North American Palladium updates terms, size of planned C$75 million convertibles in two tranches

By Rebecca Melvin

New York, Jan. 29 - North American Palladium Ltd. updated the terms of its previously announced offering of securities in two tranches, including an upsized C$32 million of five-year convertibles plus warrants. Tranche one will yield 7.5% with an initial conversion premium of about 11%, according to a news release.

Tranche one, which was upsized from an initially talked C$30 million, will be initially convertible at a share price of C$0.724. The warrants may be exercised subject to shareholder approval at C$0.869, which boosts the conversion premium to about 34% if referencing the warrant strike price.

Tranche one was expected to close on Thursday, but the warrants, which were added since the deal was initially talked, are subject to shareholder approval, which will be sought at a March 18 meeting.

Tranche two of 7.5% five-year convertibles is now expected to be for up to C$43 million, from a previously anticipated C$20 million to C$45 million deal size. Both the tranche two convertibles and warrants require shareholder approval on March 18.

The securities are being registered in the United States and also offered in Canada under a short-form base shelf prospectus. The securitites are being sold via Edgecrest Capital Corp. as lead placement agent and sole bookrunner for a syndicate of underwriters.

The company has a non-binding commitment from Crede CG III, Ltd., a wholly owned subsidiary of U.S.-based Crede Capital Group LLC, for the purchase of C$40 million of the securities, including C$20 million from each tranche.

Proceeds from the offering are expected to be used for general corporate purposes.

The company believes the proceeds of the proposed offering would be sufficient to fund the company's activities for the next 12 months, assuming both tranches are completed for proceeds of not less than C$70 million.

But if the financing is not completed in a timely manner, or alternative financing is unavailable, the company may be forced "to pursue strategic alternatives, which may include, among other things, a recapitalization of its debt," the company said in its release.

Toronto-based North American Palladium is a platinum group metals exploration company.

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