Northgate greenshoe exercised, lifting convertibles to $170 million

By Angela McDaniels

Tacoma, Wash., Oct. 12 - Northgate Minerals Corp. said the underwriters of its recent offering of six-year convertibles exercised their over-allotment option in full, increasing the size of the deal to $170 million.

The original $150 million of convertibles priced on Sept. 29 at par to yield 3.5% with an initial conversion premium of 30%. The conversion price is $4.08.

UBS Securities LLC was the bookrunner, with an underwriting syndicate that included Canaccord Genuity Corp, CIBC, Mackie Research Capital Corp., Cormark Securities Inc., Credit Suisse Securities (Canada) Inc., Macquarie Capital Markets Canada Ltd., Scotia Capital Inc. and TD Securities Inc.

The greenshoe is expected to settle Friday.

Northgate may, in lieu of delivery of shares upon conversion, choose to pay cash or a combination of cash and shares.

Proceeds will be used to finance a portion of the pre-production development costs of the company's Young-Davidson gold mine near Matachewan, Ont.

"Our intention is to settle the notes by delivery of cash, and with production at Young-Davidson scheduled to commence in 2012, we fully expect the mine to generate more than enough free cash flow to repay the convertible notes prior to their maturity in 2016, such that there will be no need to issue shares upon conversion," president and chief executive officer Ken Stowe said in a company news release.

Northgate Minerals is a Vancouver, B.C.-based gold and copper producer.

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