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Hecla Mining offers stock for convertible preferreds
New York, June 13 - Hecla Mining Co. announced a tender offer for its series B cumulative convertible preferred stock.
The Coeur D'Alene, Ida. silver and gold miner is offering seven shares of its common stock in exchange for the convertibles.
Based on the June 12 closing stock price of $29.54, the offer is worth $29.54 to holders of the convertible preferreds, Hecla said.
That is a 35% premium over the $21.95 closing price of the preferreds on June 12.
If holders exercise the regular conversion right on the preferreds, they would receive 3.2154 shares.
Hecla noted that the tender is at a discount to the $50 face value of the preferreds but added that the offer is at a premium "to the low price they have traded at in the past year."
If all holders of the preferreds accept the offer, they would hold about 17.5% of Hecla's stock, about the same percentage as when the preferreds were issued in 1993, the company said.
The offer will run for 20 business days from the time the final offer document is mailed to preferred shareholders, expected within the next few days.
"We believe acceptance of this offer will bring value to common shareholders by removing the dividend associated with the preferred stock, which is currently a total of $8 million annually," said Hecla chairman and chief executive officer Arthur Brown in a news release.
"It will benefit preferred shareholders by offering them a premium to the market value of their preferred stock and give them the opportunity to participate in further upside value through the common stock."
Hecla also said its directors decided not to resume payment of preferred dividends.
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