UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(Rule 13e-4)
(Amendment No. 1)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR
13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
GOLD RESERVE INC.
(Name of Subject Company
(Issuer))
GOLD RESERVE INC.
(Name of Filing Persons
(Offeror))
5.50% Senior Subordinated Convertible
Notes due 2022
(Title of Class of
Securities)
38068N AB4
(CUSIP Number of
Class of Securities)
Rockne J. Timm
Chief Executive Officer
Gold Reserve Inc.
926 West Sprague Ave., Suite 200
Spokane, Washington 99201
(509) 623-1500
(Name, Address and Telephone Number of
Person Authorized
to Receive Notices and Communications on
Behalf of Filing Persons)
Copy to:
Albert G. McGrath, Jr.
Baker & McKenzie LLP
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
Tel. (214) 978-3000
Fax. (214) 978-3099
CALCULATION OF FILING FEE
Transaction Valuation*
|
|
Amount of Filing Fee**
|
$
102,347,000.00
|
|
$
11,728.97
|
* Calculated solely for
purposes of determining the filing fee. The repurchase price of the 5.50%
Senior Subordinated Convertible Notes due 2022, is $1,000 per $1,000 principal
amount outstanding.
** The amount of the filing
fee was calculated in accordance with Rule 0-11 of the Securities Exchange
Act of 1934, as amended, and equals $114.60 for each $1,000,000 of the value of
the transaction.
o
Check the box if any part of the fee is
offset as provided by Rule 0-11(a)(2) and identify the filing with
which the offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the Form or Schedule and the
date of its filing.
Amount Previously Paid:
|
|
Not applicable.
|
|
Filing Party:
|
|
Not applicable.
|
Form or Registration No.:
|
|
Not applicable.
|
|
Date Filed:
|
|
Not applicable.
|
o
Check the box
if the filing relates solely to preliminary communications made before the
commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to
which this statement relates:
o
third-party
tender offer subject to Rule 14d-1
|
o
going-private
transaction subject to Rule 13e-3
|
x
issuer tender
offer subject to Rule 13e-4
|
o
amendment to
Schedule 13D under Rule 13d-2
|
Check the following box if the filing is a final amendment
reporting the results of the tender offer.
o
INTRODUCTORY
STATEMENT
This Amendment No. 1 to the Schedule TO
amends and supplements the Schedule TO originally filed by Gold Reserve Inc., a
company incorporated under the laws of Yukon, Canada (“GR” or the “Company” or
“We”) with the U.S. Securities and Exchange Commission (“SEC”) on May 17, 2012,
relating to the Notice of Right of Repurchase given to each holder (“Holder”)
of the Company’s 5.50% Senior Subordinated Convertible Notes due 2022 issued by
the Company on May 18, 2007 (the “Notes”).
As required by the Indenture (the “Indenture”),
dated May 18, 2007, by and among the Company and The Bank of New York Mellon,
as successor in interest to The Bank of New York, as Trustee (“Trustee”) and
the Co-Trustee named therein, the Tender Offer Statement on Schedule TO-I (“Schedule
TO”) was filed by GR and relates to the right of each Holder, to sell, and the
obligation of GR to purchase, upon the terms and subject to the conditions set
forth in the Indenture, the Notes, the Company Repurchase Notice to Holders of
its Notes, dated May 16, 2012 (the “Company Repurchase Notice”), as amended by
the Amended Company Repurchase Notice and Notice of Offer for Alternative
Election (“Amended Notice”) and filed as Exhibit (a)(1)(A), and the
related offer materials filed as Exhibits (a)(1)(B) to (d)(16) to
this Schedule TO, as amended (the Company Repurchase Notice, as amended by the
Amended Notice and the related offer materials, as amended or supplemented from
time to time, described in such materials as the “Put Option” and the “Offer
for Alternative Election”).
The Put Option will expire at 5:00 p.m.,
New York City time, on June 15, 2012. This Schedule TO is intended to
satisfy the disclosure requirements of Rule 13e-4(c)(2) under the
Securities Exchange Act of 1934, as amended.
This Amendment No. 1 is intended to offer Holders the
opportunity to participate in a restructuring of the Company’s Notes. Holders
of approximately 87.8% of the outstanding Notes (the “Large Noteholders”) have
agreed to the terms of a proposed restructuring (the “Proposed Restructuring”)
of the Notes pursuant to the Subordinated Note Restructuring Agreement dated
May 25, 2012, among the Company and the Large Noteholders. The Holders of the
remaining 12.2% of the Notes are being offered the opportunity to participate
in the Proposed Restructuring upon the same terms as agreed by the Company and
the Large Noteholders. This offer does not modify or supersede the Put Option.
The Offer for Alternative Election will expire at 5:00 p.m., New York City
time, on June 29, 2012.
Following the expiration of the Put Option and the
Offer for Alternative Election, the Company intends to redeem all Notes that
have not been repurchased pursuant to the Put Option or restructured pursuant
to the Proposed Restructuring as soon as practicable, subject to applicable
legal requirements and compliance with the terms of Indenture.
All information in the Amended Notice,
including all schedules and annexes thereto, which were previously filed with
the Schedule TO, is hereby expressly incorporated by reference in this
Amendment No. 1 in response to all items required in the Schedule TO, except
that such information is hereby amended and restated to the extent specifically
provided for herein. All capitalized terms used in this Amendment No. 1 and not
otherwise defined have the respective meanings ascribed to them in the Amended Notice,
as amended or supplemented.
Item 1. Summary Term Sheet.
The information set forth under caption entitled
“Summary” in the Amended Notice is incorporated herein by reference.
Item 2. Subject Company Information.
(a) The name of the issuer is Gold
Reserve Inc., and the address of its principal executive office is 926 West
Sprague Avenue, Suite 200, Spokane, Washington 99201, USA. The telephone number
of its principal executive office is 509-623-1500.
(b) The subject securities are the Notes, the
Modified Notes (described in the Amended Notice), the shares of the Company’s
common stock (“Common Stock” or “Common Shares”) and contingent value rights
(described in the Amended Notice). As of the date hereof, there are $102,347,000.00
aggregate principal amount of the Notes outstanding.
(c) The Notes are not listed on any national or
regional securities exchange or quoted on any automated quotation system. Market
quotations for the Notes are available. To the Company’s knowledge, the Notes are
traded infrequently in transactions arranged through brokers. The Common Stock
into which the Notes are convertible trades on the New York Stock Exchange Market
under the symbol “GRZ”. The information set forth under “Market for the Notes
and Common Stock” in the Amended Notice is incorporated herein by reference.
Item 3. Identity and Background of
Filing Person.
(a) The principal executive office of the filing
person, Gold Reserve Inc., is located at
926 West
Sprague Avenue, Suite 200, Spokane, Washington 99201, USA
. The telephone
number of its principal executive office is
509-623-1500
.
The persons listed on Annex
A are directors and executive officers of the Company. No single person or
group of persons controls the Company
The business address of each director and executive
officer of the Company listed above is: c/o Gold Reserve Inc., 926 West Sprague
Avenue, Suite 200, Spokane, Washington 99201, USA, and such person’s telephone
number c/o the Company is
509-623-1500
.
Item 4. Terms of the Transaction.
(a) Material Terms
(1) Offers
(i)-(ii) The information set forth in the
Amended Notice under the captions entitled “Summary”, “Information Concerning
Gold Reserve” and “Alternative Transaction” is incorporated herein by
reference.
(iii) The information set forth in
the Amended Notice under the captions entitled “Summary”, “Procedures to be
Followed by Holders Electing to Surrender Notes for Repurchase Pursuant to Put
Option” and “Procedures to be Followed by Holders Electing to Participate in Alternative
Transaction” is incorporated herein by reference.
(iv) Not applicable.
(v) The information set forth in the
Amended Notice under the captions entitled “Summary” is incorporated herein by
reference.
(vi) The information set forth in the
Amended Notice under the captions entitled “Summary”, “Procedures to be
Followed by Holders Electing to Surrender Notes for Repurchase Pursuant to Put
Option” and “Procedures to be Followed by Holders Electing to Participate in Alternative
Transaction” is incorporated herein by reference.
(vii) The information set forth in the
Amended Notice under the captions entitled “Summary”, “Procedures to be
Followed by Holders Electing to Surrender Notes for Repurchase Pursuant to Put
Option” and “Procedures to be Followed by Holders Electing to Participate in Alternative
Transaction” is incorporated herein by reference.
(viii) The information set forth in the
Amended Notice under the captions entitled “Summary” , “Procedures to be
Followed by Holders Electing to Surrender Notes for Repurchase Pursuant to Put
Option” and “Procedures to be Followed by Holders Electing to Participate in
Alternative Transaction” is incorporated herein by reference.
(ix) Not applicable.
(x) The information set forth in the
Amended Notice under the caption entitled “Information Concerning Gold Reserve”
is incorporated herein by reference.
(xi) The information set forth in the
Amended Notice under the caption entitled “Comparison of Rights Among the
Common Stock, the Notes and the Modified Notes” is incorporated herein by
reference.
(xii) The information set forth in the
Amended Notice under the captions entitled “Certain Material U.S. Federal
Income Tax Considerations” and “Certain Material Canadian Federal Income Tax
Considerations” is incorporated herein by reference.
Instruction
to Item 1004(a)
The information set forth in the Amended Notice under
the caption entitled “Comparison of Rights between the Common Stock and the
Notes and the Modified Notes” is incorporated herein by reference.
(i)-(vii) Not applicable.
(b) The information set forth in the Amended Notice
under the caption entitled “Summary” is incorporated herein by reference.
Item 5. Past Contacts,
Transactions, Negotiations and Agreements.
(e) Agreements Involving the Company’s Securities.
The Company has
entered into the Restructuring Agreement in connection with the Notes described
under the caption entitled “Alternative Transaction.”
Item 6. Purposes of the Transaction
and Plans or Proposals.
(a) The information set forth in the Amended Notice
under the captions entitled “Summary” and “Alternative Transaction” is
incorporated herein by reference.
(b) The information set forth in the Amended Notice
under the caption entitled “Use of Proceeds” is incorporated herein by
reference.
(c)(9) The information set forth in the Amended
Notice under the captions entitled “Summary” and “Alternative Transaction” is
incorporated herein by reference.
Item 7. Source and Amount of Funds
or Other Consideration.
(a) The information set forth in the Amended Notice
under the captions entitled “Summary”, “Information Concerning the Outstanding
Notes” and “Alternative Transaction” is incorporated herein by reference.
(b) The information set forth in the Amended Notice
under the captions “Summary” and “Alternative Transaction” is incorporated
herein by reference.
(d) Not applicable.
Item 8. Interest in Securities of
the Subject Company.
(a) The information set forth in the Amended Notice
under the caption “Alternative Transaction” is incorporated herein by
reference.
(b) The information set forth in the Amended Notice
under the caption “Purchase of Notes by GR” is incorporated herein by
reference.
Item 9. Persons/Assets, Retained,
Employed, Compensated or Used.
(a) For information regarding the paying agent, see
the information set forth in Amended Notice, which is incorporated herein by
reference. No persons have been directly or indirectly employed, retained or
otherwise compensated to make solicitations or recommendations in connection
with the Amended Notice, other than certain employees of the Company, none of
whom will receive any special or additional compensation in connection with the
Amended Notice beyond their normal compensation.
Item 10. Financial Statements.
(a) The information set forth in the Amended Notice
under the captions “Capitalization”, “Market Prices for the Notes and the
Common Stock” and “Ratios of Earnings” are incorporated herein by reference.
The information set forth under Item 8, Financial Statements and
Supplementary Data, in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2011 is incorporated herein by reference
and can also be accessed electronically on the Securities and Exchange
Commission’s website at http://www.sec.gov
and on SEDAR at www.sedar.com.
(b) Not applicable.
Item 11. Additional Information.
(a) Not applicable.
(b) The information set forth in the Amended Notice
and the accompanying Letter of Transmittal is incorporated herein by reference.
Item 12. Exhibits.
Exhibit No.
|
|
Description
|
|
|
|
(a)(1)(A)
|
|
Amended Company Repurchase Notice and Notice of Offer of
Alternative Election to Holders of its 5.50% Senior Subordinated Convertible
Notes due 2022, dated June 1, 2012*
|
|
|
|
(a)(1)(B)
|
|
Form of Repurchase Notice (Put Option)*
|
|
|
|
(a)(1)(C)
|
|
Form of Notice of Withdrawal (Put Option)*
|
|
|
|
(a)(1)(D)
|
|
Substitute Form W-9 (Put Option)*
|
|
|
|
(a)(1)(E)
|
|
Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 (Put Option)*
|
|
|
|
(a)(1)(F)
|
|
Letter of Transmittal (Alternative Election)*
|
|
|
|
(a)(1)(G)
|
|
Form of Notice of Withdrawal (Alternative Election)*
|
|
|
|
(a)(5)(A)
|
|
Press Release issued by GR on May 17, 2012
|
|
|
|
(a)(5)(B)
|
|
Press Release issued by GR on June 1, 2012*
|
|
|
|
(b)
|
|
Not applicable
|
|
|
|
(d)(1)
|
|
Indenture, dated May 18, 2007, by and among GR, and The Bank of
New York Mellon, as successor in interest to The Bank of New York, as Trustee
and the Co-Trustee named therein, incorporated by reference to
Exhibit 7.1 to GR’s Registration Statement on Form F-10 (File
333-142944) filed with the U.S. SEC on May 14, 2007
|
|
|
|
(d)(2)
|
|
Agreement and Plan of Merger, dated as of October 5, 1998, by and
among Gold Reserve Corporation (predecessor issuer), Gold Reserve Inc.
