Gold Reserve Announces up to US$65 Million in Financing Transactions in Connection With a Potential Bid in Relation to the Sale of the Shares of PDV Holdings, Inc., Under the Delaware Proceedings

Rhea-AI Summary

Gold Reserve has announced it will raise up to USD 65 million through various financing transactions to potentially bid for the shares of PDV Holdings under Delaware proceedings. This includes a private placement of Class A common shares to raise up to USD 10 million at USD 3.50 per share, with an over-allotment option increasing proceeds to USD 15 million. Additionally, the company secured a borrowing facility with Monarch Alternative Capital for up to USD 50 million. The funds will support a potential bid for PDVH shares or be used for general corporate purposes. The transactions are subject to regulatory approvals.

Positive

• Potential to raise up to USD 65 million.
• Private placement of shares could bring in up to USD 15 million.
• Secured borrowing facility for up to USD 50 million.
• Funds can be used for acquisition or corporate purposes.
• Regulatory approval pending, indicating progress.

Negative

• Success of share offering and facility not guaranteed.
• Potential shareholder dilution from new shares.
• High-interest rates on borrowing facility if terms not met.
• Uncertainty surrounding the Potential Bid and Transaction.
• Regulatory approvals still required, creating uncertainty.

TORONTO--(BUSINESS WIRE)-- Gold Reserve Inc. (TSX.V: GRZ) (OTCQX: GDRZF) (“Gold Reserve” or the “Company”) announced today that it has entered into an agreement with Cantor Fitzgerald Canada Corporation (“CFCC”) to undertake a best efforts private placement of Class A common shares of the Company (the "Common Shares") for anticipated gross proceeds of up to US$10 million at a price per Common Share of US$3.50 (the “Share Offering”). The Share Offering is expected to be completed on a best efforts basis pursuant to a formal agency agreement to be entered into between the Company and CFCC, as lead agent and bookrunner (the “Agent”).

The number of Common Shares to be sold will be determined in the context of the market in conjunction with the marketing efforts and there can be no assurance as to completion of the Share Offering. The closing of the Share Offering is expected to occur on or about June 7, 2024 (the “Offering Closing Date”) and is subject to the completion of formal documentation and receipt of regulatory approvals, including the approval of the TSX Venture Exchange.

The Company has granted the Agent an over-allotment option exercisable, in whole or in part, in the sole discretion of the Agent, to arrange for the purchase of up to an additional 50% of the number of Common Shares sold in the Share Offering at any time up to two days prior to the Offering Closing Date, on the same terms and conditions as the Share Offering. If exercised in full, the Company would raise up to US$15 million in gross proceeds from the issuance of Common Shares.

The Common Shares will be offered on a private placement basis pursuant to applicable exemptions in each of the provinces of Canada under National Instrument 45-106 – Prospectus Exemptions and in the United States on a private placement basis pursuant to applicable exemptions from the registration requirements of the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) and applicable state securities laws, and in such other jurisdictions as may be permitted. The Common Shares issuable to Canadian subscribers in connection with the Share Offering will be subject to a statutory hold period in Canada which will run for four months from the Offering Closing Date of the Share Offering. Any Common Shares sold to investors outside of Canada will be sold pursuant to OSC Rule 72-503.

In connection with the Share Offering, the Agent will receive a commission equal to 6% of the gross proceeds from the sale of the Common Shares subject to certain exceptions at the Offering Closing Date.

