Gold Reserve Announces Amendment to Tender Offer Notice of Right of Repurchase for 5.50% Senior Subordinated Convertible Note...
01 Juni 2012 - 11:03PM
Business Wire
Gold Reserve Inc. (TSX VENTURE:GRZ) (NYSE MKT:GRZ) (the
“Company”) announced today that it is notifying holders (“Holders”
or “Noteholders”) of its 5.50% Senior Subordinated Convertible
Notes due 2022 (the “Notes”) that the Company is modifying the
Notice of Right of Repurchase and its terms which were announced on
May 17, 2012. On May 17, 2012 the Company announced that it had
agreed with Holders of 87.8% of the notes (“Majority Noteholders”)
to restructure their Notes, subject to shareholder approval and
such consents as may be required under the Indenture, that will
allow the Company to restructure the Notes with a combination of
cash, common shares, modified terms for the remaining balance of
the Notes and a Contingent Value Right as described further below.
The Company is now offering the terms of that restructuring
arrangement to all remaining Noteholders such that the Holders of
the remaining 12.2% of the Notes now can elect to have their Notes
repurchased for 100% cash or accept the same arrangement as was
agreed with the Majority Noteholders.
Proposed Alternative Election of Noteholders
The Company has amended its Tender Offer Statement with respect
to the Right of Repurchase (“Amended Notice”) to include an
alternative election (the “Alternative Election”) that will be
available to all remaining Holders of Notes to reflect the terms of
a proposed restructuring of the Notes that has been agreed to with
its three largest Noteholders (the “Restructuring”). The Company
anticipates that, subject to shareholder approval, each Holder will
have the option to require the Company to purchase all or a portion
of their Notes for the following consideration for each $1,000 in
principal amount of Notes: (i) $200 in cash, (ii) 147.06 common
shares, (iii) $300 of amended notes which will remain outstanding
under the indenture governing the Notes, as amended, (iv) a
Contingent Value Right (“CVR”) entitling the holder to a percentage
of an award or settlement of the Company’s ICSID arbitration claim
against the Government of Venezuela with respect to the
expropriation of the Company’s Brisas Project and any proceeds from
the sale of its mining data, and (v) additional cash consideration
payable based on each Holder’s pro rata percentage of Notes
restructured pursuant to the Alternative Election in an aggregate
amount of up to $1 million (collectively, the “Alternative
Consideration”). The maximum CVR net of taxes and other deductions
that will be paid if all Holders elect this proposed alternative
transaction will not exceed 5.81% of an award or settlement and
sale of the mining data. The Restructuring will be subject to the
approval of the Company’s shareholders at its annual and special
meeting scheduled to be held on June 27, 2012.
In the event that the Restructuring is not approved by the
shareholders, in lieu of the transaction described above, the June
15, 2012 Noteholder put option (the “Put Option”) will be deferred
until September 14, 2012 for Holders, including the three largest
Noteholders, that have made the Alternative Election and the terms
of the Notes subject to the Alternative Election will be amended in
certain other respects as described in the Amended Notice.
Assuming that all Notes other than those held by the three
largest Holders are surrendered for repurchase, then together with
the maximum principal amount of $12.7 million of Notes that are to
be surrendered by the three largest Holders in connection with the
Put Option, the Company anticipates that it will utilize a maximum
of $40.6 million of cash and, depending on the election of the
Holders, may issue from 11.4 million to 13.2 million common shares
to repurchase the Notes in connection with the restructuring.
In order to surrender the Notes for repurchase pursuant to the
Put Option, Holders must deliver a Repurchase Notice to The Bank of
New York Mellon, as successor in interest to the Bank of New York,
the Trustee and paying agent for the Notes under the Indenture, no
later than 5:00 p.m., New York City time, on June 15, 2012. Holders
of Notes complying with the transmittal procedures of The
Depository Trust Company need not submit a physical Repurchase
Notice to The Bank of New York Mellon. Holders may withdraw any
Notes previously surrendered for repurchase pursuant to the Put
Option at any time no later than 5 p.m., EDT, on June 15, 2012.
Holders that wish to elect the Alternative Election must deliver
a letter of transmittal no later than 5:00 p.m., New York City
time, on June 29, 2012 pursuant to the instructions in the Amended
Notice.
Pursuant to the Indenture, the Notes are currently convertible
into 132.626 shares of the Company’s common stock per $1,000
principal amount of Notes, subject to adjustment under certain
circumstances.
The Company will make available to Holders, through The
Depository Trust Company, documents specifying the terms,
conditions and procedures for surrendering and withdrawing Notes
for repurchase. Holders are encouraged to read these documents
carefully before making any decision with respect to the surrender
of the Notes, because these documents contain important information
regarding the details of the Company’s obligation to repurchase the
Notes.
Annual and Special Shareholders Meeting
At the annual and special shareholders meeting scheduled to be
held on June 27, 2012, the Board of Directors and management of the
Company will recommend shareholders approve the Restructuring.
Members of the Board and management intend to vote all of the
Company’s shares held by them in favor of the Restructuring. In
connection with these transactions, members of the Board and
management have also agreed to a one time waiver of rights under
their Change of Control and Retention Units Agreements that would
contractually arise as a result of a party acquiring more than 25%
of the Company’s shares. Shareholders of record on May 21, 2012
will be receiving a Management Information Circular shortly that
will describe the Restructuring in more detail, as well as other
matters including an amendment and continuance of the Company’s
Shareholder Rights Plan.
Doug Belanger, President, stated: “This transaction will
minimize to the extent practicable shareholder dilution and
management and the Board of Directors recommend that shareholders
approve this transaction and will be voting their own shares in
favor of this transaction. This transaction is good for all
stakeholders in that it rationalizes the capital structure of the
Company, with greater certainty going forward, while dealing with
the refinancing of $102.5 million in convertible debt that can be
put to the Company on June 15, 2012.”
Holders of Notes are urged to read the Amended Notice, letters
of transmittal and related offer materials when they become
available because they contain important information. An amendment
to our Tender Offer Statement, which includes the offer materials,
is being filed with the Securities and Exchange Commission (“SEC”)
today. The Amended Notice, letters of transmittal and related
documents may be obtained free of charge at the SEC’s website,
www.sec.gov or by directing a request to the Company.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful.
Further information regarding the Company can be located at
www.goldreserveinc.com, www.sec.gov and www.sedar.com.
"Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release."
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