The actual filing gives much more details than just what is in the PR: bottom line is that they removed the condition precedent that Applied Minerals eliminate the outstanding balances on the PIK notes in order to close the deal, if they do several other things (explained below).
So no elimination of debt is necessary to close the deal, but other actions are, which amounts to BMI Minerals and Applied Minerals entering into a deal where BMI takes a major interest in the future of Applied.
While the debt will remain, I think this is a positive development- more cash and new blood on the BoD…this is good news IMHO.
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On July 6, 2022, Applied Minerals, Inc. (“AMI”) and its directors, Brady McCasland, Inc. (“BMI”), BMI Minerals Company (“BMCO”) and the majority holders of the outstanding principal amount of AMI’s Series A Notes and Series 2023 Notes (collectively, the “PIK Notes”) entered into an agreement described below. In consideration of BMI and BMCO agreeing to amend the Iron Sale Agreement, Mill Sale Agreement, Mining Operations Agreement and Milling Operations Agreement (collectively, the “Four Agreements”), entered into among AMI, BMI and BMCO on May 31, 2022, to remove the condition precedent that AMI enter into agreements to eliminate the outstanding balances of the Series A Notes and Series 2023 Notes, the PIK Notes, AMI and its directors agreed to the following:
(a) the PIK Notes and AMI will take reasonable actions necessary to protect the interests of BMI and BMCO as described in the Four Agreements, including (i) providing reasonable assurances in writing to BMI and BMCO that in the event of a future bankruptcy or other legal proceeding against AMI, neither the PIK Notes nor AMI will take any position or action that adversely affects or could adversely affect the interests of BMI and/or BMCO as described in the Four Agreements, and (ii) not opposing, or taking any action contrary to, any position taken by others that serves to protect the interests of BMI and BMCO as described in the Four Agreements;
(b) the PIK Notes will execute and deliver to BMI and BMCO a document prepared by the legal counsel of BMI and BMCO that is consistent with Section (a). Up to a total of $20,000 of legal costs incurred by BMI and BMCO to have such document prepared shall be deducted from the remaining purchase price to be paid by BMI and BMCO under the Four Agreements. The holders of the majority of the outstanding principal of the Series A Notes will agree to waive any event of default that is caused or, that could be caused, by the execution and/or the consummation of the Four Agreements or the action contemplated thereby (“Series A Waiver”). The holders of the majority of the outstanding principal of the Series 2023 Notes agree to waive any event of default that is caused or, that could be caused, by the execution and/or the consummation of the Four Agreements or the action contemplated thereby (“2023 Waivers”);
(c) Mario Concha, John Levy, Robert Betz and Geoffrey Scott, directors of AMI, have entered into a corporate resolution agreeing, upon the closing of the Four Agreements, to relinquish payment of all accrued but unpaid Board Fees and Operations Committee Fees as those terms are used in AMI’s 2021 Proxy Statement. Mr. Concha has agreed to relinquish payment of all compensation accrued but not paid during his tenure as CEO of AMI. Messrs. Concha, Levy and Betz, upon the closing of the Four Agreements, hereby resign as directors of AMI;
(d) AMI agreed to not use any proceeds received upon the closing of the Four Agreements to pay the accrued but unpaid salaries of former employees and directors of AMI;
(e) Upon the closing of the Four Agreements AMI hereby limits the maximum number of directors elected to its Board of Directors to five;
(f) Upon the closing of the Four Agreements, BMI will have the right to nominate, and the Board of Directors of AMI will use its best efforts to appoint or cause the election of a number of directors that is equal to one-third the number of directors of the Board of Directors of AMI. If the number of directors is not divisible by three (3), the number of directors nominated by BMI will be rounded up to the next whole number. Unanimous approval of the Board will be required to approve (i) the assumption by AMI of any interest bearing debt and (ii) fees paid to the directors for Board and Committee service.
(g) Upon the closing of the Four Agreement holders of a majority of the principal of the Series 2023 Notes hereby waive their rights under the 2023 Director Nomination Agreement to designate one person to be nominated for election to the Board of Directors of AMI; and
(h) Upon the closing of the Four Agreements, AMI will pay a total of $375,000 to the holders of the majority of the outstanding principal of the Series A Notes in exchange for the Series A Waiver and a total of $375,000 to the holders of the majority of the outstanding principal of the Series 2023 Notes in exchange for the Series 2023 Waiver.
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