(successor issuer) and GR–Merger Corp filed as Annex I to the Proxy
Statement/Joint Prospectus included as a part of the Company’s Registration
Statement on Form S-4 (Registration No. 333-68061) filed with the SEC on
November 27, 1998 and incorporated by reference herein
|
|
|
|
(d)(3)
|
|
Exchange Agreement by and among Gold Reserve Corporation, the
Company, TranSecurities International, Inc. and Holders of Unit Shares, dated
November 17, 1998 filed as Exhibit 4.1 to the Proxy Statement/Joint
Prospectus included as a part of the Company’s Registration Statement on Form
S-4 (Registration No. 333-68061) filed with the SEC on November 27, 1998 and
incorporated by reference herein
|
|
|
|
(d)(4)
|
|
Restated Articles of Incorporation of the Company filed as
Exhibit 3.1 to the Proxy Statement/Joint Prospectus included as a part
of the Company’s Registration Statement on Form S-4 (Registration No.
333-68061) filed with the SEC on November 27, 1998 and incorporated by
reference herein
|
|
|
|
(d)(5)
|
|
Bylaws of the Company filed as Exhibit 3.2 to the Proxy
Statement/Joint Prospectus included as a part of the Company’s Registration
Statement on Form S-4 (Registration No. 333-68061) filed with the SEC on
November 27, 1998 and incorporated by reference herein
|
|
|
|
(d)(6)
|
|
Form of Certificate for the Company’s Class A common shares
filed as Exhibit 4.4 to the Proxy Statement/Joint Prospectus included as a
part of the Company’s Registration Statement on Form S-4 (Registration No.
333-68061) filed with the SEC on November 27, 1998 and incorporated by
reference herein
|
|
|
|
(d)(7)
|
|
Form of Certificate for the Unit Share filed as Exhibit 4.5 to
the Proxy Statement/Joint Prospectus included as a part of the Company’s Registration
Statement on Form S-4 (Registration No. 333-68061) filed with the SEC on
November 27, 1998 and incorporated by reference herein
|
|
|
|
(d)(8)
|
|
Shareholder Rights Plan Agreement, as amended, of the Company
(including form of Rights Certificate) filed as Exhibit 99.1, Appendix C of
the Company’s Form 6-K filed with the SEC on May 14, 2009 and incorporated by
reference herein
|
|
|
|
(d)(9)
|
|
Form of Change of Control Agreement entered into by and among
Gold Reserve Inc., Gold Reserve Corporation and, individually, each of Rockne
J. Timm and A. Douglas Belanger filed as Exhibit (e)(1) of the Company’s
Schedule 14D-9 filed with the SEC on December 30, 2008 and incorporated by
reference herein
|
|
|
|
(d)(10)
|
|
Form of Change of Control Agreement entered into by and among
Gold Reserve Inc., Gold Reserve Corporation and, individually, each of James
P. Geyer, Robert A. McGuinness, Mary E. Smith, and David P. Onzay filed as
Exhibit (e)(2) of the Company’s Schedule 14D-9 filed with the SEC on December
30, 2008 and incorporated by reference herein†
|
|
|
|
(d)(11)
|
|
Gold Reserve Inc. Equity Incentive Plan filed as Exhibit 3.2 to
the Company’s Form 20-F (File No. 001-31819) filed with the SEC on April 3,
2006 and incorporated by reference herein†
|
|
|
|
(d)(12)
|
|
Gold Reserve Inc. Venezuelan Equity Incentive Plan filed as
Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (Registration
No. 333-152883) filed with the SEC on April 3, 2006 and incorporated by reference
herein†
|
|
|
|
(d)(13)
|
|
Gold Reserve KSOP filed as Exhibit 4.1 to the Company’s
Registration Statement on Form S-8 filed with the SEC on August 29, 2007
and incorporated by reference herein†
|
|
|
|
(d)(14)
|
|
Gold Reserve Inc. Director and Employee Retention Plan filed as
Exhibit (e)(6) of the Company’s Schedule 14D-9 filed with the SEC on December
30, 2008 and incorporated by reference herein†
|
|
|
|
(d)(15)
|
|
Notice of Grant of Stock Options and Option Agreement filed as
Exhibit 10.1 to the Company’s Form 10-Q (File No. 001-31819) filed with the
SEC on August 12, 2011 and incorporated by reference herein
†
|
|
|
|
(d)(16)
|
|
Subordinated
Note Restructuring Agreement dated May 25, 2012 filed as Exhibit 99.1
Company’s Form 6-K (File No. 001-31819) filed with the
SEC on May 30, 2012 and incorporated by reference herein
|
|
|
|
(g)
|
|
Not applicable
|
|
|
|
(h)
|
|
Not applicable
|
* Filed herewith
†
Management contract or compensatory plan or arrangement
Item 13. Information Required by
Schedule 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my
knowledge and belief, I certify that the information set forth in this
statement is true, complete and correct.
|
GOLD RESERVE INC.
|
|
|
|
|
|
By:
|
/s/ Rockne J. Timm
|
|
|
Name: Rockne J. Timm
|
|
|
Title: Chief Executive Officer
|
Dated: June 1, 2012
EXHIBIT INDEX
Exhibit No.
|
|
Description
|
|
|
|
(a)(1)(A)
|
|
Amended Company Repurchase Notice and Notice of Offer of
Alternative Election to Holders of its 5.50% Senior Subordinated Convertible
Notes due 2022, dated June 1, 2012*
|
|
|
|
(a)(1)(B)
|
|
Form of Repurchase Notice (Put Option)*
|
|
|
|
(a)(1)(C)
|
|
Form of Notice of Withdrawal (Put Option)*
|
|
|
|
(a)(1)(D)
|
|
Substitute Form W-9 (Put Option)*
|
|
|
|
(a)(1)(E)
|
|
Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 (Put Option)*
|
|
|
|
(a)(1)(F)
|
|
Letter of Transmittal (Alternative Election)*
|
|
|
|
(a)(1)(G)
|
|
Form of Notice of Withdrawal (Alternative Election)*
|
|
|
|
(a)(5)(A)
|
|
Press Release issued by GR on May 17, 2012
|
|
|
|
(a)(5)(B)
|
|
Press Release issued by GR on June 1, 2012*
|
|
|
|
(b)
|
|
Not applicable
|
|
|
|
(d)(1)
|
|
Indenture, dated May 18, 2007, by and among GR, and The Bank of
New York Mellon, as successor in interest to The Bank of New York, as Trustee
and the Co-Trustee named therein, incorporated by reference to
Exhibit 7.1 to GR’s Registration Statement on Form F-10 (File
333-142944) filed with the U.S. SEC on May 14, 2007
|
|
|
|
(d)(2)
|
|
Agreement and Plan of Merger, dated as of October 5, 1998, by
and among Gold Reserve Corporation (predecessor issuer), Gold Reserve Inc.
(successor issuer) and GR–Merger Corp filed as Annex I to the Proxy
Statement/Joint Prospectus included as a part of the Company’s Registration
Statement on Form S-4 (Registration No. 333-68061) filed with the SEC on
November 27, 1998 and incorporated by reference herein
|
|
|
|
(d)(3)
|
|
Exchange Agreement by and among Gold Reserve Corporation, the
Company, TranSecurities International, Inc. and Holders of Unit Shares, dated
November 17, 1998 filed as Exhibit 4.1 to the Proxy Statement/Joint
Prospectus included as a part of the Company’s Registration Statement on Form
S-4 (Registration No. 333-68061) filed with the SEC on November 27, 1998 and
incorporated by reference herein
|
|
|
|
(d)(4)
|
|
Restated Articles of Incorporation of the Company filed as
Exhibit 3.1 to the Proxy Statement/Joint Prospectus included as a part
of the Company’s Registration Statement on Form S-4 (Registration No.
333-68061) filed with the SEC on November 27, 1998 and incorporated by
reference herein
|
|
|
|
(d)(5)
|
|
Bylaws of the Company filed as Exhibit 3.2 to the Proxy Statement/Joint
Prospectus included as a part of the Company’s Registration Statement on Form
S-4 (Registration No. 333-68061) filed with the SEC on November 27, 1998 and
incorporated by reference herein
|
|
|
|
(d)(6)
|
|
Form of Certificate for the Company’s Class A common shares
filed as Exhibit 4.4 to the Proxy Statement/Joint Prospectus included as a
part of the Company’s Registration Statement on Form S-4 (Registration No.
333-68061) filed with the SEC on November 27, 1998 and incorporated by
reference herein
|
|
|
|
(d)(7)
|
|
Form of Certificate for the Unit Share filed as Exhibit 4.5 to
the Proxy Statement/Joint Prospectus included as a part of the Company’s
Registration Statement on Form S-4 (Registration No. 333-68061) filed with
the SEC on November 27, 1998 and incorporated by reference herein
|
|
|
|
(d)(8)
|
|
Shareholder Rights Plan Agreement, as amended, of the Company
(including form of Rights Certificate) filed as Exhibit 99.1, Appendix C of
the Company’s Form 6-K filed with the SEC on May 14, 2009 and incorporated by
reference herein
|
|
|
|
(d)(9)
|
|
Form of Change of Control Agreement entered into by and among
Gold Reserve Inc., Gold Reserve Corporation and, individually, each of Rockne
J. Timm and A. Douglas Belanger filed as Exhibit (e)(1) of the Company’s
Schedule 14D-9 filed with the SEC on December 30,
2008 and incorporated by reference herein
|
|
|
|
(d)(10)
|
|
Form of Change of Control Agreement entered into by and among
Gold Reserve Inc., Gold Reserve Corporation and, individually, each of James
P. Geyer, Robert A. McGuinness, Mary E. Smith, and David P. Onzay filed as
Exhibit (e)(2) of the Company’s Schedule 14D-9 filed with the SEC on December
30, 2008 and incorporated by reference herein†
|
|
|
|
(d)(11)
|
|
Gold Reserve Inc. Equity Incentive Plan filed as Exhibit 3.2 to
the Company’s Form 20-F (File No. 001-31819) filed with the SEC on April 3,
2006 and incorporated by reference herein†
|
|
|
|
(d)(12)
|
|
Gold Reserve Inc. Venezuelan Equity Incentive Plan filed as
Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (Registration
No. 333-152883) filed with the SEC on April 3, 2006 and incorporated by reference
herein†
|
|
|
|
(d)(13)
|
|
Gold Reserve KSOP filed as Exhibit 4.1 to the Company’s
Registration Statement on Form S-8 filed with the SEC on August 29, 2007
and incorporated by reference herein†
|
|
|
|
(d)(14)
|
|
Gold Reserve Inc. Director and Employee Retention Plan filed as
Exhibit (e)(6) of the Company’s Schedule 14D-9 filed with the SEC on December
30, 2008 and incorporated by reference herein†
|
|
|
|
(d)(15)
|
|
Notice of Grant of Stock Options and Option Agreement filed as
Exhibit 10.1 to the Company’s Form 10-Q (File No. 001-31819) filed with the
SEC on August 12, 2011 and incorporated by reference herein
†
|
|
|
|
(d)(16)
|
|
Subordinated
Note Restructuring Agreement dated May 25, 2012 filed as Exhibit 99.1
Company’s Form 6-K (File No. 001-31819) filed with the SEC on May 30, 2012
and incorporated by reference herein
|
|
|
|
(g)
|
|
Not applicable
|
|
|
|
(h)
|
|
Not applicable
|
* Filed herewith
†
Management contract or compensatory plan or arrangement
Exhibit 99(a)(1)(A)
AMENDED
COMPANY REPURCHASE NOTICE
AND NOTICE OF OFFER FOR ALTERNATIVE
ELECTION
To the Holders of
GOLD RESERVE INC.
5.50% Senior Subordinated Convertible
Notes
Due June 15, 2022
CUSIP 38068N AB4
NOTICE WAS INITIALLY GIVEN on May 16, 2012
pursuant to the Section 14.01 of the Indenture, dated as of May 18, 2007 (the “Indenture”),
by and between Gold Reserve Inc., as Issuer (“GR”), and The Bank of New York
Mellon, as successor in interest to The Bank of New York, as Trustee and the
Co-Trustee named therein, organized and existing under the laws of the United
States of America (the “Trustee” and “Paying Agent”), relating to the 5.50%
Senior Subordinated Convertible Notes due 2022 of GR (the “Notes”), that at the
option of each holder thereof (the “Holder”), each Note surrendered by the
Holder in accordance with this Notice will be repurchased by GR for $1,000 per
$1,000 principal amount of the Notes so surrendered, plus accrued and unpaid
interest to, but excluding, the Repurchase Date (as defined below) (such price,
the “Repurchase Price”), subject to the terms and conditions of the Indenture,
the Notes, and this Amended Company Repurchase Notice and Notice of Offer for
Alternative Election (“Amended Notice”), including the accompanying Repurchase
Notice (the “Put Option”). The Repurchase Price will be payable through
the facilities of The Depository Trust Company, New York, New York (“DTC”).
GR is offering a maximum cash amount of
$25.2 million plus accrued and unpaid Interest to, but excluding, the Repurchase
Date to the Holders because it anticipates that the maximum principal amount of
Notes that will be repurchased pursuant to the Put Option will be $25.2 million.
As described below, GR has entered into the Subordinated Note Restructuring
Agreement dated May 25, 2012 (the “Restructuring Agreement”) with Holders of
approximately 87.8% of the Notes (the “Large Noteholders”) to restructure the
Notes held by such Holders. Each Holder other than the Large Noteholders (the
“Other Holders”) may, in lieu of putting their Notes to the Company for cash pursuant
to the Amended Notice, elect to restructure their Notes on the same terms as
the Large Noteholders (the “Alternative Election”) and participate in the Alternative
Transaction.
