C$34 million of loan to fund redemption of 11% secured notes
By Jennifer Chiou
New York, Aug. 23 - MagIndustries Corp. announced that it entered into an agreement with controlling shareholder Evergreen Resources Holdings (BVI) Ltd. for a C$50 million term loan, which will bear interest at 10.5% per year.
Interest will be calculated daily and compounded monthly.
According to a news release, about C$34 million of the loan will be used to fund the redemption of the company's 11% secured notes, with the remainder to be used to fund ongoing operations.
MagIndustries said that it will seek approval of shareholders outside of Evergreen at a special meeting. The transaction also requires regulatory approval.
At the option of Evergreen, the loan will be convertible, in whole or in part, into MagIndustries shares at a conversion price equal to the volume-weighted average trading price of the stock for the five trading days immediately prior to date of the loan, less a discount of 20%.
If shareholders approve this conversion feature, the loan will become interest free. And unless they authorize the conversion feature, the loan will mature on Dec. 28, 2011.
If holders authorize the conversion feature, the maturity date may be extended to an agreed date to be no later than the first anniversary of the loan.
In the scenario that the loan is fully advanced and Evergreen were to exercise the conversion feature in full, its stake in the company would increase to 84% from 77%, assuming an average trading price of C$0.215 per share.
In other news, the company's board has appointed Longbo Chen as co-chief executive officer, Ren Zhao as co-chief financial officer and Qingsheng Wang as chief engineer.
MagIndustries develops potash assets in the Republic of Congo and is based in Toronto.
| Issuer: | MagIndustries Corp.
|
| Issue: | Term loan
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| Amount: | C$50 million
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| Maturity: | Dec. 28, 2011, unless shareholders approve conversion feature, in which case loan may be extended to up to one year after issue
|
| Coupon: | 10.5%, unless conversion feature is approved, in which case 0%
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| Conversion price: | Equal to the volume-weighted average trading price of the stock for the five trading days immediately prior to date of the loan, less a discount of 20%, if conversion feature is approved
|
| Agent: | Non-brokered
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| Investor: | Evergreen Resources Holdings (BVI) Ltd.
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| Announcement date: | Aug. 23
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| Stock symbol: | TSX Venture: MAA
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| Stock price: | C$0.22 at close Aug. 22
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| Market capitalization: | C$100.49 million
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