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REG - Bens Creek Group PLC - Update on Chapter 11 cases & $2m loan from Avani

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RNS Number : 0733O  Bens Creek Group PLC  13 May 2024

Prior to publication, certain information contained within this announcement
was deemed by the Company to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.
With the publication of this announcement, this information is now considered
to be in the public domain.

 

13 May 2024

Bens Creek Group plc

("Bens Creek" or the "Company" or the "Group")

 

Update on the Group's Chapter 11 cases

and

Interim DIP Loan from Avani

 

Further to the Company's announcement released on 9 May 2024, Bens Creek Group
plc (AIM:BEN), the owner of a metallurgical coal mine in North America
supplying the steel industry, announces that the United States of America
("US") Bankruptcy Court for the Southern District of West Virginia (the
"Court") has approved the Company's wholly owned US subsidiaries, Ben's Creek
Operations WV LLC, Ben's Creek Carbon LLC and Ben's Creek Land WV LLC
(together, the "Chapter 11 Companies" or the "Debtor"), entering into an
interim debtor-in-possession financing loan from Avani Resources Pte Ltd
("Avani" or the "Lender"), the Company's largest shareholder, for US$2.0
million (the "Interim DIP Loan").

 

Terms of the Interim DIP Loan

 

The order of the Court has authorised Avani to lend to the Chapter 11
Companies up to US$2.0 million of further funds with an interest rate of 10.5%
per annum.

 

The proceeds of the Interim DIP Loan shall be used by the Chapter 11 Companies
for the purposes identified in the approved budget by the Court including to:

 

(i)            pay expenses to preserve, maintain and operate the
Debtors' businesses;

(ii)           pay certain professional fees;

(iii)          conduct and pursue a sale and liquidation process of
the Chapter 11 Companies' assets to be completed pursuant to section 363 of
the Bankruptcy Code (the "Section 363 Sale");

(iv)         pay other essential emergency expenses of the Chapter 11
Companies; and

(v)          pay wages owed to current and former employees of the
Chapter 11 Companies.

 

Provided that Avani advances the Interim DIP Loan, Avani will be, pursuant to
the US Bankruptcy Code, granted a superpriority administrative expense claim
in the amount of the Interim DIP obligations.

 

Update on Chapter 11 and further Court hearing

 

A further court hearing will be held on 6 June 2024 to consider the terms of a
final debtor-in-possession financing loan from Avani (the "Avani DIP
Facility") which is expected to be in the quantum of US$8.865 million
inclusive of the Interim DIP Loan. The intention is for the proceeds of the
Avani DIP Facility, should it be approved by the Court, to be used to see the
Chapter 11 Companies through to the Section 363 Sale. A term sheet for the
Avani DIP Facility has been filed with the Court. Alternative
debtor-in-possession financing proposals would, if received, also be
considered by the Court prior to the hearing on 6 June 2024.

 

A sale of the Chapter 11 Companies' assets, should this be consummated, would
constitute a fundamental change of business for the Group pursuant to Rule 15
of the AIM Rules of Companies. Any such disposal is expected to result in the
Company becoming an AIM Rule 15 cash shell.

 

Update on second debtor-in-possession financing proposal

 

An alternative debtor-in-possession financing proposal for $4 million (the
"Integrity DIP Motion") was received from Integrity Coal Sales, Inc
("Integrity"). However, due to the Debtor requiring a budget of $6.5 million
to carry the Chapter 11 Companies through to the Section 363 Sale, which is
the Debtors' plan, and with Integrity unwilling to increase the Integrity DIP
Motion beyond $4 million, the Debtor decided to reject the Integrity DIP
Motion. The decision to reject the Integrity DIP Motion was sustained by the
Court. The Court sustains the Debtors' decision and finds that the Integrity
DIP Motion was not a viable decision because the Debtor would run out of money
prior to the Section 363 Sale.

 

Related party transaction

 

The drawdown of up to US$2.0 million of the Interim DIP Loan by the Chapter 11
Companies is deemed to be a transaction with a related party pursuant to rule
13 of the AIM Rules for Companies by virtue of Avani being a 29.86%
shareholder of the Company. The directors of the Company (except for Rajesh
Johar who represents Avani on the Company's board) consider, having consulted
with the Company's nominated adviser, Allenby Capital Limited, that the terms
of the Interim DIP Loan are fair and reasonable insofar as the Company's
shareholders are concerned.

 

A copy of the filing made at the Court in relation to the Interim DIP Loan, as
well as the other filings lodged in relation to the Group's Chapter 11 cases,
can be accessed here: https://ecf.wvsb.uscourts.gov/
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Flinks.uk.defend.egress.com%2FWarning%3FcrId%3D66268295da721d80276236e5%26Domain%3Dallenbycapital.com%26Lang%3Den%26Base64Url%3DeNrLKCkpKLbS109NTtMrLytO0istTs4vLSop1kvPL9MHAK4hC0k%253D%26%40OriginalLink%3Decf.wvsb.uscourts.gov&data=05%7C02%7C%7C04a096877d704f1ff3ef08dc62e124b9%7Cfc69750aedcc43bebd5b2cbe6f8d8c37%7C0%7C1%7C638493966366035082%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=NHb6FyF4LmJ3aOkQD7oXeULyYnbqhekGLMfPZUINHoc%3D&reserved=0)
 .

 

Further announcements will be made at the appropriate time.

 

For further information please contact:

 

Bens Creek Group plc
                                                                                           +44
(0) 204 558 2300

Adam Wilson, CEO

Peter Shea, Chief of Staff

 

Allenby Capital Limited (Nominated Adviser and Joint Broker)
               +44 (0) 203 328 5656

Nick Athanas / Nick Naylor / George Payne (Corporate Finance)

Kelly Gardiner / Guy McDougall (Sales and Corporate Broking)

 

WH Ireland Limited (Joint Broker)

Harry Ansell / Katy Mitchell
                                                                                 +44
(0) 207 220 1666

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