Giving effect to the agreement with the
Large Noteholders, if all outstanding Notes held by the Other Holders are surrendered
for repurchase for cash pursuant to the Put Option, and the Alternative
Election is consummated, GR will pay Holders an aggregate approximate amount of
$40.6 million in cash, consisting of approximately $25.2 million pursuant to
the Put Option and $15.4 million with respect to the Alternative Election.
Holders may surrender their Notes pursuant
to the Put Option through 5:00 p.m., New York City time, on June 15, 2012,
the date and time specified in the Indenture. All capitalized terms used
but not specifically defined herein have the meanings given to such terms in
the Indenture.
To exercise your option to have GR
repurchase the Notes pursuant to the Put Option and receive payment of the Repurchase
Price in respect of such Notes, you must validly deliver the enclosed
Repurchase Notice to the Paying Agent (and not have withdrawn such Repurchase
Notice), no later than 5:00 p.m., New York City time, on Friday, June 15,
2012, (the “Repurchase Date”).
To exercise your option to participate in
the Alternative Election, you must validly deliver the enclosed Letter of
Transmittal to the Agent (and not have withdrawn such Letter of Transmittal) no
later than 5:00 p.m., New York City time on Friday, June 29, 2012 (the
“Alternative Election Date”).
The Notes are currently eligible for
conversion. Prior to the maturity date and when the Notes are
convertible, Holders may surrender Notes to The Bank of New York Mellon, as
successor in interest to The Bank of New York, as Trustee and the Co-Trustee
named therein (the “Conversion Agent”) for shares of GR’s common stock at a
rate of 132.626 shares per $1,000 face amount of the Notes (subject to
adjustment in accordance with the terms of the Indenture).
Holders may elect to participate in the
Alternative Election. The terms and conditions to such participation are
described in the Amended Notice.
Notes as to which a Repurchase Notice has
been given by the Holder may be converted only if the election to repurchase has
been withdrawn by the Holder in accordance with the terms of the Indenture;
provided that the Notes are otherwise convertible in accordance with
Section 16.01 of the Indenture. The Holder shall have the right to
withdraw any Notes surrendered with respect to the Put Option prior to
5:00 p.m., New York City time, on June 15, 2012. The right of
Holders to submit a Repurchase Notice in order
to
surrender the Notes in the Put Option expires at 5:00 p.m., New York
City time, on June 15, 2012. Holders must also surrender their Notes to
the Paying Agent before receiving any Repurchase Price for any Note with
respect to which a Repurchase Notice has been validly submitted and not
withdrawn.
Notes as to which a Letter of Transmittal
has been delivered by the Holder may be converted only if the Letter of
Transmittal has been withdrawn by the Holder in accordance with the terms of
the Indenture; provided that the Notes are otherwise convertible in accordance
with Section 16.01 of the Indenture. The Holders shall have the right to
withdraw any Notes surrendered with respect to a Letter of Transmittal prior to
5:00 p.m., New York City time, on June 29, 2012. Holders must surrender their
Notes pursuant to the Letter of Transmittal prior to 5:00 p.m., New York City
time, on June 29, 2012.
HOLDERS THAT SURRENDER THROUGH DTC NEED NOT SUBMIT A PHYSICAL REPURCHASE
NOTICE TO THE PAYING AGENT IF SUCH HOLDERS COMPLY WITH THE TRANSMITTAL
PROCEDURES OF DTC.
The address for the Agent, Paying Agent and the Conversion Agent
is as follows:
In Person or Overnight Mail
|
|
By Registered or Certified Mail
:
|
The Bank of New York Mellon
|
|
The Bank of New York Mellon
|
101 Barclay Street, 7 East
New York, N.Y. 10286
Attn: Reorg Department
Tel: (212) 815-5920
|
|
101 Barclay Street 7 East
New York, N.Y. 10286
Attn: Reorg Department
Tel:
(212) 815-5920
|
Additional copies of this Amended Repurchase Notice and Notice of
Offer for Alternative Election may be obtained from the Paying Agent at its
address set forth above.
Dated: June 1, 2012
|
|
Gold Reserve Inc.
|
|
|
|
|
|
By The Bank of New York Mellon,
|
|
|
as Trustee
|
Withholding of 28% of gross redemption proceeds of any payment
made within the United States may be required by the Economic Growth and Tax
Relief Reconciliation Act of 2001 (the “Act”), unless the Paying Agent has the
correct taxpayer identification number (social security or employer
identification number) or exemption certificate of the payee. Please
furnish a properly completed Form W-9 or exemption certificate or equivalent
when presenting your securities.
SUMMARY TERM SHEET................................................................................................................................................................................... 1
RISK FACTORS...................................................................................................................................................................................................... 6
IMPORTANT INFORMATION CONCERNING THE PUT OPTION AND ALTERNATIVE TRANSACTION....................................... 9
1.......... Information Concerning Gold Reserve............................................................................................................................... 9
1.1......... Use of Proceeds................................................................................................................................................ 9
1.2......... Ratios of Earnings......................................................................................................................................... 9
1.3......... Market for the Notes and Common Stock.................................................................................... 9
1.4......... Capitalization............................................................................................................................................... 10
2.......... Information Concerning the Outstanding Notes..................................................................................................... 11
2.1......... GR’s Obligation to Repurchase the Notes..................................................................................... 11
2.2......... Repurchase Price........................................................................................................................................... 11
2.3......... Conversion Rights of the Notes........................................................................................................... 11
2.4......... Redemption....................................................................................................................................................... 12
2.5......... Fundamental Change................................................................................................................................ 12
2.6......... Ranking............................................................................................................................................................... 12
3.......... Procedures to be Followed by Holders Electing to Surrender Notes for Repurchase
Pursuant to Put Option............................................................................................................................................................. 12
3.1......... Method of Delivery..................................................................................................................................... 12
3.2......... Repurchase Notice....................................................................................................................................... 12
3.3......... Delivery of Notes.......................................................................................................................................... 13
4.......... Right of Withdrawal of Surrender for Purchase................................................................................................... 13
5.......... Payment for Notes Surrendered for Repurchase..................................................................................................... 13
6.......... Notes Acquired................................................................................................................................................................................. 14
7.......... Alternative Transaction......................................................................................................................................................... 14
8.......... Procedures to be Followed by Holders Electing to Participate in Alternative
Transaction...................................................................................................................................................................................... 17
8.1......... Method of Delivery..................................................................................................................................... 17
8.2......... Delivery of Notes.......................................................................................................................................... 17
8.3......... Withdrawal Rights.................................................................................................................................... 18
9.......... Interests of Directors, Executive Officers and Affiliates of GR in the Notes........................................ 19
10........ Comparison of Rights Among the Common Stock, the Notes and the Modified Notes...................... 19
11........ Purchases of Notes by GR........................................................................................................................................................... 21
12........ Certain Material U.S. Federal Income Tax Considerations for U.S. Holders.......................................... 22
13........ Certain Material Canadian Federal Income Tax Considerations............................................................... 30
14........ Additional Information........................................................................................................................................................... 34
15........ No Solicitations.............................................................................................................................................................................. 34
16........ Definitions.......................................................................................................................................................................................... 34
17........ Conflicts.............................................................................................................................................................................................. 34
18........ Certain Securities Law Considerations......................................................................................................................... 34
We are relying on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), to exempt the offer to participate in the Alternative Transaction (described below) from the registration requirements of the Securities Act. We are also relying on Sections 18(b)(1)(A) and 18(b)(4)(C) of the Securities Act to exempt the offer from the registration and qualification requirements of state securities laws. We have no contract, arrangement or understanding relating to the payment of, and will not, directly or indirectly, pay, any commission or other remuneration to any broker, dealer, salesperson, agent or other person for soliciting tenders in the offer. In addition, neither our financial advisor nor any broker, dealer, salesperson, agent or other person is engaged or authorized to solicit tenders in the offer or to express any statement, opinion, recommendation or judgment with respect to the relative merits and risks of the offer. Our officers, directors and employees may solicit tenders from holders of our Notes and will answer inquiries concerning the Notes, but they will not receive additional compensation for soliciting tenders or answering any such inquiries.
No person has been authorized to give any information or to make
any representations other than those contained in this Amended Notice and
accompanying Repurchase Notice and, if given or made, such information or
representations must not be relied upon as having been authorized. This Amended
Notice accompanying Repurchase Notice and Letter of Transmittal do not
constitute an offer to buy or the solicitation of an offer to sell securities
in any circumstances or jurisdiction in which such offer or solicitation is
unlawful. The delivery of this Amended Notice shall not under any
circumstances, create any implication that the information contained herein is
current as of any time subsequent to the date of such information. None
of GR or its board of directors or employees are making any representation or
recommendation to any Holder as to whether or not to surrender such Holder’s
Notes. You should consult your own legal, financial and tax advisors and
must make your own decision as to whether to surrender your Notes for
repurchase and, if so, the amount of Notes to surrender.
SUMMARY
TERM SHEET
The following are answers to some of the
questions that you may have about the Put Option and Alternative Election.
To understand the Put Option and Alternative Election fully and for a more
complete description of the terms of the Put Option and Alternative Election,
we urge you to read carefully the remainder of this Amended Company Repurchase
Notice and Notice of Offer for Alternative Election (“Amended Notice”) and the
accompanying Repurchase Notice and Letter of Transmittal, as they may be
amended, because those documents contain additional important
information. We have included page references to direct you to a
more complete description of the topics in this summary.
SUMMARY OF THE PUT OPTION
• Who is
offering to repurchase my Notes pursuant to the Put Option?
Gold Reserve Inc., a company incorporated
under the laws of Yukon, Canada (“GR” or the “Company”), is offering to repurchase
your validly surrendered 5.50% Senior Subordinated Convertible Notes due 2022
(the “Notes”). (Page 9)
• What
securities are you seeking to repurchase pursuant to the Put Option?
GR is offering to repurchase all of the
Notes surrendered, at the option of the Holder thereof (the “Holder”). Holders
of approximately 87.8% of the outstanding Notes (the “Large Noteholders”) have
agreed to exercise the Put Option for a maximum of $12.7 million in principal
amount of their Notes for cash, with the balance of the Notes held by them
being subject to the restructuring of Notes described herein (the “Alternative
Election”), the terms of which will also be made available to holders other
than the Large Noteholders (the “Other Holders”). (Page s 11 and 14)
As of May 16, 2012, there was $102,347,000.00
aggregate principal amount of Notes outstanding. The Notes were issued
pursuant to an Indenture (the “Indenture”), dated May 18, 2007, by and between
GR and The Bank of New York Mellon, as successor in interest to The Bank of New
York, as Trustee and the Co-Trustee named therein. The Bank of New York
Mellon, as successor in interest to The Bank of New York, as Trustee and the
Co-Trustee named therein, also acts as Paying Agent (“Paying Agent”).
(Page 9)
• How much are
you offering to pay to repurchase the Notes and what is the form of payment?
Pursuant to the Indenture, GR will pay, in
cash, a repurchase price (the “Repurchase Price”) of $1,000 per $1,000
principal amount of the Notes, plus accrued and unpaid interest to, but
excluding, the Repurchase Date, with respect to any and all Notes validly
surrendered for repurchase and not withdrawn. (Page 11) GR
anticipates that the aggregate maximum Repurchase Price for all Notes that will
be tendered for cash pursuant to the Put Option would be $25.2 million plus
accrued and unpaid Interest to, but excluding, the Repurchase Date. (Page 11)
• How can I
determine the market value of the Notes pursuant to the Put Option?
There is no established reporting system
or market for trading in the Notes.
Market
quotations for the Notes are available.
To the
extent that the Notes are traded, prices of the Notes may fluctuate widely
depending on trading volume, the balance between buy and sell orders,
prevailing interest rates, GR’s operating results and the market for similar
securities. To the extent available, Holders are urged to obtain current
market quotations for the Notes before making any decision with respect to the
Put Option. (Page 9)
• Why are you making
the offer to repurchase the Notes?
GR is required to make the offer pursuant
to the terms of the Notes and the Indenture. (Page 11)
• What does
the board of directors of GR think of the Put Option?
Although the board of directors of GR has
approved the terms of the Put Option included in the Indenture, the board of
directors of GR has not made any recommendation as to whether you should
surrender your Notes for repurchase, as provided herein or pursuant to the
Alternative Election. GR is required to make the offer pursuant to the
terms of the Notes and the Indenture. You must make your own decision
whether to surrender your Notes for repurchase pursuant to the Put Option and,
if so, the amount of Notes to surrender.
• When does
the Put Option expire?
The Put Option expires at 5:00 p.m.,
New York City time, on June 15, 2012. (Page 12)
• What are the conditions to the repurchase by
GR of the Notes pursuant to the Put Option?
Provided that the repurchase
by GR of the validly surrendered Notes is not unlawful, such repurchase will
not be subject to any other conditions. (Page 11)
• How
do I deliver a Repurchase Notice and surrender my Notes pursuant to the Put
Option?
To surrender your Notes for repurchase
pursuant to the Put Option, you must deliver the Repurchase Notice and related
documents to the Paying Agent no later than 5:00 p.m., New York City time,
on June 15, 2012, unless such time is extended. HOLDERS THAT SURRENDER
THROUGH THE DEPOSITORY TRUST COMPANY (“DTC”) NEED NOT SUBMIT A PHYSICAL REPURCHASE
NOTICE TO THE PAYING AGENT IF SUCH HOLDERS COMPLY WITH THE TRANSMITTAL
PROCEDURES OF DTC.
• A Holder whose Notes
are held in certificated form must properly complete and execute the Repurchase
Notice, and deliver such notice to the Paying Agent, with any other required
documents, no later than 5:00 p.m., New York City time, on June 15,
2012. The Holder is required to deliver to the Paying Agent the
certificate representing the Notes surrendered prior to receiving payment of
the Repurchase Price.
