FEAM - 5E Advanced Materials Signs Standstill Agreement with Lender | Benzinga
HESPERIA, Calif., Nov. 09, 2023 (GLOBE NEWSWIRE) -- 5E Advanced Materials, Inc. (NASDAQ:FEAM) (ASX: 5EA) ("5E" or the "Company"), a boron and lithium company with U.S. government Critical Infrastructure designation for its 5E Boron Americas (Fort Cady) Complex, today announced that it has taken proactive steps in advancing discussions with its lender and several parties to achieve a funding solution to position for next phase of 5E operations. To facilitate this, Company has entered a standstill agreement.
In August 2022, 5E secured a $60 million private placement of senior secured notes convertible into common stock of the Company from U.S. based institutional investment manager, Bluescape Energy Partners. Under the terms of the private placement, 5E was to maintain a minimum cash balance of $10 million ("Cash Covenant"). Today, 5E announced its fiscal first quarter 2024 financial results and a cash balance of $11.8 million. With respect to its ongoing financing and commercial initiatives, the Company required a time extension to achieve an appropriate funding solution.
As part of its plan to restructure its convertible note and strengthen its balance sheet, the Company has entered into a standstill agreement with BEP Special Situations IV, LLC ("Lender"), its primary lender and the holder of the Company's senior secured convertible notes.
The standstill agreement will provide 5E with a time extension to advance discussions with several parties to achieve a successful funding resolution for its next phase of growth as it works judiciously to finalize its permit obligations. Under the standstill agreement, the agreement allows the Company to go below its current cash covenant until December 1, 2023.
The Company is committed to protecting the interests of its stakeholders and is working diligently to negotiate and deliver a capital structure to better position the Company to commence operations. In connection with these efforts, the Company has retained Province to advise in achieving a successful restructure of its debt. Province has extensive experience and a proven track record of advising companies and boards through restructuring of debt instruments.
"A successful restructure of our convertible notes, combined with an approval from the EPA certifying compliance with all permit conditions ...