VANCOUVER, BC / ACCESSWIRE / March 4, 2016 / Prophecy Development Corp. ("Prophecy" or the "Company") (TSX:PCY, OTCQX:PRPCF, Frankfurt:1P2) announces that it has entered into an agreement to increase and amend the revolving credit facility agreement dated March 12, 2015, as amended (the "Credit Facility") with Linx Partners Ltd. ("Linx"), a company controlled by Mr. John Lee, Executive Chairman of Prophecy. The previous maximum principal amount of $1.5 million available to the Company under the Credit Facility will be increased with this amendment to $2.5 million.
The Credit Facility will fund Prophecy's ongoing business operations, bears an interest rate of 1.5% per month and is secured by a promissory note and general security agreement.
A 5% "drawdown" fee will be applicable to amounts advanced over and above the original and outstanding $1.5 million advanced, at the time of advance. Under the terms of the original Credit Facility, $1,089,280 was to become due and payable on March 12, 2016 and $403,351 on July 22, 2016. In consideration of a bonus of 20% of the total amounts advanced under the Credit Facility as of November 30, 2015 (the "Bonus"), Linx has agreed to postpone any repayments due under the Credit Facility until the earlier of October 1, 2016, or such time as the Company is in a reasonable financial position to repay all or a portion of the amounts owing, and remove the requirement for the Company to pay any 20% penalties as a result of any future failure to repay any amounts when due under the terms of the Credit Facility. Including the Bonus and "drawdown" fee, the Credit Facility carries an effective annual interest rate of 34.5%. The "drawdown" fee, Bonus and all interest payable will be accrued and added to the maximum principal amount as they are incurred.
The Company also announces that it has entered into settlement and release agreements (the "Settlement Agreements") with certain of its directors, officers, employees and consultants to cover debts owing to them as well as advanced pre-payments for services to be rendered in March. Pursuant to the terms of those Settlement Agreements, the Company has agreed, subject to approval from the Toronto Stock Exchange, to issue, in aggregate, up to 7,364,528 Common shares at a deemed price of $0.02 per Common share, to those directors, officers, employees and consultants through its Share-Based Compensation Plan which was approved by shareholders at the Company's annual general meeting of shareholders held on June 19, 2014. There were no shares allocated or issued to the Company's Executive Chairman.
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