• A Holder whose Notes
are held by a broker, dealer, commercial bank, trust company or other nominee
must contact such nominee if such Holder desires to surrender his, her or its
Notes and instruct such nominee to surrender the Notes on the Holder’s behalf.
• A Holder electronically
transmitting his, her or its acceptance through DTC’s Automatic Tenders over
the Participant Terminal System (“PTS”) should do so no later than
5:00 p.m., New York City time, on June 15, 2012, subject to the terms and
procedures of that system. In surrendering through PTS, the electronic
instructions sent to DTC by the Holder, and transmitted by DTC to the Paying
Agent will acknowledge, on behalf of DTC and the Holder, receipt by the Holder
of and agreement to be bound by the Repurchase Notice. (Pages 12-13)
• If
I surrender my Notes pursuant to the Put Option, when will I receive payment
for my Notes?
GR will accept for payment all Notes
subject to a validly delivered Repurchase Notice promptly upon expiration of
the Put Option. GR will promptly forward to the Paying Agent, before
10:00 a.m., New York City time, on June 15, 2012, the funds required to
pay the Repurchase Price for the surrendered Notes, and the Paying Agent will
distribute such funds to the Holders promptly following the later of the Repurchase
Date and the time of delivery of the Note to the Paying Agent by the Holder
thereof in the manner required by the Indenture. The Paying Agent has
advised the Company that distributions of the Purchase Price will not commence
until Monday, June 18, 2012. (Page 13)
• Until
what time can I withdraw a previously delivered Repurchase Notice?
You can withdraw a previously delivered Repurchase
Notice at any time until 5:00 p.m., New York City time, on June 15, 2012,
unless such time is extended. (Page 13)
• How
do I withdraw a previously delivered Repurchase Notice?
To withdraw a previously delivered Repurchase
Notice, you must deliver an executed written notice of withdrawal substantially
in the form attached, or a facsimile of one, to the Paying Agent no later than
5:00 p.m., New York City time, on June 15, 2012.
HOLDERS THAT WITHDRAW THROUGH DTC NEED NOT SUBMIT A NOTICE OF
WITHDRAWAL TO THE PAYING AGENT IF SUCH HOLDERS COMPLY WITH THE WITHDRAWAL
PROCEDURES OF DTC. (Page 13)
• Do I need to
do anything if I do not wish to surrender my Notes for repurchase pursuant to
the Put Option?
No. If you do not deliver a properly
completed and duly executed Repurchase Notice before the expiration of the Put Option,
GR will not repurchase your Notes and such Notes will remain outstanding,
subject to their existing terms. However, the Company intends to redeem
outstanding Notes of Holders who do not put their Notes to the Company or
participate in the Alternative Election, subject to applicable legal
requirements and compliance with the Indenture.
• If I choose to surrender my Notes for
repurchase, do I have to surrender all of my Notes?
No. You may surrender
all of your Notes, a portion of your Notes or none of your Notes for
repurchase. If you wish to surrender a portion of your Notes for
repurchase, however, you must surrender your Notes in a principal amount of
$1,000 or an integral multiple thereof. (Page 11)
• If I do not
surrender my Notes for repurchase, will I continue to be able to exercise my
conversion rights?
Yes. If you do not surrender your
Notes for repurchase, your conversion rights will not be affected. You
will continue to have the right to convert each $1,000 principal amount of a
Note into 132.626 shares of Common Stock, subject to the terms, conditions and
adjustments specified in the Indenture. (Page 11)
• If I am a
U.S. resident for U.S. federal income tax purposes, will I have to pay taxes if
I surrender my Notes for repurchase in the Put Option?
The receipt of cash in exchange for Notes
pursuant to the Put Option will be a taxable transaction for U.S. federal
income tax purposes. You should consult with your own tax advisor
regarding the actual tax consequences to you. (Pages 22-30)
• Who
is the Paying Agent?
The Bank of New York Mellon,
the trustee for the Notes, is serving as Paying Agent in connection with the Put
Option. Its address and telephone number are set forth on the front cover
page of this Amended Notice.
• Who can I
talk to if I have questions about the Put Option?
Questions and requests for assistance in
connection with the surrender of the Notes for repurchase in this Put Option
may be directed to Ms. Carolle Montreuil at The Bank of New York Mellon, as
successor in interest to The Bank of New York, as Trustee and the Co-Trustee
named therein, at (212) 815-5920; however, questions involving the Alternative
Election should be directed to Doug Belanger at the Company at (509) 623-1500.
SUMMARY OF THE ALTERNATIVE ELECTION
• How much
will I receive if I elect to participate in the Alternative Election and what
is the form of payment?
If you elect the Alternative
Election and the Company’s shareholders approve the Proposed Restructuring, you
will receive for each $1,000 of Notes that are not put to the Company (collectively
the “Offer Consideration”)
·
$200.00 in
cash,
·
147.06
Common Shares,
·
a pro rata
portion of the aggregate Contingent Value Right payable; and
·
$300
principal of Notes that will remain outstanding and represent the same
continuing indebtedness, subject to the amended terms set forth in a
Supplemental Indenture (or other Amended Note Documentation, as defined in the
Restructuring Agreement).
.
The Large Noteholders will be
eligible to participate pro rata in the 5% CVR. The CVR will be increased
proportionately for any Other Holders that elect to participate in the
Alternative Election and the CVR amounts will be shared pro rata with holders
of the Notes who participate in the Proposed Restructuring based on the
principal amount of Notes delivered to the Company by all participating holders
of Notes.
(Page 14)
• Why are you
making the offer to participate in the Proposed Restructuring?
To restructure the Notes in order to preserve
the Company’s cash and minimize the dilution that could occur if the Company
issues common shares to satisfy its obligations with respect to the Right of
Repurchase.
• What does
the board of directors of GR think of the Proposed Restructuring?
The Board concluded that the
approval of the Proposed Restructuring, as set forth in the Restructuring
Agreement, and consummation of the transactions described therein, is in the
best interests of the Company and submitted the Proposed Restructuring to the
Company’s shareholders for a vote. (Page 16)
• When does the Offer for the Alternative
Election expire?
The offer to participate in
the Alternative Election expires at 5:00 p.m., New York City time, on June
29, 2012. (Page 17)
• What are the
conditions to the delivery by GR of the Offer Consideration if I elect the
Alternative Election?
The Company’s shareholders must approve
the Proposed Restructuring in order for you to receive the Offer Consideration
pursuant to the terms of the Proposed Restructuring. (Page 16)
• How do I
deliver a Letter of Transmittal and surrender my Notes?
To surrender your Notes for participation
in the Proposed Restructuring, you must deliver the Letter of Transmittal and
related documents to the Agent no later than 5:00 p.m., New York City
time, on June 29, 2012, unless such time is extended. HOLDERS THAT
SURRENDER THROUGH THE DEPOSITORY TRUST COMPANY (“DTC”) NEED NOT SUBMIT A
PHYSICAL REPURCHASE NOTICE TO THE PAYING AGENT IF SUCH HOLDERS COMPLY WITH THE
TRANSMITTAL PROCEDURES OF DTC.
• A Holder whose Notes are
held in certificated form must properly complete and execute the Letter of
Transmittal, and deliver such Letter of Transmittal to the Agent, with any
other required documents, no later than 5:00 p.m., New York City time, on
June 29, 2012. The Holder is required to deliver to the Agent the
certificate representing the Notes surrendered prior to receiving the Offer
Consideration.
• A Holder whose Notes are
held by a broker, dealer, commercial bank, trust company or other nominee must
contact such nominee if such Holder desires to surrender his, her or its Notes
and instruct such nominee to surrender the Notes on the Holder’s behalf.
• A Holder electronically
transmitting his, her or its acceptance through DTC’s Automatic Tenders over
the Participant Terminal System (“PTS”) should do so no later than
5:00 p.m., New York City time, on June 29, 2012, subject to the terms and
procedures of that system. In surrendering through PTS, the electronic
instructions sent to DTC by the Holder, and transmitted by DTC to the Paying
Agent will acknowledge, on behalf of DTC and the Holder, receipt by the Holder
of and agreement to be bound by the Letter of Transmittal. (Page 16)
• If I
surrender my Notes pursuant to the Alternative Election, when will I receive
the Offer Consideration for my Notes?
Provided the Company’s shareholders
approve the Restructuring Proposal, GR will promptly forward to the Agent,
before 10:00 a.m., New York City time, on June 29, 2012, the funds
required to pay the cash portion of the Offer Consideration for the surrendered
Notes received by that time and the Agent will distribute such funds to the
Holders promptly following the later of the expiration of the Offer of the
Alternative Election and the time of delivery of the Note to the Paying Agent
by the Holder thereof. The Company will also deliver the remaining Offer
Consideration as soon as practicable. (Page 14)
• What happens
if the shareholders do not approve the Restructuring Proposal?
If the Company’s shareholders do not
approve the Restructuring Proposal, Holders of Notes that accepted the Alternative
Election will participate in the
Replacement Restructuring
. (Page 15)
• Until what
time can I withdraw a previously delivered Letter of Transmittal?
You can withdraw a previously delivered
Letter of Transmittal at any time until 5:00 p.m., New York City time, on
June 29, 2012, unless such time is extended. (Page 18)
• How do I
withdraw a previously delivered Letter of Transmittal?
To withdraw a previously delivered Letter
of Transmittal, you must deliver an executed written notice of withdrawal
substantially in the form attached, or a facsimile of one, to the Agent no
later than 5:00 p.m., New York City time, on June 29, 2012.
HOLDERS THAT WITHDRAW THROUGH DTC NEED NOT
SUBMIT A NOTICE OF WITHDRAWAL TO THE AGENT IF SUCH HOLDERS COMPLY WITH THE
WITHDRAWAL PROCEDURES OF DTC. (Page 18)
• Do I need to
do anything if I do not wish to surrender my Notes for repurchase pursuant to
the Put Option or participate in the Proposed Restructuring?
No. If
you do not deliver a properly completed and duly executed Repurchase Notice
before the expiration of the Put Option or deliver a Latter of Transmittal to
participate in the Alternative Transaction, GR will not repurchase or
restructure your Notes and such Notes will remain outstanding, subject to their
existing terms. However, the Company intends to redeem outstanding Notes
of Holders who do not put their Notes to the Company or participate in the
Alternative Election, subject to applicable legal requirements and compliance
with the Indenture.
• If I do not
surrender my Notes for repurchase pursuant to the Put Option or participate in
the Proposed Restructuring, will I continue to be able to exercise my
conversion rights?
Yes. If you do not surrender your
Notes for repurchase or participate in the Alternative Election, your
conversion rights will not be affected. You will continue to have the
right to convert each $1,000 principal amount of a Note into 132.626 shares of
Common Stock, subject to the terms, conditions and adjustments specified in the
Indenture. (Page 11)
• If I am a
U.S. resident for U.S. federal income tax purposes, will I have to pay taxes if
I participate in the Alternative Election?
The receipt of cash, Common Shares, CVRs
(as defined below), and Modified Notes pursuant to the Proposed Restructuring
will also be a taxable transaction. However, the amount of gain or loss a U.S.
Holder recognizes as a result of the Proposed Restructuring, and the timing of
such gain or loss, depends in part on the U.S. federal income tax treatment of
the CVR, with respect to which there is substantial uncertainty. Please see
“Certain Material U.S. Federal Income Tax Considerations for U.S. Holders.”
You should consult with your own tax advisor regarding the actual tax
consequences to you. (Pages 22-30)
• Who can I
talk to if I have questions about the Alternative Election?
Questions and requests for assistance in
connection with the surrender of the Notes to participate in the Alternative
Transaction may be directed to Doug Belanger at the Company at (509) 623-1500.
RISK FACTORS
Failure to prevail in the arbitration proceedings and obtain
compensation from Venezuela for the Brisas Project and Choco 5 property could
materially adversely affect the Company.
In October 2009 we filed a Request for
Arbitration under the Additional Facility Rules of the International Centre for
Settlement of Investment Disputes (“ICSID”), against the Bolivarian Republic of
Venezuela (“Respondent”) seeking compensation for all of the loss and damage
resulting from Venezuela’s wrongful conduct, including the expropriation of the
Brisas Project. Our claim includes the full market value of the legal
rights to develop the Brisas Project as of the date of the Tribunals
decision, the value of the Choco 5 Property and interest on the claim
calculated since the loss. Our claim as last updated in our July 2011 Reply
totals approximately $2.1 billion which includes interest from April 14, 2008
(the date of the loss) to July 29, 2011 (the date of our last filing) of
approximately $400 million. The cost of prosecuting our arbitration claim is
substantial, and there is no assurance that we will be successful in
establishing Venezuela’s liability or, if successful, will collect any award by
the Tribunal for compensation from Venezuela.
The conversion, repurchase or restructure of our outstanding
convertible notes could result in the issuance of a significant number of our
common shares causing significant dilution to existing shareholders and, in
certain circumstances, could result in a change of control.
In May 2007, we issued $103,500,000
aggregate principal amount of 5.50% convertible notes due on June 15,
2022. On June 15, 2012, note holders have a one time option to require
the Company to repurchase the notes at a price equal to 100% of the principal
amount of the notes plus unpaid interest. The Company has entered into the
Restructuring Agreement to restructure its Notes as an alternative to
satisfying our obligation to repurchase the outstanding notes, by delivering
common shares which would require us to issue shares based on the Daily VWAP
(as defined in Indenture) for ten days ending three days prior to the
Repurchase Date, likely resulting in significant dilution to existing
shareholders and a potential change of control of the Company which could
result in the payment of severance compensation pursuant to change of control
agreements with certain employees.
