Champion Iron Limited announced that its subsidiary Quebec Iron Ore Inc. ("QIO"), the operator of the Bloom Lake Mining Complex, has successfully completed the previously announced amendment and increase to its existing credit facilities (the "Credit Facility") from $200 million to $400 million (the "Refinancing"). With the additional proceeds under the amended Credit Facility, in addition to its cash on hand and ongoing cash flows from operations, the Company expects the completion of the Bloom Lake Phase II expansion project (the "Phase II") to be fully funded, which aims to double the nameplate capacity of Bloom Lake to 15 Mtpa of high-grade iron ore concentrate.
"This is an important milestone for our Company as we finalize the funding required to complete our Phase II expansion project, which will enable us to capitalize on the rising global demand for our high-grade iron ore concentrate," commented David Cataford, CEO of Champion. "We aim to complete the Phase II expansion with the same diligence and efficiency we demonstrated when restarting the Bloom Lake Phase I project in 2018, which was executed on time and on budget. We are thankful for the support provided by our financial partners, positioning our Company to unlock Bloom Lake's additional potential."
QIO completed the Refinancing with the previously announced syndicated group, with the addition of Export Development Canada ("EDC"). The Credit Facility is provided by Societe Generale (Coordinating Bank, Joint Lead Arranger and Joint Bookrunner), with Toronto-Dominion Bank, Royal Bank of Canada and The Bank of Nova Scotia (all acting as Joint Lead Arrangers and Joint Bookrunners), with the inclusion of the Bank of China, Fédération des caisses Desjardins du Québec, Investissement Québec and EDC. The Credit Facility is available by way of a $350 million term loan (the "Term Facility") and a US$50 million revolving facility (the "Revolving Facility"). The Term Facility will mature five years from today and shall be repaid in equal quarterly installments of principal and accrued interest, starting on the first quarter following the completion of the Phase II construction.
The Revolving Facility will mature three years from today. The Credit Facility will bear interest at LIBOR plus 4.00% pre-completion, after which the Credit Facility will revert to the original interest rate, based on leverage ratios ranging between LIBOR plus 2.85% if the net debt to EBITDA ratio is lower or equal to 1.00x to LIBOR plus 3.75% if the net debt to EBITDA ratio is greater than 2.50x. The Credit Facility includes standard and customary finance terms and conditions, including with respect to fees, representations, warranties, covenants and conditions precedent to disbursements.
In addition to the Credit Facility, Champion received a credit approved commitment letter for US$75 million in equipment financing from Caterpillar Financial Services Limited (the "Equipment Financing"), subject to execution of definitive documentation, which is expected to occur in the first quarter of 2021.