Vancouver-based Glamis Gold (TSE) has entered into an agreement with Toronto investment firm Loewen, Ondaatje, McCutcheon & Co. relating to US$8-million worth of convertible debentures.
Under the agreement, L.O.M. will acquire the debentures through the acquisition, by private placement, of 8,000 special warrants priced at US$1,000 each. The warrants will be exchangeable into Glamis debentures as soon as they are qualified for distribution to the public in qualifying jurisdictions.
At L.O.M.’s option, the size of the offering can be increased by an additional US$2 million.
The 5-year debenture will carry interest at 8%, and be convertible into common shares of Glamis at $3.35 per share. The unsecured debentures can be redeemed at par value two years from the issue date if the weighted average price of Glamis shares exceeds 135% of the conversion price. They are also redeemable at par three years from the issue date should the weighted average price be 125% of the conversion price.
A clause in the agreement, subject to regulatory approval, allows L.O.M. to terminate its obligations to Glamis if the price of gold falls below US$335 per oz. The yellow metal was trading recently at US$360.
Glamis says it will use the proceeds for working capital, mine development and possible acquisitions.
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