The Company has also entered into a binding term sheet with Monarch Alternative Capital LP (“Monarch”) to obtain a borrowing facility (the “Facility”). The Facility allows the Company, in its sole discretion, to borrow up to US$50 million. The sole purpose of the Facility is to fund any cash deposits required by the Company with respect to a Potential Bid (as defined below) submitted pursuant to the Bidding Procedures (as defined below). The closing of the Facility is subject to entering into definitive documentation and it is expected to close on or before June 5, 2024. The Facility is secured solely by an assignment of up to US$75 million of the Company’s potential claim recovery against the parent of PDVH. Monarch has the right to redeem the amount drawn under the Facility upon the earlier of (a) the closing of a sale transaction under the Sale Process (as defined below), (b) the long stop date of any sale agreement pursuant to the Sales Process, (c) the date the Sales Process is terminated without a sale agreement, and (d) December 31, 2025. If on such date Monarch has not received the drawn amount, Monarch has the right to cause the Company to pay US$75 million plus interest calculated thereon at (i) the secured overnight financing rate plus 200 basis points through December 31, 2025, plus (ii) the secured overnight financing rate plus 800 basis points thereafter, by the issuance to Monarch of an 18 month term note. Further details will be provided once definitive documentation is entered into.

The Company is evaluating and considering engaging in a potential transaction (the “Potential Transaction”) in relation to the sale of the common shares of PDV Holdings, Inc. (“PDVH”), the indirect parent company of CITGO Petroleum Corp (the “Sale Process”). The Potential Transaction may include the Company submitting a bid (a “Potential Bid”), either solely or jointly with certain undetermined parties, pursuant to the sales and bidding procedures managed by the Special Master of the U.S. District Court for the District of Delaware (the “Bidding Procedures”). The Company has most recently discussed the Sales Process in its January 9, 2024 and July 28, 2023 press releases.

The net proceeds from the above-mentioned Share Offering and Facility, as well additional cash on hand, provide the Company with in excess of US$65 million to be used to assist in funding certain expenses in connection with the Potential Transaction, including the cash deposit required for a Potential Bid submitted pursuant to the Bidding Procedures; however, there can be no assurance that a Potential Bid will be made or that the Potential Transaction will be consummated and in such case, the net proceeds of the Share Offering may also be used for working capital and general corporate purposes.

“This transaction provides the Company with sufficient liquidity to potentially bid, either solely or jointly, to acquire the PDVH shares on June 11 in accordance with the requisite bidding procedures established by the Delaware Court and demonstrates we are taking proactive steps to protect the interests of our shareholders,” said Paul Rivett, Executive Vice-Chairman of Gold Reserve.

The securities referred to in this news release have not been and will not be registered under the U.S. Securities Act, or the securities laws of any state of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements. This news release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

On Behalf of the Board of Directors

Paul Rivett
Executive Vice-Chairman

NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

Cautionary Statement Regarding Forward-Looking statements

This release contains “forward-looking statements” within the meaning of applicable U.S. federal securities laws and “forward-looking information” within the meaning of applicable Canadian provincial and territorial securities laws and state Gold Reserve’s and its management’s intentions, hopes, beliefs, expectations or predictions for the future. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management at this time, are inherently subject to significant business, economic and competitive uncertainties and contingencies. They are frequently characterized by words such as "anticipates", "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed", "positioned" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements contained in this press release include, but are not limited to, statements relating to the Share Offering, the Facility, the Potential Transaction and the Potential Bid.

