North American Palladium prices up to C$35 million 7.5% five-year convertibles

By Rebecca Melvin

New York, April 9 - North American Palladium Ltd. was pricing up to C$35 million of 7.5% five-year convertible debentures at an initial conversion price of C$0.4629. The exact premium of the bonds wasn't yet known as the stock reference price was being based on the three-day volume weighted average price of shares on the Toronto Stock Exchange ending Wednesday, a syndicate source said.

The offering, which was downsized from an originally talked C$43 million, is coming concurrently with two-year warrants representing 25% of the common shares into which the debentures will be convertible.

The warrants offering, which was downsized from an initial 33.33% of the common shares into which the debentures are convertible, have a strike price of C$0.5786.

As previously reported, the deal was being sold on a best-efforts basis by Edgecrest Capital Corp., as lead bookrunner for a syndicate including Canaccord Genuity Corp. and Canaccord Genuity Inc.

Proceeds will be used for expenditures at the company's Lac des Iles mine, exploration, mining equipment and other general corporate purposes, including ordinary course repayments under the company's $60 million revolving operating credit facility and interest under a $170 million term loan.

The debentures are non-callable for 18 months and then are provisionally callable if shares exceed 150% of the volume weighted average price of shares for 10 trading days.

The warrants are also callable after 18 months if the VWAP of shares exceeds 150% of the warrant exercise price for 10 trading days.

There is takeover protection at 102% of par.

Shares issuable under the terms of the debentures and warrants are expected to be listed, subject to the approval of the Toronto Stock exchange and New York Stock Exchange.

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

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