An agreement has been reached between Nova Gold Resources (TSE) and its banker, National Bank of Canada, that will allow the former to restructure a $1.9-million loan.
The loan was incurred by NovaGold subsidiary Murray Brook Resources to finance completion of the Murray Brook gold-silver mine in New Brunswick. Murray Brook had been paying off the loan with proceeds from the mine, but mine operations were discontinued in May 1992, owing to depletion of reserves.
The National Bank has postponed payment of the outstanding principal on the loan until May 31, 1996, and NovaGold has issued 10.8 million common shares as substitute security for the bank’s existing security. When permitted by securities law, the NovaGold shares will be sold by a registered dealer and the proceeds will be applied to reduce the outstanding principal on the loan.
If any of the loan remains outstanding on May 31, 1996, the bank will make a claim under a loan insurance program with the Atlantic Canada Opportunities Agency for 85% of the bank’s loss.
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