Securities Law & Instruments

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications and National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions -- application for full revocation of failure-to-file cease trade order and cease to be reporting issuer applications -- issuer cease traded due to failure to file with the Commission interim financial statements, related management's discussion and analysis and related certifications -- issuer has applied for a full revocation of the cease trade order as at the effective time of the Recapitalization Plan under the Companies' Creditors Arrangement Act -- issuer has also applied to cease to be a reporting issuer in each jurisdiction where it is currently a reporting issuer -- a company created as part of the Recapitalization Plan that became a reporting issuer in each jurisdiction where the issuer has been a reporting issuer also applied to cease to be a reporting issuer in each jurisdiction where it is a reporting issuer -- full revocation granted as at the effective time of the Recapitalization Plan -- cease to be reporting issuer applications granted as at the effective time of the Recapitalization Plan

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(10)(a)(ii), 144.

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications.

National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (JURISDICTION) AND IN THE MATTER OF A REVOCATION OF A FAILURE-TO-FILE CEASE TRADE ORDER AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF BANRO CORPORATION AND IN THE MATTER OF BANRO CORPORATION LTD

Background

Banro Corporation (Issuer) is subject to a failure-to-file cease trade order (FFCTO) issued by the Ontario Securities Commission (Decision Maker) on November 20, 2017.

The Issuer has applied to the Decision Maker under National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions (NI 11-207) for an order (FFCTO Revocation Order) pursuant to Section 144 of the Securities Act (Ontario) (Legislation) revoking the FFCTO to take effect as at the Effective Time (as defined below).

The FFCTO Revocation Order is the order of the principal regulator and evidences the decision of the Decision Maker in the Jurisdiction.

The principal regulator in the Jurisdiction has also received an application (Cease to be a Reporting Issuer Application) from the Issuer and Banro Corporation Ltd (Newco and together with the Issuer, the Filers) for orders pursuant to s.1(10)(a)(ii) of the Legislation that each of the Issuer and Newco cease to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (Cease to be a Reporting Issuer Order) to take effect as at the Effective Time.

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application), the Decision Maker is the principal regulator for the Cease to be a Reporting Issuer Application and the Filers have provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied on in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador in respect of the Cease to be a Reporting Issuer Order.

Interpretation

Terms defined in National Instrument 14-101 Definitions, NP 11-206 Process for Cease to be a Reporting Issuer (NP 11-206) and NP 11-207 have the same meanings if used in this Order, unless otherwise defined.

Representations

This decision is based upon the following facts represented by the Filers:

1. The Issuer is a corporation existing under the Canada Business Corporations Act (CBCA) and its registered and principal office is in the Province of Ontario.

2. The authorized share capital of the Issuer consists of an unlimited number of common shares (Common Shares) and an unlimited number of preference shares issuable in series (Preferred Shares).

3. Immediately prior to the Effective Time, there were 109,857,390 issued and outstanding Common Shares and no issued and outstanding Preferred Shares. The Companies (as defined below) have been advised by Baiyin Nonferrous Group Company, Limited (Baiyin) and Gramercy Funds Management LLC (Gramercy), respectively, that as of December 22, 2017, being the date of the CCAA filing referred to in Representation 11, approximately 30.1% of the outstanding Common Shares were held by Baiyin or affiliates thereof within the direct or indirect control of Baiyin and related parties, and approximately 30% of the issued and outstanding Common Shares were held by Gramercy and related parties. Gramercy is formed under the laws of Delaware and the Baiyin entity which holds the Common Shares is formed under the laws of the British Virgin Islands.

4. Immediately prior to the Effective Time, the Issuer had outstanding U.S. $197.5 million principal amount of 10% Secured Notes due March 1, 2021 (Notes and the holders of such Notes the Noteholders). Immediately prior to the Effective Time, approximately 28.6% of the outstanding principal amount of the Notes were held by Baiyin and approximately 41.9% of the outstanding principal amount of the Notes were held by Gramercy. The Notes were held in "book entry only form" in the Canadian Depositary for Securities (CDS) and were not convertible into Common Shares.

5. The Notes were issued pursuant to a Plan of Arrangement (Plan) completed under the CBCA in April of 2017. As part of the Plan, some holders of U.S.$175,000,000 10% Senior Secured Notes due 2017 (2012 Notes) elected to exchange such 2012 Notes for Notes. According to the offering memorandum provided to investors in Canada with respect to the offering of 2012 Notes, the 2012 Notes that were issued in Canada were issued to accredited investors as such term is defined in National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106). The Notes were not, at the Effective Time, and had never been listed on any exchange in Canada or on a marketplace or any other facility for bringing together buyers and sellers of securities where trading is publicly reported in any other country. Immediately prior to the Effective Time, 32 holders had beneficial ownership or control or direction over the Notes.

