But Tyhee is blaming Santa Fe Gold for that delay, saying it failed to provide the company with detailed information after an apparent shareholder filed a lawsuit to block the merger.
The termination of the deal comes less than two months after the two companies signed a definitive merger agreement that included a $3 million “bridge loan” to Santa Fe Gold.
Under the agreement, Tyhee was required to obtain financing of at least $20 million by March 15, otherwise Santa Fe could choose to terminate the deal, the company said.
“Because Tyhee failed to timely consummate a qualified financing, Santa Fe’s Independent Special Committee has determined that it is in the best interest of Santa Fe and its stockholders to terminate the merger agreement,” Santa Fe said in a news release. “As such, Santa Fe has provided Tyhee with notice of its election to terminate the merger agreement.”
The agreement also calls for Tyhee to pay Santa Fe a $300,000 “break fee” if the merger is called off because it didn’t secure financing in a timely manner, according to the news release.
Tyhee said Friday that it was pursuing financing in a timely manner until it learned earlier this month that a stockholder of Santa Fe had filed suit on behalf of himself and other shareholders.
Tony Cavanaugh filed suit March 4 in the 2nd Judicial District Court in Albuquerque, accusing Santa Fe’s five-member board of directors of breaching its fiduciary duties by pursuing the merger through an unfair process and for an unfair price.
At that point, Tyhee said it asked for an extension of the financing deadline until Santa Fe could provide more information on the potential impact of the suit, including the “timing of merger closure, potential fees that Tyhee would be required to pay on behalf of Santa Fe, and potential injunctions that may result,” the company said in a news release.
“Santa Fe has not responded to any of these requests by Tyhee to date,” the company said.
Now that the deal has been terminated, Santa Fe said it will resume talks with some private equity funds that previously had expressed interest in working with the company, as well as meet with several investment banks in its pursuit of a financial adviser.
Santa Fe Gold owns the state’s only commercial-scale gold and silver mining project in southern New Mexico. But the company suspended operations last November at its Summit mine in Grant County and its milling facility in Lordsburg because it lacked investment capital to bring the project up to full production.