Norton aims to reduce debt by 28% through redeeming some convertibles

By Devika Patel

Knoxville, Tenn., Sept. 27 - Norton Gold Fields Ltd. said it will redeem a portion of its convertible notes due in August 2011 and the remainder will be converted.

The company said this will reduce its debt by 28%, or A$38 million, to A$97 million.

Norton will use the A$25 million it holds in escrow to redeem A$23.8 million of the convertibles immediately at the August 2011 redemption value. It will also pay a 5% premium to the face value of the convertibles.

As a condition of this redemption, the noteholders will convert their remaining convertibles at a conversion price of A$0.25 per share for a total of 56.8 million shares. The conversion price is a 22% premium to the current share price, the company said in a press release.

The company estimated that the transaction will save it about A$18 million in redemption and interest payments.

"This agreement, together with the recent settlement of the Lehman hedge, provides Norton with greater surety going forward," managing director Andre Labuschagne said in the release. "We can now focus on key areas of hitting production and cost targets at our multiple mining operations around our central Paddington processing facility near Kalgoorlie and continue to manage debt down as cash becomes available."

"In this agreement, Norton has reached an attractive balance between redemption and conversion, minimizing dilution whilst maintaining a significant cash balance," chairman Mark Wheatley added in the release.

South Brisbane, Australia's Norton produces gold.

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