SALT LAKE CITY, UTAH -- (Marketwire) -- 06/26/09 -- Palladon Ventures Ltd. ("Palladon" or the "Company") (TSX VENTURE: PLL) (FRANKFURT: PV-1) announced today that the Company has executed an agreement (the "Extension Agreement") with Luxor Capital Group, LP ("Luxor"), to extend the term of the Company's two loans payable to Luxor in the current aggregate amount (including principal and accrued interest) of approximately US$37 million (the "Luxor Loans"), which loans were otherwise payable in full on June 26, 2009. The Company is currently seeking TSX Venture Exchange approval of the Extension Agreement, the primary terms of which are described below.
The Extension Agreement anticipates two extension periods. The first extension period is to October 15, 2009 ("First Extension Period"), while a second extension to December 31, 2010 ("Second Extension Period") is contingent on the Company raising funds (the "Interim Financing") of no less than US$5,000,000 during the First Extension Period. The Company will pay-in-kind interest accruing during the extension periods at 12.5% per annum, thus preserving cash and providing Palladon flexibility to fund operations. In connection with the First Extension Period, the Company has agreed to pay additional interest of US$500,000, which will be added to the principal amount of the Luxor Term Loan, and would be payable in cash out of the Interim Financing.
During the First Extension Period, the Company will endeavor to complete the Interim Financing to fund operations, advance feasibility studies for iron concentrate and alternate iron products (DRI, pig iron or iron nuggets), and potentially repay a portion or all of the Luxor Loans. The Company will attempt to raise a minimum of US$5 million in the Interim Financing, which is anticipated to fully fund operations through the end of 2010. Palladon will also continue discussions with strategic and financial investors regarding larger funding options to refinance and repay the Luxor Loans, as well as to advance its concentrate and alternate iron production projects.
If Palladon raises a minimum of US$5 million of equity capital prior to October 15, 2009 and if certain other conditions have been met, then the due date on the Luxor Loans will be extended, without further action by any party, to December 31, 2010. Upon the closing of the Interim Financing and commencement of the Second Extension Period, Palladon will be obligated to pay additional interest to Luxor in the amount of US$1,750,000 (assuming the Luxor Loans have not been paid in full), payable by the issuance to Luxor of shares of Palladon's common stock at the per share price at which Palladon's common stock is issued or deemed to have been issued in the Interim Financing, provided that in no event shall any such shares issued exceed 5% of Palladon's total shares outstanding after giving effect for the Interim Financing.
Additionally, during the Second Extension Period, if the Luxor Loans continue to be outstanding, Palladon will issue to Luxor on each of December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010 common shares in an amount equal to a maximum of 3% of the then total outstanding shares of Palladon's common stock.