Our ability to obtain the resources required for continued
servicing or restructuring of our notes or to meet other obligations as they
come due depends on numerous factors, some of which are beyond our control.
Unless and until we successfully collect
an arbitral award, if any, or acquire and/or develop other operating properties
which provide positive cash flow, our ability to meet our obligations as they
come due or redeem in whole or part or otherwise restructure the notes excluding
the note holder’s option to require the Company to redeem the convertible notes
on June 15, 2012, will be limited to our cash on hand and/or our ability to
issue additional equity or debt securities in the future. Such transactions
could potentially cause substantial dilution to the then existing shareholders
and, in certain circumstances, could result in a change of control.
Failure to acquire or invest in another mining project could
adversely affect future results including continued listing on the Amex or TSX
Venture.
We are actively pursuing alternative
mining prospects. However, the identification of a viable mining project takes
time, and a substantial amount of management’s attention has been focused on
the Brisas arbitration proceeding. Even if a new mining project is
identified, there is no guarantee that we could adequately finance or
successfully construct and operate the project. In addition, the Company is
subject to a Plan to regain compliance with the continued listing rules of the
Amex and is required to maintain compliance with the TSX Venture listing rules.
No assurances can be given that the Company will be able to achieve compliance
with the Amex Company Guide within the required time frame and/or maintain
continued compliance with the TSX Venture Company Manual and, as a result,
could be subject to future delisting actions.
Industry competition for new properties could limit the Company’s
ability to grow in the future
There is strong competition from other
mining companies in connection with the acquisition of future properties
considered to have commercial potential. Many of these companies have greater
financial resources, operational experience and technical capabilities. As a
result, we may be unable to acquire additional mining properties, thereby
limiting future growth.
The outcome of the litigation regarding the enjoined hostile
takeover bid may adversely affect our business.
In December 2008, the Company filed an
action in the Ontario Superior Court of Justice against Rusoro and Rusoro’s
financial advisor Endeavour Financial International Corporation (“Endeavour”)
seeking an injunction restraining Rusoro and Endeavour from proceeding with an
unsolicited offer by Rusoro to acquire all of the Company’s outstanding shares,
significant monetary damages, and various other items. Endeavour was the
Company’s financial advisor from 2004 until shortly after the commencement of
Rusoro’s offer. The Company was subsequently granted an interlocutory
injunction restraining Rusoro and Endeavour from proceeding with any hostile
bid until the conclusion and disposition at trial of our original legal action.
A subsequent
appeal by Rusoro was denied and
thereafter Rusoro and Endeavour filed counterclaims against the Company for,
among other things, damages of Cdn $102.5 million and $0.5 million,
respectively. Our legal action is ongoing and there can be no assurances as to
its ultimate outcome, whether Rusoro and or Endeavour will pursue any other
legal course of action or, if successful, whether Rusoro will initiate another
unsolicited offer for the Company.
Failure to retain and attract key personnel could adversely affect
the Company.
We are dependent upon the abilities and
continued participation of key personnel to manage the Brisas arbitration and
identify, acquire and develop new opportunities. Substantially all key
management personnel have been employed by the Company for over 15 years. The
loss of key employees (in particular those long time key management personnel
possessing important historical knowledge related to the Brisas Project which
is relevant to our arbitration claims) or an inability to obtain personnel
necessary to execute our plan to acquire and develop a new project could have a
material adverse effect on our future operations.
Operating losses are expected to continue.
We have no commercial production at this
time and, as a result, we have not recorded revenue or cash flows from mining
operations and have experienced losses from operations for each of the last
five years, a trend we expect to continue unless and until the investment
dispute regarding Brisas is resolved favorably to the Company and/or we acquire
or invest in an alternative project and achieve commercial production.
We may issue additional common shares, debt instruments
convertible into common shares or other equity-based instruments to fund future
operations.
We cannot predict the size of any such
future issuances of securities, or the effect, if any, that future issuances
and sales of our securities will have on the market price of our common shares
or the fair market value of the notes. Any transaction involving the issuance
of previously authorized but unissued shares, or securities convertible into
shares, will result in dilution, possibly of a substantial nature, to present
and prospective holders of shares and in certain circumstances could result in
a Change of Control.
The price and liquidity of our common shares may be volatile.
The market price of our common shares may
fluctuate based on a number of factors, some of which are beyond our control,
including:
-
the result of our arbitration and litigation
proceedings;
-
economic and political developments in Venezuela;
-
our operating performance and financial
condition;
-
continued listing of our common shares on
Canadian and US stock exchanges;
-
the public’s reaction to announcements or filings
by ourselves or other companies;
-
the price of gold and copper and other metal
prices, as well as metal production volatility;
-
the arrival or departure of key personnel;
-
acquisitions, strategic alliances or joint
ventures involving us or other companies.
Risks inherent in the mining industry could adversely impact
future operations.
Exploration for gold and other metals is
speculative in nature, involves many risks and frequently is unsuccessful. As
is customary in the industry, not all prospects will be positive or progress to
later stages (e.g. the feasibility and permitting stages), therefore,
management can give no assurances as to the future success of its efforts to
acquire, explore, develop or operate another mining property. Exploration
programs entail risks relating to location, metallurgical processes,
governmental permits and regulatory approvals and the construction of mining
and processing facilities. Development can take a number of years, requiring
substantial expenditures and there is no assurance that we will have, or be
able to raise, the required funds to engage in these activities or to meet our
obligations with respect to the exploration properties in which we may acquire
an interest. Any one or more of these factors or occurrence of other risks
could cause us not to realize the anticipated benefits of an acquisition of
properties or companies.
U.S. Internal Revenue Service designation as a “passive foreign
investment company” may result in adverse U.S. tax consequences to U.S. Holders.
U.S. persons should be aware that we have
determined that we were a "passive foreign investment company" (a
"PFIC") under Section 1297(a) of the Internal Revenue Code of 1986,
as amended, for the taxable year ended December 31, 2007, when we issued the
Notes, we have continued to be a PFIC since that time, and we expect to be a
PFIC for the taxable year ending December 31, 2012. As a result, U.S. persons
will generally be subject to various adverse U.S. federal income tax
consequences in connection with the ownership of the Notes, Modified Notes, and
Commons Shares as described in “Certain Material U.S. Federal Income Tax
Considerations for U.S. Holders.”
The U.S. federal income tax treatment of the CVR is unclear.
There is substantial uncertainty as to the
tax treatment of the CVR. The receipt of the CVR as part of the Proposed
Restructuring may be treated as a “closed transaction” or as an “open
transaction” for U.S. federal income tax purposes, which affects the amount of
gain or loss, if any, that may be recognized at the time of the exchange under
the Proposed Restructuring. Please see “Certain Material U.S. Federal Income
Tax Considerations for U.S. Holders.”
It may be difficult to bring certain actions or enforce judgments
against the Company and/or its directors and executive officers.
Investors in the U.S. or in other
jurisdictions outside of Canada may have difficulty bringing actions and
enforcing judgments against the Company, our directors or executive officers
based on civil liability provisions of federal securities laws or other laws of
the U.S. or any state thereof or the equivalent laws of other jurisdictions of
residence. We are organized under the laws of Yukon, Canada. Some of our
directors and officers, and some of the experts named from time to time in our
filings, are residents of Canada or otherwise reside outside of the U.S. and
all or a substantial portion of their and our assets, may be located outside of
the U.S. As a result, it may be difficult for investors in the U.S. or outside
of Canada to bring an action in the U.S. against directors, officers or experts
who are not resident in the U.S. It may also be difficult for an investor to
enforce a judgment obtained in a U.S. court or a court of another jurisdiction
of residence predicated upon the civil liability provisions of Canadian
security laws or U.S. federal securities laws or other laws of the U.S. or any
state thereof against us or those persons.
IMPORTANT INFORMATION CONCERNING THE PUT OPTION AND ALTERNATIVE TRANSACTION
1. Information Concerning Gold Reserve
. Gold Reserve Inc., a company incorporated under the laws of Yukon, Canada (“GR” or the “Company” or “We”), is offering to repurchase for cash its 5.50% Senior Subordinated Convertible Notes due 2022 (the “Notes”) as required by the Indenture (the “Indenture”), dated May 16, 2012, by and among the Company and Bank of New York Mellon, as Successor-in-Interest to the Bank of New York, as Trustee (“Trustee”) and the Co-Trustee named therein. The Company is also offering an Alternative Election, as described below.
The Company is engaged in the business of acquiring, exploring and developing mining projects. The Company is an exploration stage company incorporated in 1998 under the laws of Yukon, Canada and is the successor issuer to Gold Reserve Corporation which was incorporated in 1956. From 1992 to 2008 the Company focused substantially all of its management and financial resources on the development of the Brisas gold and copper project located in the Kilometer 88 mining district of the State of Bolivar in south-eastern Venezuela (the “Brisas Project” or “Brisas”). The Brisas Project was expropriated by the Venezuelan government in 2008.
As previously disclosed in its Annual Report on Form 10-K/A filed with the Commission, the Company determined as of June 30, 2011 (the last business day of its most recently completed second fiscal quarter), that less than 50 percent of its outstanding voting securities were directly or indirectly held of record by residents of the United States. Because the share ownership percentage of United States residents of the Company is less than 50% and the Company is organized under the laws of Yukon, Canada, the Company is a “foreign private issuer” pursuant to Rule 3b-4 under the Securities Exchange Act of 1934, as amended The Company previously reported as a foreign private issuer for many years prior to its annual report on Form 10-K for the fiscal year ended December 31, 2009, as during 2009 its shareholder composition changed such that more than 50 percent of its outstanding voting securities were directly or indirectly held of record by residents of the United States. The Company has returned to foreign private issuer reporting for administrative ease and as a cost-savings measure.
The Company’s administrative office is located at 926 West Sprague Avenue, Suite 200, Spokane, WA 99201, U.S.A. and its telephone and fax numbers are 509.623.1500 and 509.623.1634, respectively.
1.1 Use of Proceeds.
We will not receive any cash proceeds in connection with the Put Option or the Proposed Restructuring described below. We will pay all of the fees and expenses related to the Put Option and the Proposed Restructuring that we incur. We will not pay any commissions or concessions of any broker dealer or any other costs or expenses you may incur in participating in the Put Option or the Proposed Restructuring. Any Notes that are properly tendered pursuant to the Put Option or the Alternative Election will be retired.
1.2 Ratios of Earnings.
The following table sets forth information regarding our ratio of earnings to fixed charges. For purposes of determining the below ratio, earnings consist of pre-tax income or loss from continuing operations before adjustment for non-controlling interests in consolidated subsidiaries or income or loss from fixed charges. Fixed charges consist of interest expenses, amortization of debt issuance costs and accretion of debt discount.
|
2011
|
2010
|
2009
|
2008
|
2007
|
|
|
|
|
|
|
Net loss before taxes and fixed charges
|
$ (16,902,140)
|
(14,995,253)
|
(12,940,063)
|
(18,960,233)
|
(11,952,920)
|
Fixed charges
|
(6,710,253)
|
(6,641,877)
|
(6,593,660)
|
(7,014,682)
|
(3,419,366)
|
Coverage deficit
|
(23,612,393)
|
(21,637,130)
|
(19,533,723)
|
(25,974,915)
|
(15,372,286)
|
Ratio of earnings to fixed charges
|
(2.52)
|
(2.26)
|
(1.96)
|
(2.70)
|
(3.50)
|
1.3 Market for the Notes and Common Stock.
There is no established reporting system or trading market for trading in the Notes. However, quotations of prices for the Notes are available. We will not receive any cash proceeds from the repurchase or restructuring of our Notes. We will pay all of the fees and expenses related to the Right of Repurchase and offer to participate in the Alternative Election that we incur. We will not pay any commissions or concessions of any broker dealer or any other costs or expenses you may incur in participating in the Right of Repurchase or the offer to participate in the Alternative Election. Any Notes that are properly tendered and accepted pursuant to the Put Option or the Alternative Transaction will be retired. To the extent that the Notes are traded, prices of the Notes may fluctuate widely depending on trading volume, the balance between buy and sell orders, prevailing interest rates, GR’s operating results and the market for similar securities. To the extent available, Holders are urged to obtain current market quotations for the Notes before making any decision with respect to the Put Option or Alternative Election. The Notes are held through the Depository Trust Company (“DTC”). As of May 16, 2012, there was $102,347,000 aggregate principal amount of Notes outstanding, and DTC was and is the sole record Holder of the Notes.
The Common Stock into which the Notes are convertible is traded in Canada on the TSX Venture symbol “GRZ.V”. Prior to February 1, 2012, the shares of Common Stock were traded on the TSX. The shares are also traded in the United States on the NYSE MKT under the symbol “GRZ.” The Notes are not listed for trading on any exchange. The following table sets forth, for the fiscal quarters indicated, the high and low sales prices of the Common Stock as reported on the TSX Venture and NYSE MKT.
|
TSX VENTURE/TSX
|
NYSE MKT
|
|
Canadian dollars
|
U.S. dollars
|
2012
|
High
|
Low
|
High
|
Low
|
May (through May 15, 2012)
|
$4.55
|
$3.88
|
$4.53
|
$3.70
|
April
|
4.30
|
3.50
|
4.35
|
3.53
|
March
|
3.99
|
2.77
|
3.98
|
2.90
|
February
|
3.09
|
2.73
|
3.11
|
2.83
|
January
|
3.03
|
2.69
|
3.05
|
2.68
|
|
|
|
|
|
2011
|
|
|
|
|
Fourth Quarter
|
$3.10
|
$2.35
|
$3.05
|
$2.02
|
Third Quarter
|
3.10
|
2.03
|
3.14
|
2.10
|
Second Quarter
|
2.85
|
1.61
|
2.99
|
1.66
|
First Quarter
|
1.88
|
1.65
|
1.87
|
1.67
|
|
|
|
|
|
2010
|
|
|
|
|
Fourth Quarter
|
$1.84
|
$1.39
|
$1.84
|
$1.37
|
Third Quarter
|
1.32
|
0.82
|
1.28
|
0.80
|
Second Quarter
|
1.25
|
0.76
|
1.24
|
0.71
|
First Quarter
|
1.63
|
1.01
|
1.58
|
0.98
|
On May 15, 2012, the closing price for the Common Stock was Cdn $3.88 per share on the TSX Venture and U.S. $3.70 per share on the NYSE MKT. As of May 31, 2012, there were a total of 59,788,972 Class A common shares and 500,236 Class B common shares issued and outstanding. The number of holders of Class A and Class B common shares of record on May 15, 2012 was approximately 448. As of May 15, 2012, based on information received from our transfer agent and other service providers, we believe our common shares are owned beneficially by approximately 7,500 shareholders.