6. In addition to the Common Shares, there were also outstanding, immediately prior to the Effective Time, warrants that entitled the holders thereof to acquire 1,250,000 Common Shares at a price of U.S.$2.275 per share for a period of 3 years, expiring February 26, 2019 (Warrants) and outstanding options to purchase Common Shares that were issued pursuant to the Issuer's stock option plan, all of which were "out of the money" (Options).

7. The Issuer had no securities issued and outstanding immediately prior to the Effective Time other than the Common Shares, the Warrants, the Options and the Notes.

8. The Common Shares were previously listed for trading on the Toronto Stock Exchange (TSX) and on the NYSE American stock exchange (NYSE American). The Common Shares were delisted from the TSX on January 22, 2018. The Common Shares were suspended from trading on the NYSE American on December 22, 2017 and subsequently delisted from the NYSE American.

9. Immediately prior to the Effective Time no securities of the Issuer were traded in Canada on a "marketplace" as defined in National Instrument 21-101 Marketplace Operation (NI 21-101).

10. The FFCTO was issued on November 20, 2017 due to the failure of the Issuer to file its: (i) interim financial statements for the period ended September 30, 2017; (ii) management's discussion and analysis relating to the interim financial statements for the period ended September 30, 2017; and (iii) certification of the foregoing filings as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.

CCAA Proceedings

11. On December 22, 2017, the Issuer and its Barbados-based subsidiaries (Companies) commenced restructuring proceedings under the Companies' Creditors Arrangement Act (CCAA) pursuant to which an initial order (Initial Order) was granted by the Ontario Superior Court of Justice (Commercial List) (Court). Pursuant to the Initial Order, the Issuer obtained protection from its creditors under the CCAA for an initial period expiring January 19, 2018 (which was extended several times).

12. Also, on December 22, 2017, the Issuer entered into a support agreement with Baiyin and Gramercy for the support of a recapitalization plan (Recapitalization Plan) to be implemented in the event that a superior transaction was not identified and implemented under a CCAA court-approved sales and investment solicitation process (SISP).

13. The Issuer also received commitments from Baiyin and Gramercy for up to US$20 million in interim financing to support its continued operations during the CCAA proceedings, which interim financing was approved by the Court in the Initial Order (Interim Facility).

14. FTI Consulting Canada Inc. was appointed as the monitor in the CCAA proceedings (Monitor). The Monitor is an officer of the Court, and its role is to oversee the business of the Issuer and be an impartial observer of the restructuring of the Issuer's business pursuant to the CCAA proceedings.

15. On January 18, 2018, the Issuer obtained approval from the Court to commence the SISP and the SISP was initiated on January 22, 2018. Pursuant to the SISP, interested parties were given an opportunity to acquire the Issuer: (i) for cash proceeds equal to the outstanding amount of the Interim Facility, the priority debt, 75% of the affected parity lien debt of the Issuer, and cash consideration sufficient to repay all amounts due under the stream agreements or treatment of the stream agreements on the same terms as the Recapitalization Plan, or (ii) on other terms superior to the Recapitalization Plan. The deadline for submission of non-binding letters of intent was established as 12:00 pm (Eastern Standard Time) on March 2, 2018, and the deadline for submission of binding bids was established as 12:00 pm (Eastern Standard Time) on April 9, 2018.

16. On February 1, 2018 the consolidated plan of compromise and reorganization reflecting the Recapitalization Plan, was accepted for filing by the Court. The Court also granted orders: (i) authorizing meetings of creditors of the Issuer to be held on March 9, 2018 to consider approval of the Recapitalization Plan (Meeting Order); and (ii) establishing a claims procedure to identify and determine certain claims that are to be affected by the Recapitalization Plan and to identify all claims against the directors and officers of the Companies.

17. Pursuant to the Meeting Order, the Court ordered the Issuer to cause CDS to publish a bulletin to its "Participant Holders" of Notes outlining the particulars of the creditors' meetings and the instructions for obtaining and recording (i) the voting instructions of beneficial Noteholders entitled to vote at the creditors' meetings (Voting Instructions) which included the principal amount of Notes held by each beneficial Noteholder, and (ii) registration instructions of beneficial Noteholders with respect to registration of the equity of the newly-formed company that is the result of the implementation of the Recapitalization Plan (i.e. Newco), in each case to be furnished via a "Voting Information and Election Form."

