St. Andrew arranges $124-million rights offering
2007-02-27 06:03 ET - News Release
Mr. Glenn Laing reports
ST ANDREW FILES PRELIMINARY RIGHTS OFFERING PROSPECTUS TO RAISE UP TO $124 MILLION
St. Andrew Goldfields Ltd. has filed a preliminary rights offering prospectus with the securities regulatory authorities in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, to raise gross proceeds of up to approximately $124-million.
Terms of the rights offering
St. Andrew intends to issue to holders of its outstanding common shares 1.9 rights for each common share held. Each one right will entitle eligible shareholders to subscribe for one unit at a subscription price of $1 per unit. Each unit will consist of one common share and one-half of one common share purchase warrant. Each whole warrant will be exercisable for 18 months for one common share at $1.25 per share. The record date for determining shareholders entitled to receive rights will be determined at the time of filing the final rights offering prospectus. The rights offering is subject to the approval of the Toronto Stock Exchange and the applicable securities regulatory authorities.
St. Andrew currently has approximately 65.3 million common shares outstanding. If fully subscribed, the rights offering will raise gross proceeds of approximately $124-million pursuant to which St. Andrew will issue approximately 124 million common shares and 62 million common share purchase warrants.
The offering size of $124-million through the issuance of 1.9 rights per share supersedes the terms set out in St. Andrew's news issued in Stockwatch dated Jan. 16, 2007, which press release announced an offering size of $110-million through the issuance of 1.7 rights per share.
Standby guarantors
Technifund Inc., a company controlled by the chairman of the board of directors of St. Andrew, and managed accounts of Trapeze Asset Management Inc. and of Trapeze Capital Corp., have agreed to act as standby guarantors with respect to, collectively, $110-million of the rights offering (Technifund as to $87-million and Trapeze as to $23-million) for a standby guarantee fee of 6 per cent. Technifund currently holds secured debentures of St. Andrew in the total principal amount of $74.3-million and Trapeze currently holds secured debentures of St. Andrew in the total principal amount of $23-million. The secured debentures have an 18-month term, bear interest at the rate of 10 per cent per year and $91-million in total thereof is subject to a 2-per-cent financing commitment fee of the principal amount.
Use of proceeds
Proceeds from the rights offering will be used to retire St. Andrew's outstanding 10-per-cent secured debentures, for capital expenditures at St. Andrew's Nixon Fork property and development and drilling programs at the Holloway-Holt gold mine, to pay the standby guarantee fee, the financing commitment fee and the expenses of the rights offering, and for working capital, potential acquisitions and general corporate purposes.
Shareholder rights plan
The board of directors of the company has approved the adoption of a takeover protection rights plan. Subject to certain exemptions, rights under the plan will become exercisable when a person, together with any parties related to it, acquires or announces its intention to acquire 20 per cent or more of the company's outstanding common shares without complying with the provisions of the plan or without approval of the board of directors of the company. Under such circumstances, each right, upon exercise, will permit the purchase of common shares of the Company at a substantial discount to the market price.
The takeover protection rights plan, once adopted, must be confirmed by shareholders within six months.
We seek Safe Harbor.
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