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EXHIBIT 99.1
NEWS RELEASE
SUNSHINE MINING AND REFINING COMPANY
FOR IMMEDIATE RELEASE CONTACT: WILLIAM W. DAVIS
(214) 265-1377
SUNSHINE COMMENCES REORGANIZATION UNDER CHAPTER 11
BOISE, IDAHO, August 23, 2000 - Sunshine Mining and Refining Company
announced today that as part of an overall financial restructuring the Company
and three of its subsidiaries commenced reorganization cases under Chapter 11 of
the United States Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware.
The Company and its affiliates have prepared a proposed plan of
reorganization cosponsored by four of its major bondholders holding more than
70% of the Company's outstanding indebtedness. The joint filing underscores the
Company's goal of completing its reorganization and emerging from Chapter 11 as
quickly as possible.
The Company announced that it has arranged $5 million of debtor in
possession (DIP) financing from affiliates of the major bondholders cosponsoring
the reorganization, and has a commitment for $5 million of long term financing
after the Company emerges from bankruptcy, expected by year-end. The DIP
financing will be secured by substantially all the assets of the Company.
The Company expects to continue business as usual and will be filing
motions with the court seeking approval of the continuation of all Company
compensation and benefit plans, and payment of funds due to suppliers of
essential goods and services, and otherwise conduct business as usual.
The restructuring was necessitated by the Company's operating losses
and inability to refinance its outstanding obligations in the severely depressed
silver market which has continued for the past 12 years. The Company and its
major creditors recognized that the Company's silver assets are world class, and
that with a restructured debt-free balance sheet the ability of the Company to
put the Pirquitas Mine into production will be greatly enhanced.
-more-
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Under the plan as proposed all equity in the Company will be canceled;
however, the cosponsoring bondholders have agreed to cede approximately 4% of
the new equity to existing shareholders. In addition, approximately 6% of the
new equity is being reserved for other unsecured creditors, most of which is
ceded to the other creditors by the cosponsoring bondholders. The cosponsoring
bondholders will retain approximately 90% of the new equity to be issued under
the plan, and will name a majority of the directors of the reorganized company.
In addition, the cosponsoring bondholders will have an option to acquire the
Company's subsidiary, Sunshine Argentina, which owns the Pirquitas Mine in
Argentina. Such option may be exercised upon the occurrence of certain adverse
events to the Company or its subsidiaries.
The Company previously issued 8.3 million warrants to purchase common
stock of the Company to the holders of its 8% Senior Exchangeable Notes and its
10% Senior Convertible Notes for extensions of maturity and for agreements to
exchange debt for equity in the reorganization. The warrants represent the right
to acquire one new share of the Company's common stock at its par value, and
have a cashless exercise feature.
In a letter to employees advising of the filing, John Simko, Chairman
and Chief Executive Officer, and William Davis, Executive Vice President and
Chief Financial Officer, told employees to take pride in their accomplishments
in a very difficult market.
In the letter, Simko and Davis pointed to deteriorating market
conditions for precious metals mining in general as contributing to the
difficulty of restructuring the debt. They pointed out that in 1996, on the
basis of a few drill holes in Pirquitas, the Company was able to raise $30
million to further explore the property. In the current market, with a completed
feasibility study demonstrating its excellent economics, the Company could not
access the money to refinance the debt.
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Sunshine Mining news releases and information can be accessed on the
Internet at: www.sunshinemining.com.
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