18. The Court further ordered that each CDS Participant Holder provide to Kingsdale Advisors (who was retained by the Issuer as the Solicitation Agent for the creditors' meetings) a master list of all Voting Instructions and registration elections received from beneficial Noteholders for whom it was the Participant Holder in advance of the creditors' meetings and ordered that the Solicitation Agent prepare and deliver a full tabulation of votes cast by beneficial Noteholders to the Monitor and the Scrutineer (of the meetings) for the creditors' meetings based on those master lists.

19. Following the creditors' meetings, further CDS bulletins were issued, advising beneficial Noteholders to provide registration instructions and advising beneficial Noteholders of the date for implementation of the Recapitalization Plan. The solicitation agent maintained an updated list of registration instructions received from former beneficial Noteholders. Information concerning the securityholders of Newco in this Order is based on that information.

20. On March 5, 2018 the Issuer announced that it intended to proceed with the Recapitalization Plan as no non-binding letters of intent had been received by the deadline on March 2, 2018 and, therefore, no superior transaction had been identified under the SISP.

21. On March 9, 2018, the Issuer announced that the Recapitalization Plan had been approved by the Issuer's creditors in accordance with the Meeting Order. The resolution approving the Recapitalization Plan was approved by 96.154% of affected secured creditors and 96.296% of affected unsecured creditors in number, who represented 91.112% and 91.114% respectively in value of the eligible voting claims who were present and voted in person or by proxy at the creditors' meetings.

22. On March 27, 2018, the Issuer received an order (Sanction Order) from the Court sanctioning the Recapitalization Plan. Based on the CCAA and the applicable case law, the Issuer was required to establish the following in order to obtain the Court's approval of the Recapitalization Plan:

(a) there has been strict compliance with all statutory requirements of the CCAA and adherence to all previous orders of the Court;

(b) nothing has been done or purported to be done that is not authorized by the CCAA; and

(c) the Recapitalization Plan is fair and reasonable.

23. Under the Recapitalization Plan which was approved by and attached to the Sanction Order, the Recapitalization Plan must be implemented by April 30, 2018 unless extended in accordance with the Recapitalization Plan. On April 27, 2018, the outside date for completion of the Recapitalization Plan was extended to May 4, 2018.

24. The Recapitalization Plan became effective on May 3, 2018 at 12:01am (Effective Time).

The CCAA Recapitalization Plan

25. Newco was incorporated as an exempted company with limited liability under the laws of the Cayman Islands.

26. Pursuant to the Recapitalization Plan:

(a) holders of equity interests in the Issuer (including the holders of Common Shares, Warrants and Options) had their interests extinguished for no consideration;

(b) the Issuer issued 100 Common Shares (Issuer Shares) to Banro Group (Barbados) Limited (BGB), a company organized under the laws of Barbados and a subsidiary of Newco, and thereby became a wholly-owned, indirect subsidiary of Newco;

(c) certain unsecured creditors of the Issuer had their claims compromised in exchange for their share of an unsecured cash pool;

(d) Class A Common Shares and Class B Common Shares of Newco (Newco Shares) were distributed to certain of the secured creditors of the Issuer, including the Noteholders, in settlement of their secured claims against the Issuer and its subsidiaries and such creditors hold all of the issued and outstanding shares of Newco;

(e) as consideration for consensual amendments to certain gold stream purchase agreements with first priority secured obligations, the parties to such agreements received warrants (Stream Warrants) to purchase additional equity of Newco;

(f) the Interim Facility was replaced by a term credit facility;

(g) as consideration for a credit facility (Exit Facility) that replaced the Interim Facility, the lenders under the Exit Facility received warrants to purchase additional equity of Newco (Exit Facility Warrants); and

(h) the amendments to certain gold stream purchase agreements as well as certain forward sales agreements continued in effect.

Newco

27. As a result of the implementation of the Recapitalization Plan, under the definition of "reporting issuer" in the securities legislation of certain of the Provinces of Canada, Newco became a reporting issuer as at the Effective Time and became subject to the continuous disclosure requirements under the securities legislation of those jurisdictions.

28. The authorized share capital of Newco consists of Class A Common Shares and Class B Common Shares. Immediately following the Effective Time, the issued and outstanding capital of Newco will consist of 17,278,163 Class A Common Shares, 6,097,143 Class B Common Shares, Stream Warrants that entitled the holders thereof to acquire 2,077,804 Newco Shares and Exit Facility Warrants that entitled the holders thereof to acquire 519,450 Newco Shares.

