James Bay obtains financing for continuing litigation

Executive Summary

• James Bay Resources Ltd. entered into an investor agreement with 1001399076 Ontario Inc. ("1001") to fund its ongoing U.S. litigation claims against Wynn Resorts Ltd. and John Armstrong.
• Under the agreement, 1001 assumes all financing responsibilities for the litigation in exchange for 80% of any final settlement or judgment proceeds, while James Bay retains 20% of the award.
• To secure the agreement, James Bay assigned convertible debentures with an aggregate principal value of $452,000 to 1001, extinguishing the company's repayment obligation for these instruments.

Key Details

• Counterparty: 1001399076 Ontario Inc. ("1001").
• Litigation Targets: Wynn Resorts Ltd. (claims previously announced Oct. 3, 2024) and John Armstrong and his firm.
• Proceeds Split: 1001 receives 80% of any final, non-appealable settlement or judgment; James Bay retains 20%.
• Consideration/Debt Assignment: James Bay assigned existing convertible debentures with an aggregate principal value of $452,000 (held by 1001 shareholders) to 1001.
• Debt Extinguishment: James Bay has no further obligation to repay the assigned convertible debentures.
• Conversion Option: If no final award is received within two years of the agreement's effective date, holders of the debentures may convert the outstanding principal and accrued interest into units.
  • Conversion Price: $0.05 per unit.
  • Unit Composition: One common share and one common share purchase warrant.
  • Warrant Exercise Price: $0.05 per common share.
  • Warrant Term: Three years from the date of issuance.
• Strategic Rationale: The transaction transfers the cost and risk of litigation to 1001 while preserving a minority interest in any favorable outcome.
• Closing Conditions: Subject to customary closing conditions and required approvals.

Notable Quotes

• "The assignment of the convertible debentures and the related final award arrangement with 1001 are intended to strengthen the company's financial position by transferring the cost and risk of litigation, while preserving a share of any favourable outcome for James Bay and its shareholders."