By Sheri Kasprzak
New York, March 3 - North American Palladium Ltd. said it is heading to the PIPE market with a $58.5 million private placement of convertible notes.
The 6.5% notes are convertible into common shares at a 13% premium to the market price at closing. The deal is expected to wrap on March 15.
The notes will be redeemed over an 18-month period beginning one year after issuance. The notes will be redeemed at par plus interest in nine bi-monthly payments.
At closing, the investors, the company's major shareholder Kaiser Francis Oil Co. and another institutional investor, will receive warrants equal to 50% of the shares issuable upon conversion. The shares are exercisable over four years at a price equal to 125% of the then-applicable market price.
Kaiser and the other investor agreed to buy $35 million of the notes at closing and Kaiser will have the right to buy another $10 million before Dec. 31. If Kaiser does not exercise its right to purchase the additional $10 million, other investor may purchase the balance.
Also, North American has the right to sell Kaiser $13.5 million in additional notes before June 30 to repay an outstanding loan to Kaiser.
Proceeds from the placement will be used to complete underground development at the company's Lac des Iles mine and to advance work at the Arctic platinum project to earn a 50% interest in the Gold Fields Ltd. properties. The remainder will be used for general corporate purposes.
Toronto-based North American is a platinum group metals exploration company.
| Issuer: | North American Palladium Ltd.
|
| Issue: | Convertible notes
|
| Amount: | $58.5 million (maximum)
|
| Maturity: | Redeemable over 18 months beginning one year after issuance
|
| Coupon: | 6.5%
|
| Price: | Par
|
| Yield: | 6.5%
|
| Conversion price: | 13% premium to the market price at closing
|
| Call: | Redeemable at par plus interest a year after issuance
|
| Warrants: | Equal to 50% of the shares issuable upon conversion
|
| Warrant expiration: | Four years
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| Warrant strike price: | 125% of the then-applicable market price
|
| Investors: | Kaiser Francis Oil Co., another institution
|
| Pricing date: | March 3
|
| Settlement date: | March 15
|
| Stock symbol: | Amex: PAL
|
| Stock price: | $10.78 at close March 2
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