Forbes Coal closes remainder of US$25 million loan Facility and restructures senior debt - 14 News, WFIE, Evansville, Henderson, Owensboro

Forbes Coal closes remainder of US$25 million loan Facility and restructures senior debt

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SOURCE Forbes & Manhattan Coal Corp.

TORONTO, July 3, 2014 /CNW/ - Forbes & Manhattan Coal Corp. ("Forbes Coal" or the "Company") (TSX: FMC) (JSE: FMC) has closed the remainder of the previously announced secured convertible loan facility from Resource Capital Fund V L.P ("RCF"), in the aggregate principal amount of US$25 million (the "Facility"). The Facility consists of the US$4 million bridge loan advanced to the Company on February 5, 2014 (the "Bridge Loan"), a convertible loan in the principal amount of US$15 million to be advanced in a number of tranches (the "Convertible Loan"), and a refinancing of the existing US$6 million convertible loan facility completed between the Company and RCF on September 6, 2013 (the "Refinancing"). The Bridge Loan was converted into a loan on the same terms as the Convertible Loan upon closing of the Convertible Loan and the Refinancing.

In connection with the Convertible Loan, RCF will receive an establishment fee equal to 5% of the value of the Convertible Loan, which amount will be satisfied through the issuance of common shares in the capital of Forbes Coal ("Common Shares"), at a price of C$0.1446 per Common Share.

The Facility will bear interest at a rate of 12% per annum, payable monthly. Interest payment obligations under the Facility will be satisfied through the issuance of Common Shares valued at the 20-day volume-weighted average trading price of the Common Shares on the Toronto Stock Exchange prior to the relevant interest payment date, or may be satisfied in cash in certain circumstances. The Facility will mature on June 30, 2019.

As a condition of entering into the Facility, Forbes Coal also restructured its existing senior debt facilities with Investec Bank Limited ("Investec"). As partial consideration for the restructuring, the Company issued warrants to purchase 34,817,237 Common Shares to Investec (the "Warrants"), each of which are exercisable at a price of C$0.1446 per Common Share until July 3, 2019. Any proceeds received upon the exercise of the Warrants will be applied to the loan facilities with Investec as a mandatory prepayment. RCF will have the right to, at its option, purchase the Warrants from Investec.

The issuance of Common Shares to RCF upon conversion of the Facility, in satisfaction of interest obligations under the Convertible Loan and the Refinancing, and in satisfaction of the establishment fee payable in connection with the Convertible Loan, as well as the issuance of the Warrants to Investec, were approved by shareholders of the Company at an annual and special meeting held on June 27, 2014. Pursuant to the policies of the TSX and Multilateral Instrument 61-101 – Protection of Minority Shareholder in Special Transactions, RCF did not vote on the resolutions approving the issuances of the Common Shares to RCF under the Facility nor on the issuance of the Warrants to Investec.

The Company intends to use the proceeds of the Convertible Loan primarily for necessary capital investment, as well as to enact strategies for operational improvements. Additional details with respect to the Facility and the restructuring of the Investec loans may be found in the Company's amended management information circular dated May 27, 2014.

Forbes Coal is also pleased to announce the appointment of Ms. Lorraine Harrison to the position of Corporate Secretary of the Company in connection with the transfer of head office functions to South Africa undertaken as part of the Company's restructuring process. Ms. Harrison replaces Mr. Neil Said in the position. The Board of Directors of Forbes Coal is thankful to Mr. Said for his services to the Company and wishes him success in his future endeavours.

About Forbes Coal

Forbes Coal is a growing coal producer in southern Africa. It holds a majority interest in two operating mines through its 100% interest in Forbes Coal (Pty) Ltd., a South African company which has a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju"). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine in South Africa. Forbes Coal has an experienced coal-focused management team.

Cautionary Notes:

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the use of proceeds from the Facility, and future financial or operating performance of Forbes Coal and its projects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Forbes Coal to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although Forbes Coal has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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