GR urges you to obtain current market information for the Notes, to the extent available, and the Common Stock before making any decision to surrender your Notes pursuant to the Put Option or participate in the Proposed Restructuring by electing the Alternative Election.
1.4
Capitalization.
The following table sets forth our cash and cash equivalents and our combined capitalization as of June 27, 2012 (i) on an actual basis and (ii) on an as-adjusted basis to reflect the Proposed Restructuring, as follows:
·
giving effect to the Put Option, as if all outstanding Notes not held by the Large Noteholders were tendered and accepted pursuant to the Put Option (excluding any accrued interest and dividends); and
·
giving effect to the Proposed Restructuring.
The as-adjusted information assumes that the relevant transactions were consummated on
June 27
, 2012.
|
|
|
|
|
|
|
|
|
ACTUAL
March 31,
2012
|
June 15
th
Put
|
Proposed
Restructuring
|
AS ADJUSTED
June 27,
2012
|
Cash and Cash equivalents
|
|
|
$ 53,760,689
|
$(25,158,600)
|
$(15,437,680)
|
$ 13,164,409
|
Borrowings
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
|
|
|
|
Long-term borrowings, including $234,073 unamortized costs
|
|
|
--
|
|
|
|
Total borrowings
|
|
|
102,347,000
|
25,158,600
|
54,031,880
|
23,156,520
|
Equity:
|
|
|
102,347,000
|
25,158,600
|
54,031,880
|
23,156,520
|
Serial preferred stock, without par value
|
|
|
|
|
|
|
Authorized
|
Unlimited
|
|
|
|
|
|
Issued
|
None
|
|
|
|
|
|
Common shares and equity units
|
|
|
246,167,909
|
--
|
38,594,200
|
284,762,109
|
Class A common shares, without par value
|
|
|
|
|
|
|
|
March 31,
2012
|
June 27,
2012
|
|
|
|
|
Authorized: Unlimited
|
|
|
|
|
|
|
Issued and outstanding:
|
59,751,472
|
71,102,707
|
|
|
|
|
Equity Units
|
|
|
|
|
|
|
Issued and outstanding
|
500,236
|
500,236
|
|
|
|
|
Contributed Surplus
|
|
|
5,171,603
|
|
|
5,171,603
|
Stock options
|
|
|
18,277,515
|
|
|
18,277,515
|
Accumulated deficit
|
|
|
(299,905,965)
|
|
|
(299,905,965)
|
Accumulated other comprehensive income
|
|
|
17,535
|
|
|
17,535
|
|
|
|
|
|
|
|
Total shareholders’ deficit
|
|
|
(30,271,403)
|
--
|
38,594,200
|
8,322,797
|
|
|
|
|
|
|
|
Total Capitalization
|
|
|
72,075,597
|
25,158,600
|
92,626,080
|
31,479,317
|
|
|
|
|
|
|
|
Total Shares Issued/OS
|
60,251,708
|
71,602,943
|
|
|
|
|
Change in Shares
|
|
11,351,235
|
|
|
|
|
2. Information Concerning the Outstanding
Notes
. The Notes
were issued under an Indenture, dated May 18, 2007 (the “Indenture”), by and
among the Company and The Bank of New York Mellon, as successor in interest to
The Bank of New York, as Trustee and the Co-Trustee named therein, (the
“Trustee”). The Notes mature on June 15, 2022.
2.1
GR’s Obligation to Repurchase
the Notes
.
Pursuant to the terms of the Indenture and the Notes, unless earlier redeemed,
GR is obligated to repurchase all Notes validly surrendered for repurchase and
not withdrawn, at the Holder’s option on June 15, 2012 at a repurchase price of
100% of the principal amount of Notes, plus any accrued and unpaid interest to,
but excluding, the Repurchase Date (as defined below). Holders of approximately
87.8% of the outstanding Notes (the “Large Noteholders”) have agreed to
exercise the Put Option for $12.7 million in principal amount of their Notes
for cash, with the balance of the Notes held by them being subject to the
restructuring of Notes described herein (the “Alternative Election”), the terms
of which will also be made available to holders other than the Large
Noteholders (the “Other Holders”).
As of May 16, 2012, there was $102,347,000
aggregate principal amount of Notes outstanding. Accordingly, the
aggregate maximum Repurchase Price for all Notes GR anticipates will be
tendered pursuant to this Amended Notice would be $25.2 million plus accrued
and unpaid Interest to, but excluding, the Repurchase Date.
This Put Option will expire at
5:00 p.m., New York City time, on Friday, June 15, 2012 (the “Repurchase
Date”), unless extended in connection with the finalization of the Alternative
Election. Provided that the repurchase by GR of validly surrendered Notes
is not unlawful, such repurchase will not be subject to any other conditions
and will be made promptly after expiration of the Put Option. The payment
by GR for validly tendered Notes is subject to the Payment Agent’s receipt of a
validly and timely delivered Repurchase Notice and receipt of the
certificate(s) representing the surrendered Notes.
2.2
Repurchase Price
. Pursuant to the terms of the
Indenture and the Notes, the repurchase price to be paid by GR for the Notes
(the “Repurchase Price”) that will be tendered pursuant to this Amended Notice
promptly after the Repurchase Date is $1,000 per $1,000 principal amount of the
Notes, plus any accrued and unpaid interest to but excluding the Repurchase
Date. The Repurchase Price will be paid in cash with respect to any and
all Notes for which a valid Repurchase Notice has been delivered and not
withdrawn and for which a certificate representing the surrendered Notes has
been delivered. If you are surrendering only a portion of your Notes for
repurchase, such Notes will be accepted only in principal amounts at maturity
equal to $1,000 or integral multiples thereof.
The Repurchase Price is based solely on
the requirements of the Indenture and the Notes and bears no relationship to
the market price of the Notes or Common Stock (as defined below). Thus,
the Repurchase Price may be significantly higher or lower than the current
market price of the Notes. Holders of Notes are urged to obtain the best
available information as to potential current market prices of the Notes, to
the extent available, and Common Stock (as defined below) before making a
decision whether to surrender their Notes for repurchase.
None of GR or its board of directors or
employees are making any recommendation to Holders as to whether to surrender
or refrain from surrendering the Notes for repurchase pursuant to this Amended
Notice. Each Holder must make his, her or its own decision whether to
surrender his, her or its Notes for repurchase and, if so, the principal amount
of Notes to surrender based on such Holder’s assessment of current market value
and other relevant factors.
2.3
Conversion Rights of the
Notes
. The
Notes are convertible into shares of GR’s Common Stock, no par value (the “Common
Stock”), in accordance with and subject to the terms of the Indenture and the
Notes. Holders may convert their Notes into Common Stock of GR at any
time prior to stated maturity. The Notes are currently convertible into
Common Stock. The conversion rate of the Notes as of May 16, 2012 is
132.626 shares of Common Stock per $1,000 principal amount of the Notes, which
is equivalent to a conversion price of $7.54 per share of Common Stock (subject
to adjustment in accordance with the terms of the Indenture). The Paying
Agent is currently acting as Conversion Agent for the Notes.
Holders that
do not surrender their Notes for repurchase pursuant to the Put Option will
maintain the right to convert their Notes into Common Stock in accordance with
and subject to the terms of the Indenture and the Notes. Any Notes as to
which a Repurchase Notice has been given may be converted in accordance with
the terms of the Indenture only if the applicable Repurchase Notice has been
validly withdrawn at or before 5:00 p.m., New York City time, on June 15,
2012, as described in Section 4 hereto.
2.4
Redemption
. The Notes are redeemable by the
Company any time until June 15, 2012, in whole or in part, for cash at a price
equal to 100% of the principal amount being redeemed plus accrued and unpaid
interest to, but excluding, the redemption date, if the closing sale price of
the Common Shares on the NYSE MKT is equal to or greater than 150% of the
applicable conversion price then in effect for at least 20 trading days in the
period of 30 consecutive trading days ending on the trading day prior to the
date of mailing of the notice of redemption. Beginning on June 16, 2012, the
Company may, at its option, redeem all or part of the Notes for cash at a price
equal to 100% of the principal amount being redeemed plus accrued and unpaid
interest to, but excluding, the redemption date. The Company has agreed to
limit its redemption rights with respect to Holders who participate in the
Alternative Election.
2.5
Fundamental Change
. The Notes may be put to GR for
cash at the option of the Holder if there is a Fundamental Change (as defined
in the Indenture) at a redemption price equal to 100% of the principal amount
of the Notes, plus accrued and unpaid interest, including additional interest,
if any, up to but not including, the redemption date
2.6
Ranking
. The notes are unsecured
obligations and rank (1) subordinate in right of payment to future
unsubordinated indebtedness for the construction and development of Brisas, and
effectively subordinate to the extent of the collateral securing such
indebtedness, (2) subordinate to senior secured bank indebtedness in right of
payment, and effectively subordinate to the extent of the collateral securing
such indebtedness, (3) subordinate in right of payment to any guarantee of the
indebtedness described in (1) or (2) by the Company or any of its subsidiaries
for the period that the guarantee is in effect, (4) equal in right of payment
to any of the Company’s other existing and future unsecured and unsubordinated
indebtedness, and (5) senior in right of payment to all of the Company’s future
subordinated debt.
3. Procedures to be Followed
by Holders Electing to Surrender Notes for Repurchase Pursuant to Put Option
. Holders will not be entitled
to receive the Repurchase Price for their Notes unless they validly deliver and
do not withdraw a Repurchase Notice at or before 5:00 p.m., New York City
time, on June 15, 2012 and surrender their Notes for cancellation. Only
registered Holders are authorized to deliver a Repurchase Notice to surrender
their Notes for repurchase. Holders may surrender some or all of their
Notes; however, if you are surrendering only a portion of your Notes, such
Notes must be in $1,000 principal amount or an integral multiple thereof.
A Holder who is a DTC participant may
elect to surrender to GR his, her or its beneficial interest in the Notes by
electronically transmitting his, her or its acceptance through DTC’s PTS no
later than 5:00 p.m., New York City time, on June 15, 2012, subject to the
terms and procedures of that system. In surrendering through PTS, the
electronic instructions sent to DTC by the Holder, and transmitted by DTC to
the Paying Agent will acknowledge, on behalf of DTC and the Holder, receipt by
the Holder of and agreement to be bound by the Repurchase Notice.
If Holders do not validly deliver and not
withdraw a Repurchase Notice at or before 5:00 p.m., New York City time,
on June 15, 2012, their Notes will remain outstanding, subject to the existing
terms of the Notes.
HOLDERS THAT SURRENDER THROUGH DTC NEED
NOT SUBMIT A PHYSICAL REPURCHASE NOTICE TO THE PAYING AGENT IF SUCH HOLDERS
COMPLY WITH THE TRANSMITTAL PROCEDURES OF DTC.
3.1
Method of Delivery
. The method of delivery of the
Notes, the related Repurchase Notice and all other required documents,
including delivery through DTC and acceptance through DTC’s PTS, is at the
election and risk of the person surrendering such Notes and delivering such Repurchase
Notice and delivery will be deemed made only when actually received by the
Paying Agent. The date of any postmark or other indication of when a Note
or the Repurchase Notice was sent will not be taken into account in determining
whether such materials were timely received. If such delivery is by mail,
it is suggested that Holders use properly insured, registered mail with return
receipt requested, and that Holders mail the required documents sufficiently in
advance of the Repurchase Date to permit delivery to the Paying Agent no later
than 5:00 p.m., New York City time, on June 15, 2012.
3.2
Repurchase Notice
. Pursuant to the Indenture, the
Repurchase Notice must contain:
• the certificate
number of the Notes being delivered for repurchase;
• the portion of
the principal amount of the Notes which will be delivered to be repurchased,
which portion must be in principal amounts of $1,000 at maturity or an integral
multiple thereof; and
• a statement
that such Notes shall be purchased as of the Repurchase Date pursuant to the
terms and conditions specified in the Indenture and the Notes.
3.3
Delivery of Notes
.
Notes in Certificated Form
. To receive the Repurchase Price, a
Repurchase Notice must be validly delivered to the Paying Agent and not
withdrawn at or before 5:00 p.m. New York City time on June 15, 2012 and
the Notes must be surrendered for repurchase on, before or after the Repurchase
Date. The delivery of the Note is a condition to receipt by the Holder of
the Repurchase Price for that Note.
Notes Held Through a Custodian
. A Holder whose Notes are held by a
broker, dealer, commercial bank, trust company or other nominee must contact
such nominee if such Holder desires to surrender his, her or its Notes and
instruct such nominee to surrender the Notes for repurchase on the Holder’s
behalf.
