Detour Gold begins consent solicitation for 5.5% convertibles

By Toni Weeks

San Diego, May 31 - Detour Gold Corp. commenced a consent solicitation to amend the indenture governing the company's $250 million of 5.5% senior convertible notes due Nov. 30, 2017.

According to a news release, the company is soliciting consents for amendments that would provide the company with greater financial flexibility. Specifically, the amendments would permit Detour Gold to obtain an up to C$100 million secured revolving credit facility to be used for working capital and to expand the company's debt to include a broader range of instruments, including commercial letters of credit, and permit those instruments to be collateralized by assets other than cash.

The proposed amendments require the consent of holders of record as of 5 p.m. ET on June 5 representing two-thirds of the principal amount of the outstanding convertibles. If the amendments pass, the company will pay a consent fee of 50 basis points, equivalent to $5 per $1,000 principal amount of convertibles, to holders who consent to the amendments by the expiration date, 5 p.m. ET on June 26.

Detour Gold is also a party to a second trust indenture governing $175 million of 5.5% senior convertible notes due Nov. 30, 2017 and a third indenture governing $75 million of 5.5% class A senior convertible notes due Nov. 30, 2017. The company said that the registered holder of both of those note series has consented to proposed amendments that are identical to those in the consent solicitation, with these amendments becoming effective upon the successful completion of the consent solicitation.

Further information about the consent solicitation will be mailed to holders of the convertible notes on or about June 13.

The gold exploration and development company is based in Toronto.

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