49 North seeks OK to exchange 9% convertibles for preferreds, common shares, new convertible

By Toni Weeks

San Luis Obispo, Calif., March 26 – 49 North Resources Inc. said it is seeking approval from holders of its 9% convertible subordinated debentures due June 29, 2017 to exchange the principal amount of the notes for a combination of common shares, first preferred series 1 shares and a new 2.5% senior secured convertible debenture.

According to a press release, the exchange will further secure the future of the company during the prolonged downturn for the junior resource capital market while offering the highest possible potential returns to both the existing debentureholders and shareholders.

Under the terms of the proposal, holders of the existing convertibles will receive, per C$100 principal amount of debentures plus any accrued interest, 150 common shares, 25 preferred shares and C$25 principal amount of the new 2.5% convertibles.

The new non-voting preferreds will pay 2.5% cash dividends annually and will be issued at a price of C$1.00 per preferred. They are convertible into common shares at a conversion price of C$0.50 per share. They are also redeemable by the company at par after three years.

The new 2.5% debenture will have a principal amount of up to C$5 million and a term of five years. The outstanding principal amount of the new debenture will be convertible into common shares at C$0.50 per share. The repayment of outstanding principal and interest will be secured by all present and acquired personal property of the company.

49 North needs approval from the holders of 66 2/3% of the principal amount of the debentures voted at a meeting, either in person or in proxy. More information will be sent to the debentureholders in April.

If the proposal is approved, the company expects that the total number of common shares issued will be 18,622,771, the total number of preferred shares issued will be 3,103,795, and an aggregate of C$3,103,795 principal amount of new debentures will be issued.

The company is a Saskatoon, Sask.-based oil and gas exploration, development and production company with a resource investment portfolio and strategic operations in financial, managerial and geological advisory services and merchant banking.

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