29. As at the Effective Time, Newco has 41 beneficial security holders worldwide.

30. The Newco Shares that were distributed pursuant to the Recapitalization Plan to persons or companies who are resident in Canada were distributed pursuant to the prospectus exemption in section 2.11 of NI 45-106 and will be subject to the resale restrictions in section 2.6 of National Instrument 45-102 Resale of Securities (NI 45-102). Newco did not distribute Stream Warrants or Exit Facility Warrants pursuant to the Recapitalization Plan to persons or companies who are resident in Canada.

31. Newco is not an OTC reporting issuer under Multilateral instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets (MI 51-105).

32. As at the Effective Time, Newco has less than 51 beneficial security holders worldwide and less than 15 beneficial security holders in each of the jurisdictions of Canada, except that there are 18 beneficial holders of Class B Shares of Newco in Ontario, those 18 holding approximately 5.3% of the total equity of Newco.

33. No securities of Newco are traded on a marketplace as defined in NI 21-101 or on a marketplace or any other facility for bringing together buyers and sellers of securities where trading is publicly reported in any other country. Newco does not currently intend to seek financing by way of a public offering of its securities in Canada or elsewhere.

34. Newco is applying to cease to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer.

35. As a consequence of Newco having more than 15 beneficial securityholders in Ontario, Newco is not eligible to use the "simplified procedure" under NP 11-206.

36. Newco is not in default of the Legislation or the rules and regulations made pursuant thereto.

The Issuer

37. The Issuer Shares that were distributed pursuant to the Recapitalization Plan were distributed pursuant to the prospectus exemption in section 2.11 of NI 45-106 and will be subject to the resale restrictions in section 2.6 of NI 45-102.

38. The Issuer is not an OTC reporting issuer under MI 51-105.

39. The Issuer has no outstanding securities other than 100 Common Shares that are held by one beneficial securityholder, BGB, a subsidiary of Newco.

40. No securities of the Issuer are traded on a marketplace as defined in NI 21-101 or on a marketplace or any other facility for bringing together buyers and sellers of securities where trading is publicly reported in any other country. The Issuer does not intend to seek financing by way of a public offering of its securities in Canada or elsewhere.

41. The Issuer is applying to cease to be a reporting issuer in all of the jurisdictions of Canada in which it is a reporting issuer

42. To implement the Recapitalization Plan, the Issuer effected certain trades as set out in Representation 26 in securities of the Issuer that are necessary for and in connection with the Recapitalization Plan as at the Effective Time. The purpose of the FFCTO Revocation Order is to permit these trades as at the Effective Time.

43. As a consequence of the Issuer being in default of securities legislation as evidenced by the FFCTO being in effect, the Issuer is not eligible to use the "simplified procedure" under NP 11-206.

44. In acting in compliance with the Meeting Order and the Sanction Order regarding the Recapitalization Plan, the Issuer may have engaged in certain acts in furtherance of trades in securities of the Issuer (Acts), which Acts were taken at the direction and with the approval of, and under the supervision of, the Court. Except for any Acts and the outstanding continuous disclosure filings the Issuer is not in default of any of the requirements of the FFCTO, the Legislation or the rules and regulations made pursuant thereto.

45. The Filers each acknowledge that, in granting the relief sought, the principal regulator is not expressing any opinion or approval as to the terms of the Recapitalization Plan.

46. The Recapitalization Plan cannot be completed without the Requested Relief because the Recapitalization Plan contemplates that, immediately following its completion: (i) the Issuer will not be a reporting issuer; (ii) Newco will not be a reporting issuer; and (iii) the Issuer will no longer be subject to the FFCTO.

Orders

The Decision Maker for the FFCTO Revocation Order is satisfied that the test set out in the Legislation for the Decision Maker to make the FFCTO Revocation Order is met.

The decision of the Decision Maker for the FFCTO Revocation Order under the Legislation is that the FFCTO Revocation Order is granted.

The Decision Maker for the Cease to be a Reporting Issuer Order is satisfied that the test set out in the Legislation for the Decision Maker to make the Cease to be a Reporting Issuer Order is met.

The decision of the Decision Maker for the Cease to be a Reporting Issuer Order under the Legislation is that the Cease to be a Reporting Issuer Order is granted.

Dated May 3, 2018.

As to the Cease to be a Reporting Issuer Order:

"Timothy Moseley"
Commissioner
Ontario Securities Commission
 
"Grant Vingoe"
Commissioner
Ontario Securities Commission

As to the FFCTO Revocation Order:

"Jo-Anne Matear"
Manager, Corporate Finance
Ontario Securities Commission