extension to standstill agreement

Media/ASX Release 2 July 2009
Market Update
Territory Announces Extension to Standstill Arrangement with Financiers
KEY POINTS
• Tripartite Standstill Agreement with the Company’s financiers extended by six weeks to
12 August 2009
• This enables negotiations to continue for a proposed Debt Restructure and a potential Equity
Raising
• Monarch Gold Recapitalisation Deed approved by creditors, under which Territory would
potentially recover the full amount of $25.5M owing over two years, if the transaction is
completed
• The Frances Creek Mine has maintained production at an annualised rate of more than 2.2
million tonnes per annum, at a cost for the quarter of approximately $50/t loaded at Darwin Port.
Territory Resources Limited (ASX: TTY – “Territory” or “the Company”) advises that it has reached agreement
with its financiers, the hedge book facility provider (“Bank”) and Noble Resources Limited (“Noble”), for a six
week extension of the previously announced Tripartite Standstill Agreement to 12 August 2009 to enable
the implementation of a comprehensive long-term debt reconstruction of the Company.
Under the previous standstill arrangements (as announced on 1 April 2009), the parties agreed not to enforce
their rights under the financial instruments until 30 June 2009 to allow time to negotiate arrangements for the
conversion of short-term debt into a suitable long-term structure.
The Company has today signed a Variation and Restatement Agreement – Standstill Agreement that has
extended the standstill period until 12 August 2009 or such later date as agreed by the parties to allow for the
implementation of a comprehensive debt reconstruction. The extension is subject to no event of default
occurring under the standstill arrangements.
The Company has also entered into the following loan agreements:
• a Restatement Agreement – Loan Agreement with the Bank to refinance the short term loan
facilities that were used to crystallise the Company’s foreign exchange hedge contracts. The
total loan amount under the new loan agreement is $15.5 million and is repayable on 12
August 2009 or such later date as agreed between the parties; and
• a Supplemental Deed to the Noble Loan Agreement that extends the repayment date of the
$29.5 million loan by Noble to the Company to 12 August 2009 or such later date as agreed
between the parties.
Territory is continuing negotiations with the various parties to finalise suitable arrangements for the debt
restructure and proposed equity raising. The Company has placed its securities into voluntary suspension while
these confidential discussions continue. Once finalised, the Company will make an announcement on the
proposed arrangements and seek reinstatement of its securities for trading on the Australian Securities
Exchange.
“This six week extension reflects the commitment of the parties to settle on the necessary debt restructure and
the positive view adopted by the Company’s financiers of the significant operational improvements achieved
over the past six months, with consistent production at an annualised rate of 2.2 Mt achieved and operating
costs now below A$50/tonne loaded on the boat at Darwin,” commented Territory’s Managing Director Andy
Haslam.
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“The finalisation of our funding arrangements has been unavoidably put back due to the delays in the
settlement of benchmark iron ore prices in China. This extension will allow time for all parties to continue to
work together positively and cooperatively to achieve a sustainable and positive long-term outcome for the
Company and its shareholders which enables Territory to realise its longer-term growth potential,” he added.
As part of the standstill arrangements and to facilitate the debt restructure, the Company entered into a Security
Trust Deed on 1 April 2009 under which it has granted a fixed and floating charge over the Company’s assets,
a mortgage over its shares in key subsidiaries and a mining tenement mortgage over its Frances Creek Mining
Leases to secure the funding provided by the Bank and Noble.
In accordance with the ASX Listing Rules, a General Meeting of shareholder has been convened for 16 July
2009 at 2.00pm WST to seek shareholder approval for the provision of the security to Noble (see Notice of
Meeting dispatched to shareholders on 12 June 2009 for further details).
Territory also notes that the meeting of creditors of Monarch Gold Mining Company Limited (“Monarch”) was
recently held at which a Varied Deed of Company Arrangement and associated recapitalisation and restructure
of Monarch was approved by creditors. Territory notes that, under the approved recapitalisation proposal, the
Company would recover approximately $2.9 million upfront with the recovery of the balance of the full $25.5
million owed by Monarch being dependant on the various parties being able to complete the transaction over
the course of the next two years. Under the proposal Territory will receive:
• $2,961,000 upon completion;
• Beneficial entitlement of the proceeds from the Minjar Project sale;
• The proceeds from the sale of the Davyhurst and Siberia Projects (if any); and
• A payment for the remainder of the $25.5 million outstanding (if not fully satisfied by the above
payments) in two years from completion of the proposed recapitalisation transaction.
- ENDS -
Released by: On behalf of:
Nicholas Read Andy Haslam
Read Corporate Managing Director
Telephone: +61-8 9388 1474 Territory Resources Ltd
Mobile: 0419 929 046 Telephone: +61-8 9483 5100