We caution that such forward-looking statements involve known and unknown risks, uncertainties and other risks that may cause the actual events, outcomes or results of Gold Reserve to be materially different from our estimated outcomes, results, performance, or achievements expressed or implied by those forward-looking statements, including but not limited to: failure to obtain any necessary regulatory approvals in connection with the Share Offering; the completion of the Share Offering and the closing thereof; the entering of definitive documentation (including the terms thereof) with respect to the Facility and the completion thereof; that the proceeds obtained under the Share Offering or the Facility will be less than expected; the failure of the Company to negotiate or enter into any agreements required for the Share Offering or the Facility; the failure of the Company to negotiate and/or submit a Potential Transaction, including as a result of failing to obtain sufficient equity and/or debt financing to fund the expenses in connection with any Potential Transaction; that the proceeds of any equity/debt financing are used for purposes other than expenses associated with the making of any Potential Transaction; that any Potential Bid submitted by the Company will not be selected as a “Successful Bid” under the Bidding Procedures, and if selected may not close due to the Sale Process not being completed, including as a result of the United States Office of Foreign Asset Control (“OFAC”) not granting an authorization in connection with any potential sale of PDVH shares and/or whether it changes its decision or guidance regarding the Sale Process; failure of the Company or any other party to obtain any required shareholders and/or regulatory approvals (including approvals of the TSX Venture Exchange) for, or satisfy other conditions to effect, any transaction resulting from a Potential Bid; that the Company forfeit any cash amount deposit made due to failing to complete a Potential Bid or otherwise; that the making of the Potential Transaction or any transaction resulting therefrom may involve unexpected costs, liabilities or delays; that, prior to or as a result of the completion of any transaction contemplated by a Potential Transaction, the business of the Company may experience significant disruptions due to transaction related uncertainty, industry conditions or other factor; the ability to enforce the writ of attachment granted to the Company; the timing set for various reports and/or other matters with respect to the Sale Process may not be met; the ability of the Company to otherwise participate in the Sale Process (and related costs associated therewith; the amount, if any, of proceeds associated with the Sale Process; the competing claims of certain creditors, the “Other Creditors” (as detailed in the applicable court documents filed with the Delaware Court) of Venezuela and the Company, including any interest on such creditors’ judgements and any priority afforded thereto; uncertainties with respect to possible settlements between Venezuela and other creditors and the impact of any such settlements on the amount of funds that may be available under the Sale Process; and the proceeds from the Sale Process may not be sufficient to satisfy the amounts outstanding under the Company’s September 2014 arbitral award and/or corresponding November 15, 2015 U.S. judgement in full and the ramifications of bankruptcy with respect to the Sale Process and/or the Company’s claims, including as a result of the priority of other claims. This list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. For a more detailed discussion of the risk factors affecting the Company’s business, see the Company’s Annual Information Form on Form 40-F and Management’s Discussion & Analysis for the year ended December 31, 2023 and other reports that have been filed on SEDAR+ and are available under the Company’s profile at www.sedarplus.ca and which have been filed on EDGAR and are available under the Company’s profile at www.sec.gov/edgar.

Investors are cautioned not to put undue reliance on forward-looking statements. All subsequent written and oral forward-looking statements attributable to Gold Reserve or persons acting on its behalf are expressly qualified in their entirety by this notice. Gold Reserve disclaims any intent or obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result of new information, future events or otherwise, subject to its disclosure obligations under applicable rules promulgated by the Securities and Exchange Commission and applicable Canadian provincial and territorial securities laws.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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Gold Reserve Inc. Contact



Jean Charles Potvin

999 W. Riverside Ave., Suite 401 Spokane, WA 99201 USA

Tel: (509) 623-1500

Fax: (509) 623-1634

Source: Gold Reserve Inc.

FAQ

What is the potential financing amount Gold Reserve aims to raise?

Gold Reserve aims to raise up to USD 65 million through various financing transactions.

What is the purpose of Gold Reserve's financing transactions?

The funds will support a potential bid for PDVH shares or be used for general corporate purposes.

How much could Gold Reserve raise through the private placement of shares?

Gold Reserve could raise up to USD 15 million through the private placement of shares.

What is the borrowing facility amount secured by Gold Reserve?

Gold Reserve has secured a borrowing facility for up to USD 50 million with Monarch Alternative Capital.

When is the closing date for the share offering?

The closing date for the share offering is expected to occur on or about June 7, 2024.

What is the interest rate for the borrowing facility if terms are not met?

The interest rate for the borrowed amount is the secured overnight financing rate plus 200 basis points through December 31, 2025, increasing to 800 basis points thereafter.

What approvals are needed for the financing transactions to proceed?

The transactions require regulatory approvals, including from the TSX Venture Exchange.