Colossus Minerals seeks to restructure under the Bankruptcy and Insolvency Act

The Canadian Press 0

TORONTO – Financially troubled Colossus Minerals Inc. (TSX:CSI), a development-stage miner focused on Brazil, intends to file for protection under the Bankruptcy and Insolvency Act.

Trading in shares of Colossus, which was unable to make a Dec. 31 interest payment on its convertible gold-linked notes, have been halted on the Toronto Stock Exchange pending a delisting review.

Colossus said Tuesday that its board has approved a proposal from certain noteholders and Sandstorm Gold Ltd. (TSX:SSL) that provides for interim debtor-in-possession financing while the company pursues a six-week sale and investment solicitation process.

The credit facility will be for up to US$4 million, subject to increase by up to an additional US$6 million with the consent of the lenders.

Subsequent to court approval, the company intends to pursue a dual-track process of administering a sale process and seeking creditor and court approvals for the implementation of the restructuring.

If implemented as proposed, noteholders would end up with about 51.5 per cent of the restructured company’s outstanding common shares and Sandstorm, a gold streaming company, about 38.8 per cent.

Lenders under a bridge loan would end up with about eight per cent and existing shareholders about 1.7 per cent.

Colossus is focused on its Serra Pelada project in the Carajas region in Para, Brazil, which it says hosts a high-grade gold and platinum group metals deposit.

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