
mine. The consummation of the transaction is subject to certain
conditions, including Bankruptcy Court approval of the plan of
reorganization. Proceeds from the transaction will be used, in part, to
provide cash distributions to creditors of the Company and ASMC.
The Purchase Agreement includes a no-shop provision that precludes the
Company from affirmatively soliciting alternative transactions for the sale
of San Cristobal to a third party. If the Company consummates an
alternative transaction, it will be required to pay a break-up fee of $16
million.
