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UrtheCast (TSX:UR) announced that it has received a letter dated October 24, 2018 from its lenders that an Event of Default had occurred as a result of the recent resignation of its executive, Fabrizio Pirondini. As quoted in the press release: UrtheCast also announced that it has entered into a forbearance agreement (the “Forbearance Agreement”) …

UrtheCast (TSX:UR) announced that it has received a letter dated October 24, 2018 from its lenders that an Event of Default had occurred as a result of the recent resignation of its executive, Fabrizio Pirondini.

As quoted in the press release:

UrtheCast also announced that it has entered into a forbearance agreement (the “Forbearance Agreement”) dated October 25, 2018 with the Lenders pursuant to which the Lenders have agreed to refrain from taking any actions or seeking any remedies available to them under the terms of the Credit Agreement until November 23, 2018. Mr. Pirondini was identified as a key man under the Credit Agreement in May 2018, at a time when UrtheCast had interim leadership and was searching for a new chief executive officer.

UrtheCast has requested that the Lenders remove Mr. Pirondini as a key man under the Credit Agreement or otherwise waive any Event of Default. As no amount is outstanding under the Credit Agreement, the practical consequence of the Event of Default is that the Lenders are not obligated to fund under the Credit Agreement. In addition, as the first drawdown under the Credit Agreement has not yet occurred, any such termination also would result in the termination of the Lenders’ royalty entitlement and the cancellation of the Lenders’ warrants issued under the Credit Agreement. The Board of Directors of UrtheCast believes that Mr. Pirondini’s departure does not adversely impact its operational capabilities, and that his departure is facilitating a necessary restructuring of senior personnel and other optimization measures initiated by Donald F. Osborne, UrtheCast’s Chief Executive Officer.

UrtheCast is also continuing to work to meet all previously announced first drawdown conditions under the Credit Agreement, including the refinancing of the Sabadell loan and the receipt of confirmation from the Lenders that the minimum annual binding contractual commitments for UrtheDaily have been met. With more than $350 million in binding contractual commitments, management believes that UrtheCast’s business case, including for the UrtheDaily Constellation, has been validated, and intends to seek out alternative funding sources if the Lenders choose not to fund under the Credit Agreement. While discussions are ongoing with the Lenders, there can be no assurance that the Lenders will agree to continue to forbear, that the Event of Default will be cured, that the Lenders will otherwise be prepared to make advances under the Credit Agreement or that any alternative financing will be available on similar terms as the Credit Agreement or at all.

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