Notes in Global Form
. A Holder who is a DTC participant
may elect to surrender to GR his, her or its beneficial interest in the Notes
by:
• electronically
transmitting his, her or its acceptance through DTC’s PTS no later than
5:00 p.m., New York City time, on June 15, 2012, subject to the terms and
procedures of that system. In surrendering through PTS, the electronic
instructions sent to DTC by the Holder and transmitted by DTC to the Paying
Agent will acknowledge, on behalf of DTC and the Holder, receipt by the Holder of
and an agreement to be bound by the Repurchase Notice; and
• delivering to
the Paying Agent’s account at DTC through DTC’s book-entry system his, her or
its beneficial interest in the Notes. Delivery of the beneficial interest
in the Note is a condition to receipt by the Holder of the Repurchase Price for
that Note.
The Notes and the Repurchase Notice must
be delivered to the Paying Agent in the manner set forth herein to collect
payment. Delivery of documents to DTC or GR does not constitute delivery
to the Paying Agent.
HOLDERS THAT SURRENDER THROUGH DTC NEED
NOT SUBMIT A PHYSICAL REPURCHASE NOTICE TO THE PAYING AGENT IF SUCH HOLDERS
COMPLY WITH THE TRANSMITTAL PROCEDURES OF DTC.
4. Right of Withdrawal of
Surrender for Purchase.
Repurchase Notices may be withdrawn
at any time at or before 5:00 p.m., New York City time, on June 15, 2012,
unless such date is extended. In order to withdraw a Repurchase Notice,
Holders must deliver to the Paying Agent written notice, substantially in the
form enclosed herewith, containing:
• the principal
amount of the Note in respect to which such notice of withdrawal is being
submitted;
• the certificate
number(s) (if such Note is held in other than Global Form) in respect of
which such notice of withdrawal is being submitted, or the appropriate
depositary information of the Note in respect of which such notice of
withdrawal is being submitted is represented by a global note; and
• the principal
amount, if any, of such Notes which remain subject to the original Repurchase
Notice and which have been or will be delivered to the Paying Agent for
repurchase by GR.
The signature on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Rule 17Ad-15
of the Notes Exchange Act of 1934, as amended (the “Exchange Act”)) unless such
Notes have been surrendered for repurchase for the account of an Eligible
Institution. Notes subject to any properly withdrawn Repurchase Notice
will be deemed not validly surrendered for purposes of the Put Option.
Notes withdrawn from the Put Option may be re-surrendered by following the Repurchase
Notice procedures described in Section 3 above.
HOLDERS THAT WITHDRAW THROUGH DTC NEED NOT
SUBMIT A PHYSICAL WITHDRAWAL NOTICE TO THE PAYING AGENT IF SUCH HOLDERS COMPLY
WITH THE WITHDRAWAL PROCEDURES OF DTC.
5. Payment for Notes
Surrendered for Repurchase
.
The Repurchase Price for any Notes with respect to which a valid Repurchase
Notice has been delivered and not withdrawn shall be paid to the Holder
promptly following the later of the Repurchase Date and the time of delivery of
such Notes by the Holder thereof in the manner required by the Indenture.
Each Holder of a beneficial interest in the Notes that has properly delivered a
Repurchase Notice with respect to such beneficial interest through DTC and not
validly withdrawn such delivery at or before 5:00 p.m., New York City
time, on June 15, 2012, will receive the Repurchase Price promptly following
the later of the Repurchase Date and the time of delivery of such Notes by the
Holder thereof to the Paying Agent in the manner required by the Indenture.
The total
amount of funds required by GR to repurchase all of the Notes that GR
anticipates will be tendered pursuant to the Amended Notice is $25.2 million
assuming (i) all of the Notes are validly surrendered for repurchase and
accepted for payment, (ii) the Large Noteholders surrender a maximum of $12.7
million in principal amount of their Notes for cash pursuant to the agreement among
the Large Noteholders and GR and (iii) the Holders of the remaining $12.5
million in principal amount of the outstanding Notes surrender all of their
Notes for repurchase. Tendered Notes will be repurchased with cash on hand.
6. Notes Acquired
. Any Notes repurchased by GR
pursuant to the Put Option will be delivered to and cancelled by the Trustee,
pursuant to the terms of the Indenture.
7. Alternative Transaction .
The Company has agreed with
holders identified below (the “Large Noteholders”) of approximately 87.8% of
the Company’s outstanding 5.50% senior subordinated convertible notes (“Notes”)
to refinance the Notes pursuant to the terms of the Subordinated Note
Restructuring Agreement dated May 25, 2012 (the “Restructuring Agreement”). The
Notes were issued pursuant to an Indenture (the “Indenture”), dated May 18,
2007, by and between the Company and The Bank of New York Mellon, as successor
in interest to The Bank of New York, as Trustee and the Co-Trustee named
therein. As of May 25, 2012, there was $102,347,000.00 aggregate principal
amount of Notes outstanding.
The Notes will be restructured
in one of two ways: (1) if the Company’s shareholders approve the proposed
restructuring, as recommended by the Board and management, then the Notes will
be restructured as provided below under “Proposed Restructuring”; and (2) if
the Company’s shareholders do not approve the Proposed Restructuring, the Notes
will be restructured as provided below under “Replacement Restructuring.” The
Proposed Restructuring is subject to Shareholder approval and subject to such
consents as may be required under the Indenture and, if approved, will allow
the Company to redeem and restructure its Notes with a combination of cash,
common shares, new terms for the remaining balance of the Notes and a
Contingent Value Right, each as further described below.
In fulfillment of its
obligations under the Indenture, the Company announced on May 17, 2012 that it
would repurchase all Notes validly surrendered for repurchase and not withdrawn
at a repurchase price of 100% of the principal amount of Notes, plus any
accrued and unpaid interest to, pursuant to a Right of Repurchase provided in
the Indenture. The Large Noteholders agreed pursuant to the Restructuring Agreement
to surrender a specified percentage of their Notes as follows:
-
Steelhead Navigator Master, L.P. will put 5% of
its Notes to the Company for cash pursuant to the Put Option under the terms
of the Indenture. The remaining 95% of its Notes (in the approximate
amount of $54.123 million) will be restructured as set forth below.
-
Funds managed by Greywolf Capital Management LP
will put 50% of its Notes to the Company for cash pursuant to the Put
Option under the terms of the Indenture. The remaining 50% of its Notes
(in the approximate amount of $9.836 million) will be restructured as set
forth below.
-
All Notes owned by funds managed by West Face
Capital Inc. (in the approximate amount of $13.229 million) will be
restructured as set forth below.
Proposed Restructuring
Under the terms of the Proposed
Restructuring, the Notes of the Large Noteholders that are not put to the
Company for cash will be modified upon the following terms for each $1,000 in
principal amount, plus any accrued and unpaid interest on the Notes through the
date on which the Proposed Restructuring is consummated (the “Closing Date”).
-
$700 principal amount of Notes that are not put
to the Company shall be exchanged for (i) USD $200.00 in cash, (ii) 147.06
Common Shares, and (iii) a pro rata portion of the aggregate 5% Contingent
Value Right payable in respect of all Subject Notes; and
-
$300 principal of Notes that are not put to the
Company shall remain outstanding and represent the same continuing
indebtedness, subject to the amended terms set forth in a Supplemental
Indenture (or other Amended Note Documentation, as defined in the
Restructuring Agreement) as follows (such Notes, as modified, referred to
in this Amended Notice as “Modified Notes”):
-
the maturity date will be June 29, 2014;
-
the Conversion Rate will be increased from
132.6260 shares of Common Stock per $1,000 in principal amount of
Modified Notes (equivalent to a Conversion Price of $7.54) to 250 shares
of Common Stock per $1,000 in principal amount of Modified Notes
(equivalent to a Conversion Price of $4.00);
-
the Holder may convert its Modified Notes to
shares of Common Stock at the Conversion Price at any time after the
Closing Date upon 3 days prior written notice to the Company;
-
the Company shall have a mandatory obligation to
redeem the Modified Notes then outstanding, in whole or in part, for an
amount of cash equal to 120% of the face value thereof plus accrued and
unpaid interest upon (i) the Company’s receipt of payment of a settlement
or award with respect to its pending arbitration proceedings related to
Venezuela’s expropriation of the Brisas Project (any such settlement or
award, the “Arbitration Award”) or (ii) the Company’s receipt of proceeds
from sale or other disposition of its mining data (the “Mining Data
Sale”), in each case with 20 days’ notice to the Large Noteholders;
provided, however, that the Company’s redemption obligations in (i) and
(ii) shall be limited to the amount of the proceeds received by the
Company (provided, further, that any subsequent receipt of additional
proceeds shall be applied in a similar manner until such time as the
redemption obligations have been satisfied in full);
-
the Company may redeem the Modified Notes, in
whole or in part upon 20 days’ notice to the Large Noteholders, for
shares of Common Stock at the conversion price plus cash for any accrued
and unpaid interest if the closing sale price of its common shares is
equal to or greater than 200% of the conversion price for at least 20
trading days in the period of 30 consecutive trading days (and, for the
avoidance of doubt with respect to the Modified Notes, this provision
shall override the provision in the Indenture that permits the Company to
redeem the Notes at any time after June 16, 2012); and
-
unless previously converted by the Large Holder,
or redeemed by the Company, the Company may satisfy the Notes, at
maturity, by payment of cash in an amount equal to the principal plus
accrued and unpaid interest thereon.
Each Large Noteholder will be
entitled to a contingent value right (“CVR”) that will entitle the Large
Noteholders to receive, net of certain deductions, a pro rata portion of and
aggregate amount of 5% of the proceeds actually received by the Company with
respect to (i) the Arbitration Award and (ii) the Mining Data Sale, net of
certain deductions. The Large Noteholders will be eligible to participate pro
rata in the 5% CVR. The proceeds received by the Company in which the Large
Noteholders will participate through the CVR may be cash, commodities, bonds,
shares or any other consideration received by the Company as a result of the
Arbitration Award or the Mining Data Sale. If such proceeds are other than
cash, the Large Noteholders shall receive their pro rata share of 5% of such
non-cash proceeds, net of any required deductions (e.g., for taxes) based upon
the fair market value of such non-cash proceeds. For purposes of the
foregoing, each Holder’s pro rata share of the CVR shall be based on the amount
of such Holder’s Notes that are amended.
The obligations under the CVR
may be accelerated upon the occurrence of an Enterprise Sale, which includes any
(i) merger, plan of arrangement or other business combination transaction
involving the Company or any of its subsidiaries, (ii) a sale, pledge (with
certain limited exceptions), transfer or other disposition of 85% or more of
the Company’s then outstanding shares or (iii) sale, pledge, transfer or other
disposition, directly or indirectly, of all or substantially all of the assets
of the Company.
In addition, each Holder that
participates in the Proposed Restructuring will be entitled to an additional
cash payment of a pro rata percentage (based on the outstanding principal
amount of the Notes held by such Holder) of a maximum of up to $1,000,000
depending upon the participation of the Holders in the Alternate Transaction.
The cash, Common Shares,
Modified Notes and Contingent Value Rights to be delivered by the Company if
the Proposed Restructuring is approved by the Shareholders is collectively
referred to as the “Offer Consideration.”
The CVR will be increased
proportionately for any Other Holders that elect to participate in the
Alternative Election and the CVR amounts will be shared pro rata with holders
of the Notes who participate in the Proposed Restructuring based on the
principal amount of Notes delivered to the Company by all participating holders
of Notes.
Replacement Restructuring
If the shareholders do not
approve the Proposed Restructuring, and the transactions contemplated thereby,
the following changes will be made with respect to the Notes or the Notes will
be exchanged for new notes which have terms substantially similar to the Notes,
with the changes listed below (collectively referred to as “Replacement
Restructuring”). For the avoidance of doubt, all Other Holders that elect the
Alternative Election will receive the same treatment automatically.
-
the Repurchase Date (as defined in the Indenture)
will be deferred for 90 days (to Friday, September 14, 2012);
-
the price of the Common Stock to be used in calculating
the number of Common Shares to be delivered upon exercise of the
Repurchase Put Right (as defined in the Indenture) will have a floor price
of $3.61 and a ceiling price of $4.00;
-
the
Conversion Rate will be increased from 132.6260 shares of Common Stock per
$1,000 principal amount of Notes (equivalent to a Conversion Price of
$7.54) to 250 shares of Common Stock per $1,000 principal amount of Notes
(equivalent to a conversion price of $4.00 per share);
-
subject to the mandatory redemption obligation
specified immediately below, the Company will not exercise its redemption
rights before September 14, 2014;
-
the Company shall redeem the Notes then
outstanding, in whole or in part (on a pro-rata basis), for an amount of
cash equal to 120% of the face value thereof plus accrued and unpaid
interest upon (i) the Company’s receipt of payment of the Arbitration
Award or (ii) the Company’s receipt of proceeds from the Mining Data Sale,
in each case with 20 days’ notice to the Large Noteholders; provided,
however, that the Company’s redemption obligations in (i) and (ii) shall
be limited to the amount of the proceeds received by the Company
(provided, further, that any subsequent receipt of additional proceeds
shall be applied in a similar manner until such time as the redemption
obligations have been satisfied in full); and
-
the Company will provide a first priority blanket
lien on all of the Company’s mining data to secure the Company’s
obligations under the Notes and the Company shall deliver such instruments
and agreements on the date of close as the Large Noteholders may
reasonably require to memorialize and perfect the first-priority security
interest in all of the Company’s mining data.
