Huldra Silver Inc. announces closing of $7 million financing and ccaa restructuring

TSX.V: HDA NEWS RELEASE

VANCOUVER, B.C., November 24, 2014 – Huldra Silver Inc. (“Huldra” or the “Company“) is pleased to announce that it has completed the first tranche of it previously announced secured convertible debenture financing and raised gross proceeds of $7,000,882 (the “First Tranche”). Concurrently with closing of the First Tranche (“Closing”), the Company implemented the previously announced restructuring of its debts and obligations (the “Restructuring”) under the Company’s Plan of Compromise and Arrangement dated August 8, 2014 (the “Plan”). The Plan was prepared by the Company in connection with its proceedings (the “CCAA Proceedings”) under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”), and was approved by the creditors of the Company on September 23, 2014 and sanctioned by the Supreme Court of British Columbia (the “Court”) on October 10, 2014. The monitor in the CCAA Proceedings filed the certificate of Plan implementation with the Court on November 21, 2014 (the “Plan Implementation Date”).

Private Placement of $7,000,882 of Secured Convertible Debentures

The Company has closed the First Tranche of its previously announced offering of secured convertible debentures (each, a “Debenture”) in the aggregate principal amount of up to $8 million and 5,000 non-transferrable common share purchase warrants (each, a “Warrant”) for every $1,000 of principal of the Debentures (collectively, the “Offering”). Pursuant to the First Tranche, the Company issued Debentures in the aggregate principal amount of $7,000,882 (the “Principal Amount”) and 35,004,410 Warrants. Each Warrant is exercisable into one common share of the Company (each, a “Share”) at an exercise price of $0.075 per Share in the first 12 months after Closing and at $0.10 per Share for 36 months thereafter, subject to adjustment.

The Debentures mature on November 21, 2017 (the “Maturity Date”) and bear interest (“Interest”) at a rate of 10% per annum, which Interest is payable as to 50% in cash and 50% by the issuance of Shares at a price per Share equal to the market price of the at the time of issuance. The Debentures are also convertible into Shares a price of $0.055 per Share at any time, and from time to time, until the Maturity Date. A maximum of 127,288,764 Shares will be issuable on conversion of the Principal Amount of the Debentures, subject to adjustment.

The holders of the Debentures have been granted a security interest over all of the property and assets of the Company and its wholly-owned subsidiary Huldra Properties Inc., and the enforcement of such security is subject to the terms and conditions of the Debentures and the Agency and Interlender Agreement among the holders of the Debentures.

The Debentures and the related security interest are subordinate to the Company’s debts and obligations owing to Waterton Global Value, L.P. (“Waterton”), until such time as all amounts owed to Waterton have been repaid by the Company. Upon repayment by the Company of all amounts owed to Waterton, the holders of the Debentures issued pursuant to the First Tranche will be granted an aggregate 2% net smelter returns royalty with respect to the Company’s Treasure Mountain mine, provided that each holder of the Debentures issued pursuant to the First Tranche shall only be entitled to their pro rata share of such royalty based on their individual investment pursuant to the First Tranche. This royalty will replace the 2% net smelter returns royalty with respect to the Company’s Treasure Mountain mine which is currently held by Waterton (the “Waterton Royalty”) and will be terminated upon repayment of all amounts owed to Waterton by the Company.

In connection with the closing of the First Tranche, the Company paid cash finder’s fees of $22,960 and issued finder’s warrants (each, a “Finder’s Warrants”) to purchase an aggregate of 471,455 Shares. The terms of the Finder’s Warrants are the same as the terms of the Warrants.

The Debenture, Warrants, Finder’s Warrants and Shares issuable on conversion thereof are subject to a statutory hold period expiring March 22, 2015.

Implementation of CCAA Restructuring Plan

The Company has implemented its CCAA Restructuring to settle approximately $21,655,060 of its debt in accordance with the terms and conditions of the Plan under the CCAA proceedings. Upon the Plan Implementation Date, the Plan is binding and effective on all persons affected by the Plan. On the Plan Implementation Date, a total of approximately $14,063,902 owed to unsecured creditors of the Company was settled by the payment of approximately $25,408 and the issuance of an aggregate of 275,150,815 Shares (collectively, the “Unsecured Creditor Settlement Shares”) at $0.05 per Share to the unsecured creditors. Under the Plan, the settlement of the approximate $7,591,158 owed to secured creditors is to be settled in two stages: (i) approximately $5,718,419 was settled on the Plan Implementation Date by the issuance of an aggregate of 114,368,382 Shares (collectively, the “Secured Creditor Settlement Shares” and together with the Unsecured Creditor Settlement Shares, the “Settlement Shares”) to the secured creditors, and (ii) the remaining approximate $1,872,739 (the “Secured Creditor Settlement Payment”) owed to secured creditors will be settled by the payment within 12 months of Closing of this amount plus interest at a rate of 3% per annum from the date of Closing (the “Closing Date”) until the date of repayment in full. Upon repayment in full of the amounts owing to the secured creditors under the Plan, the Monitor’s final certificate will be filed with the Court confirming that all distributions to the Company’s creditors have been made in accordance with the Plan which will be the final step to the Company exiting CCAA creditor protection. The Settlement Shares are subject to a statutory hold period expiring on March 22, 2015. The payment of the settlement amounts constitutes full, final and absolute settlement of all rights of the creditors affected by the Plan. The stay of proceedings granted to the Company pursuant to the CCAA Proceedings has now been terminated.

