JOHANNESBURG (miningweekly.com) – Coal producer Forbes & Manhattan Coal has received permission from the TSX to rely on a financial hardship exemption in connection with the $4-million bridge loan portion of a larger, up to $25-million financing package to be provided to it by Resource Capital Funds (RCF).

Aside from the $4-million bridge loan facility, the financing agreement with RCF also included a $15-million convertible loan and the refinancing of an existing $6-million convertible loan facility that was completed on September 6, 2013.

Forbes Coal made an application to the TSX to allow it an exemption from the requirement to obtain shareholder approval for any, or all, of the financing aspects, on the basis of financial hardship, as defined in the TSX Company Manual.

As only the bridge loan facility would be handled in terms of the financial hardship exemption, Forbes Coal said it would call and hold a special meeting of shareholders to obtain shareholder approval for the convertible loan and the refinancing.

Common shares held by RCF would be excluded from the votes required to approve the convertible loan and the refinancing, as RCF is a party to the financing.

Meanwhile, in line with Forbes Coal’s request, the company would also be placed under remedial delisting review by the TSX, as was customary when companies requested relief in terms of the financial hardship exemption.

Forbes Coal explained that it had made the application to the TSX as the company was in serious financial difficulty.

“The application to rely on the financial hardship exemption was made upon the recommendation of a special committee of board members free from any interest in the financing and unrelated to the lender,” Forbes Coal said, explaining that the financing was designed to improve the company’s financial situation, and, based on the determination of the special committee, it was reasonable for the company given the circumstances.

In a statement released along with the company’s interim results for the three months ended November 2013, Forbes Coal stated that it had a significant need for equity capital and financing for operations and working capital.

“Because of continuing operating losses and a working capital deficiency, the company's continuance as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operation,” Forbes Coal said.