DLA Piper, Dentons, Blakes, BLG, Osler counsel in CCAA proceedings this week
Deal: Silvercorp to acquire Adventus, creating geographically diversified metals producer
Value: $200 million
McCarthy Tetrault and Bennett Jones are serving as legal counsel in the $200 million M&A between Silvercorp and an Ecuador-focused mining firm – a deal anticipated to create a new geographically diversified metals producer. Also in this week’s deals roundup are DLA Piper, Dentons, Blakes, BLG, and Osler assisting in two CCAA proceedings.
Vancouver-based Silvercorp Metals Inc. has agreed to acquire Adventus Mining Corporation, an Ecuador-focused copper-gold exploration and development company, in a deal valued at $200 million.
McCarthy Tétrault LLP and FBPH Abogados are acting as Canadian and Ecuador legal counsel, respectively, to Silvercorp. Bennett Jones LLP and AVL Abogados are acting as Canadian and Ecuador legal counsel, respectively, to Adventus.
The acquisition provided Silvercorp with enhanced asset, geographic, and metal diversification, significantly increasing its gold exposure and boosting its production profile through the advanced El Domo project in Ecuador. This project, along with the PEA stage Condor project, offered substantial growth and re-rating potential, reinforcing Silvercorp’s presence in a mining-friendly jurisdiction.
“This transaction will create a new globally diversified green metals producer,” said Silvercorp Chairman and CEO Rui Feng. “It presents the opportunity for us to leverage our technical expertise and strong balance sheet to unlock value for all shareholders by constructing the El Domo project. We look forward to working with the Government of Ecuador and local communities, as well as leveraging the existing Adventus and Curimining teams, to grow our business in Ecuador which will generate sustainable economic, social, and environmental value for all stakeholders.”
Adventus President, CEO and Director Christian Kargl-Simard said, “I believe that Silvercorp strongly shares our values, in addition to bringing financial strength and experience from global operations. Combining the companies positions us well to deliver on El Domo and our other projects in collaboration with the government, local communities, and all stakeholders.”
Upon deal completion, existing Silvercorp and Adventus shareholders will own approximately 81.6 percent and 18.4 percent, respectively, of Silvercorp shares outstanding on a fully-diluted in-the-money basis.
The deal is expected to close in the third quarter of 2024, subject to customary closing conditions.
The Teal Jones Group, a prominent forest products company based in Surrey, British Columbia, has sought protection under the Companies' Creditors Arrangement Act (CCAA).
The move for CCAA protection follows a series of financial challenges, including a decline in lumber prices, inflationary pressures, and rising interest rates. These factors contributed to reduced liquidity and led to the company defaulting on specific loan covenants with Wells Fargo in November 2023. Despite a forbearance period where Teal Jones had to achieve certain milestones, they failed to meet these requirements, leading to a lack of further accommodations from lenders.
In response, Teal Jones has initiated a Sales and Investor Solicitation Process (SISP) within the CCAA proceedings and is seeking recognition of these proceedings under Chapter 15 of the US Bankruptcy Code.
Legal advisories include DLA Piper representing Teal Jones, Dentons for the monitor PricewaterhouseCoopers LLP, Blakes for the Royal Bank of Canada, Bennett Jones for Wells Fargo and Export Development Canada (EDC), and BLG for Business Development Bank of Canada (BDC).
Ted Baker Canada Inc., along with its affiliates, obtained CCAA protection on April 24, 2024, amidst financial turmoil in their retail and e-commerce operations across Canada and the US. They operated 25 stores under the banners Ted Baker, Lucky Brand, and Brooks Brothers, employing about 280 staff, plus six retail concessions in HBC stores. Previously under Authentic Brands Group, the companies were sold to OSL Fashion Services early in 2023.
In August 2023, the entities acquired assets related to the Lucky Brand and Brooks Brothers brands, partially financed by a CIBC loan with a remaining balance of $43.5 million (US$31.6 million). Following these acquisitions, the companies faced significant challenges, including supply chain disruptions, tightened payment terms due to the insolvency of Ted Baker's UK operations, a transition to a new technology platform during peak sales season, and low overall sales.
The CCAA proceedings aimed to allow the companies to restructure under DIP financing from CIBC. They also sought recognition of these proceedings under Chapter 15 of the US Bankruptcy Code. A&M served as the monitor, with legal counsel provided by Osler for the companies, Bennett Jones for the monitor, Blakes for CIBC, and McCarthys for OSL.