In connection with implementation of the Restructuring, the Company also entered into a settlement agreement with Waterton (the “Settlement Agreement”), whereby the Company and Waterton agreed to settle the aggregate of $12,367,460 owed to Waterton (the “Waterton Debt”) by the issuance of 108,992,918 Shares to Waterton (which are included in the Secured Creditor Settlement Shares issued on Closing) and the payment of $6,876,328 (the “Waterton Settlement Amount”), which includes $1,784,717 of the Secured Creditor Settlement Payment which represents Waterton’s potion of that amount, to Waterton as follows: (i) $2,876,328 on the Closing Date (paid); (ii) $1,500,000 within 6 months of the Closing Date; and (iii) $2,500,000 within 12 months of the Closing Date. The Company has agreed to pay interest to Waterton at a rate of 3% per annum on the portion of the Waterton Settlement Amount which remains outstanding after the Closing Date until such time as the full Waterton Settlement Amount and interest thereon has been repaid, with such interest to be paid on each payment of the Waterton Settlement Amount. Upon repayment in full of the Waterton Settlement Amount and interest thereon, the Waterton Royalty will be terminated and all of the security interests in the assets and property of Huldra and its subsidiaries will be discharged.

On Closing of the Transaction, there were a total of 417,313,777 Shares issued and outstanding which are held on an undiluted basis as follows: approximately 6.7% by the shareholders who held Shares prior to Closing; approximately 27.4% by the secured creditors of the Company under the CCAA proceedings; and approximately 65.9% by the unsecured creditors of the Company under the CCAA proceeding. On closing of the Restructuring, Waterton and Concept Capital Management Ltd. (“CCM”) both became control persons of the Company, holding approximately 26.1% and 23.1%, respectively, of the issued and outstanding Shares on an undiluted basis. On a fully-diluted basis, assuming conversion of the Debentures and interest thereon and of all of the outstanding warrants and options, Waterton and CCM will hold approximately 9.2% and 17%, respectively, of the issued and outstanding Shares on a fully diluted basis. The additional Shares held by CCM on a fully-diluted basis are attributable to additional Shares being issued to CCM on conversion of the principal amount of the $5,850,000 in Debentures issued to them pursuant to the First Tranche.

Appointment of New Director

The Company is also pleased to announce that Frank Hogel will join its Board of Directors effective immediately. Mr. Hogel’s international financing experience, expertise with Canadian resource companies, experience in the corporate finance and mining and mineral exploration industries, and ability to analyze expansion and acquisition opportunities are expected to add value to the Huldra team as the Company implements on its CCAA Restructuring pursuant to the Plan and move towards building its future. Mr. Hogel is an Asset Manager actively involved in the financial evaluation of companies and convertible debenture structuring, and sits on the advisory board of CCM. His background includes more than 13 years of direct experience in the mining industry, expertise as an international financier / investor and successful track record stock consultant and stock broker in London, England. Mr. Hogel holds a degree in Economics and International business and Management from the University of Nürtingen in Germany and a Finance Degree (DTV) as a tested finance and stock consultant.

Peter Espig, Chief Executive Officer, commented, “Closing of First Tranche financing is a significant milestone in helping the Company improve its financial stability that will allow it to focus on unlocking the value of its assets, which includes a new processing mill and tailings facility near Merritt, BC. During this difficult year the Huldra team has worked tenaciously and never stopped believing in the project. We are also very fortunate to have Frank Hogel join our team, as we move Huldra into a new chapter. His support is greatly appreciated and we look forward to working with him in the future.”

On behalf of the Board of Directors

“Peter Espig”

Peter Espig
CEO & Director
For additional information
Contact: (604) 647-0142

Disclaimer for Forward-Looking Information

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events including: (i) that Huldra will be able to make the outstanding payments to its secured creditors and exit CCAA creditor protection, (ii) that Huldra will be able to make the balance of the payments owed to Waterton under the Settlement Agreement, (iii) that the Company will be able to carry out its business plan as stated herein, (vi) that that the Company will be able to raise fund under subsequent tranches of the Offering, (vii) the enforcement and the priority of security interests in the assets and property of the Company and its subsidiaries, (viii) the projected capitalization of the Company on a fully-diluted basis, and (ix) the benefits of Mr. Hogel’s appointment as a director of the Company. No assurance can be given that any of the events anticipated by the forward-looking statements will occur as planned or at all, or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management’s current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause the Company’s actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) that Huldra is unable to meet its future financial obligations or that it will not be able to complete its Restructuring, (2) that Huldra will not be able to make the balance of the payments owed to Waterton, (3) that Huldra will be unable to recommence operations at its mine and mill for any reason whatsoever, (4) that Huldra will not be able to raise additional funds pursuant to the Offering, (5) that the priority or the enforcement of the security interests in the property and assets of the Company and its subsidiaries will not be as stated in this news release, (6) that the Company’s financial position upon exiting creditor protection may not be stronger than it currently is, and that the Company may not exist creditor protection at all, (7) a downturn in general economic conditions in North America and internationally, (8) volatility and fluctuation in the prices of silver, lead and zinc, (9) volatility and fluctuation in the price of the Company’s stock and stock of resource issuers generally, and (10) other factors beyond the Company’s control. Readers are cautioned that the foregoing list of factors is not exhaustive. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking information should circumstances or management’s estimates or opinions change.

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