If shareholder approval is obtained on or
prior to June 27, 2012, then, subject to the satisfaction or waiver of the
other conditions set forth in the Restructuring Agreement, the Company
anticipates closing the Proposed Restructuring on June 29, 2012. If shareholder
approval is not obtained by June 27, 2012, then, subject to certain exceptions,
the Replacement Restructuring shall be consummated on June 29, 2012. If shareholder
approval is obtained after the June 27, 2012, but prior to July 31, 2012, then,
the closing of the Proposed Restructuring shall occur on the earlier of (i) two
Business Days following the date of such shareholder approval or (ii) July 31,
2012. The failure of the Company to hold the meeting at which it seeks shareholder
approval on or prior to June 27, 2012 shall be a breach of the Restructuring
Agreement and the Company shall pay to each Large Noteholder such Holder’s pro
rata portion of $125,000, multiplied by the number of Business Days from the
fifth Business Day following June 27, 2012 through the date on which the
meeting is held at which Shareholder approval is sought.
If a meeting of shareholders has been held
at which approval of the Proposed Restructuring has been sought as provided
herein but such meeting has not been held on or prior to June 27, 2012, and shareholder
approval is not obtained at such meeting, then, the Company shall close on the Replacement
Restructuring on the earlier of (x) two Business Days following the date of
such meeting or (y) July 31, 2012. The failure of the Company to hold the
meeting at which it seeks shareholder approval on or prior to June 27, 2012
shall be a breach of the Restructuring Agreement and the Company shall pay to
each Large Noteholder such Holder’s pro rata portion of $125,000, multiplied
by the number of Business Days from the fifth Business Day following June 27,
2012 through the date on which the meeting is held at which shareholder
approval is sought.
If the Replacement Restructuring closing
has not occurred by August 15, 2012, for any reason, each Large Noteholder (and
each Other Holder, as applicable) may elect to have the Company redeem any or
all of the Notes held by it on such date in accordance with the terms of the
Indenture by providing written notice of such election within 30 days of August
15, 2012.
The failure of the Company to obtain shareholder
approval of the Proposed Restructuring, as set forth in the Restructuring
Agreement, and the transactions contemplated thereby, would have adverse
consequences to the Company, including the following:
-
The Large Noteholders will retain the right to
put their Notes to the Company, which has the option to pay for the Notes
with its Common Shares;
-
Shareholders would be subject to dilution because
the Company would not satisfy 20% of the Large Holder’s Notes for cash;
and
-
The limited waivers executed by the Company’s
executive management and directors would not apply, thereby resulting in
substantial change in control payments.
The foregoing summary is
qualified in its entirety by the Subordinated Note Restructuring Agreement, a
copy of which is attached as Exhibit 99.1 to the Company’s
Report on Form 6-K filed with the SEC on
May 30, 2012
.
Support of Proposed
Restructuring; Waiver of Certain Change of Control Rights in Connection with
Proposed Restructuring
Members of management and the
directors have agreed to support the transactions contemplated by the
Restructuring Agreement and have agreed to limited waivers of their rights
under their respective change in control agreements with respect to the Proposed
Restructuring. In consideration for such waivers, the Company has agreed to pay
an aggregate amount of $337,850 to those directors and employees who agree to
execute limited waivers. Each individual salaried employee will be paid an
amount of cash
equal to 25% of his or her annual
salary, Mr. Coleman will be paid $25,000, Mr. Geyer will be paid $20,000;
however, Messrs. Potvin, McChesney and Mikkelsen agreed to forgo an immediate
cash payment by accepting a participation of up to 2% of the pool established
under the Bonus Plan described below under 2012 Bonus Pool Plan.
Recommendation of the Board
The Board has concluded that the approval
of the Proposed Restructuring, as set forth in the Restructuring Agreement, and
consummation of the transactions described therein, is in the best interests of
the Company.
8. Procedures to be Followed
by Holders Electing to Participate in Alternative Transaction
.
The tender of a Note pursuant to a validly
executed Letter of Transmittal and the acceptance of tendered Notes by us will
constitute a binding agreement between the tendering Holder and us upon the
terms and conditions described in Section 7 and in the accompanying Letter of Transmittal.
Except as described below, a holder who wishes to tender Notes for the Offer
Consideration must tender either through ATOP, and follow the procedures for
book-entry transfer described below, or by signing and returning the
appropriate Letter of Transmittal, including all other documents required by
the Letter of Transmittal. We do not intend to permit tenders of Notes by
guaranteed delivery procedures. All Notes not tendered for the Offer
Consideration in connection with the Alternative Election will be returned to
the tendering holders at our expense promptly after the termination or
withdrawal of the Alternative Election.
THE METHOD OF DELIVERY OF NOTES, LETTERS
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF
THE HOLDER. IF DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY
BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
8.1
Method of Delivery
To effectively tender Notes held through
DTC, DTC participants may electronically transmit their tender through ATOP,
for which the transaction will be eligible, and DTC will then edit and verify
the acceptance and send an Agent’s Message (as defined below) to the Agent for
its acceptance. Delivery of tendered outstanding Notes held through DTC must,
if made by book-entry delivery, be made to the Agent pursuant to the book-entry
delivery procedures set forth below. The term “Agent’s Message” means a message
transmitted by DTC, received by the Agent, which states that DTC has received
an express acknowledgement from the DTC participant tendering Notes that such
DTC participant has received and agrees to be bound by the terms of the Alternative
Election as set forth in this Amended Notice and the applicable letter(s) of
transmittal and that we may enforce such agreement against such participant.
Delivery of the Agent’s Message by DTC may be done in lieu of execution and
delivery of a letter of transmittal by the participant identified in the
Agent’s Message. Accordingly, a letter of transmittal need not be completed by
a holder tendering through ATOP (although, as stated above, the holder will be
deemed to be bound by the terms of the Offer as set forth in this Offer and the
applicable letter(s) of transmittal with respect to all securities so
tendered).
8.2
Delivery of Notes
The Agent will establish one or more
accounts with respect to the outstanding Notes at DTC for purposes of the
Offer. Any financial institution that is a participant in DTC may make
book-entry delivery of their outstanding Notes by causing DTC to transfer their
outstanding shares or Notes to the Agent’s account at DTC in accordance with
DTC’s procedures for transfer. DTC will then send an Agent’s Message to the
Agent. Although delivery of outstanding Notes may be effected through
book-entry at DTC, the letters of transmittal, with any required signature
guarantees, or an Agent’s Message in connection with a book-entry transfer,
plus, in any case, all other required documents, must be transmitted to and
received by the Agent at one or more of its addresses set forth in this Offer
to Exchange prior to 5:00 p.m., New York City time, on the Alternative
Transaction Expiration Date.
Holders desiring to tender Notes on the Alternative
Election Expiration Date through ATOP should note that they must allow
sufficient time for completion of the ATOP procedures during the normal
business hours of DTC. Unless the Notes being tendered are deposited with the
Agent at or prior to 5:00 p.m. on the Alternative Election Expiration Date
(accompanied by a properly transmitted Agent’s Message in the case of Notes
tendered through ATOP), we may, at our option, treat such tender as defective
and decline to accept the tendered securities for payment of the Offer
Consideration.
Each signature on a letter of transmittal
or a notice of withdrawal, as the case may be, must be guaranteed, unless the
Notes surrendered for exchange with that letter of transmittal are tendered
(1) by a registered holder of the Notes who has not completed either the
box entitled “Special Exchange Instructions” or the box entitled “Special
Delivery Instructions” in the letters of transmittal, or (2) for the
account of a financial institution (including most commercial banks, savings
and loan associations and brokerage houses) that is a participant in the
Security Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program,
each known as an “eligible institution.” In the event that a signature on a
letter of
transmittal, or a notice of withdrawal, as
the case may be, is required to be guaranteed, the guarantee must be by an
eligible institution. The term “registered holder” as used in this paragraph
with respect to the Notes means any person in whose name the Notes are
registered on the books of the registrar for the Notes.
All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of Notes
tendered for exchange will be determined by us in our sole discretion. We and
the Agent reserve the absolute right to reject any and all Notes not properly
tendered and to reject any Notes the acceptance of which might, in our judgment
or in the judgment of the Agent or their counsel, be unlawful. We and the Agent
also reserve the absolute right to waive any defects or irregularities or
conditions of the Offer as to particular Notes either before or after the Offer
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender Notes in the Offer). Unless waived, any defects or
irregularities in connection with tenders of Notes for exchange must be cured
within the period of time we determine. We and the Agent will use reasonable
efforts to give notification of defects or irregularities with respect to
tenders of Notes for exchange but will not incur any liability for failure to
give the notification. We will not deem Notes tendered until irregularities
have been cured or waived.
Any determination by the Company as to the
validity, form, eligibility and acceptance of Notes for the Offer
Consideration, or any interpretation by the Company as to the terms and conditions
of the Offer, is subject to applicable law and, if challenged by holders of
Notes or otherwise, to the judgment of a court of competent jurisdiction.
If any letter of transmittal, endorsement,
bond power, shares, power of attorney or any other document required by the
letter of transmittal is signed by a trustee, executor, corporation or other
person acting in a fiduciary or representative capacity, the signatory should
so indicate when signing, and, unless waived by us, submit proper evidence of the
person’s authority to so act, which evidence must be satisfactory to us in our
sole discretion.
Any beneficial owner of the Notes whose
Notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender Notes in the Offer should
contact the registered holder promptly and instruct the registered holder to
tender on the beneficial owner’s behalf. If the beneficial owner wishes to
tender directly, the beneficial owner must, prior to completing and executing
the appropriate letter of transmittal and tendering Notes, make appropriate
arrangements to register ownership of the Notes in the beneficial owner’s name.
Beneficial owners should be aware that the transfer of registered ownership may
take considerable time.
8.3
Withdrawal Rights
You may withdraw your tender of Notes pursuant
to the Alternative Election at any time prior to 5:00 p.m. (New York City time)
on the Alternative Election Expiration Date. You may only withdraw your tender
of Notes after the Alternative Election Expiration Date as permitted by law.
For a withdrawal of a tender of Notes to
be effective, a written or facsimile transmission notice of withdrawal must be
received by the Agent at or prior to 5:00 p.m. on the Alternative Election Expiration
Date, by mail, fax or hand delivery or by a properly transmitted “Request
Message” through ATOP. Any such notice of withdrawal must:
·
specify the name of
the person who tendered the Notes to be withdrawn and the name of the DTC
participant whose name appears on the security position listing as the owner of
such Notes, if different from that of the person who deposited the Notes;
·
contain the aggregate
liquidation preference or principal amount represented by the Notes to be
withdrawn;
·
unless transmitted
through ATOP, be signed by the holder thereof in the same manner as the
original signature on the applicable letter of transmittal, including any
required signature guarantee(s); and
-
if the applicable letter of transmittal was
executed by a person other than the DTC participant whose name appears on
a security position listing as the owner of the Notes, be accompanied by a
properly completed irrevocable proxy that authorized such person to effect
such withdrawal on behalf of such holder.
Withdrawal of Notes can only be
accomplished in accordance with the foregoing procedures. Holders may not
rescind their valid withdrawals of tendered Notes. However, Notes validly
withdrawn may thereafter be retendered at any time at or prior to 5:00 p.m. on
the Alternative Election Expiration Date by following the procedures described
under “—Delivery of Notes.”
All questions as to the form and validity
(including time of receipt) of any notice of withdrawal of a tender will be
determined by us. In the event of a dispute, a court of competent jurisdiction
has the power to review and make binding determinations with respect to our
determinations of these matters. We reserve the absolute right to reject any or
all attempted withdrawals of Notes that are not in proper form or the
acceptance of which would, in our opinion, be unlawful. We also reserve the
right to waive any defects, irregularities or conditions of a withdrawal as to
particular Notes. A waiver of any defect or irregularity with respect to the
withdrawal of one Note shall not constitute a waiver of
the same or any other defect or irregularity with respect to the withdrawal of
any other Note except to the extent we may otherwise so provide. Withdrawals of
Notes shall not be deemed to have been made until any defects or irregularities
have been waived by us or cured. None of us, the Agent, the information agent
or any other person will be under any duty to give notification of any defect
or irregularity in any notice of withdrawal of a tender or incur any liability
for failure to give any such notification.
9. Interests of Directors,
Executive Officers and Affiliates of GR in the Notes
.
Pursuant to the Restructuring Agreement,
GR’s executive officers and directors will enter into Change of Control Waiver
Agreements, whereby such executive officers and directors will waive their
rights to receive change of control payments that would otherwise be triggered
pursuant to the Proposed Restructuring.
In connection with services to GR, each of
GR’s executive officers and directors is a party to stock option, stock unit or
restricted stock plans or other arrangements involving the Common Stock.
Except as described above, GR is not and to the knowledge of GR, none of its affiliates,
directors or executive officers, is a party to any contract, arrangement,
understanding or agreement with any other person relating, directly or
indirectly, to the Put Option or with respect to the Notes, including, but not
limited to, any contract, arrangement, understanding or agreement concerning
the transfer or the voting of the securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies, consents or authorizations.
A list of the directors and executive
officers of GR is attached to this Amended Notice as Annex A.
Except as otherwise disclosed herein, to
the knowledge of GR:
·
none of GR or its
executive officers, directors, subsidiaries or other affiliates has any
beneficial interest in the Notes;
·
none
of the officers or directors of the
subsidiaries of GR has any beneficial interest in the Notes;
·
GR
will
not repurchase any Notes from such
persons; and
·
during the
60 days preceding the date of this Amended Notice, none of GR or its
officers, directors or
affiliates
has
engaged in any transactions in the Notes.
10. Comparison of Rights Among
the Common Stock, the Notes and the Modified Notes.
The following briefly summarizes the material
differences between the rights of holders of the Notes, the rights of holders
of the Modified Notes and the rights of holders of our Common Stock. The
discussion below is a summary and is qualified in its entirety by reference to
our Articles of Incorporation, the Indenture relating to the Notes, the
Supplemental Indenture relating to the Modified Notes, our Bylaws and
applicable laws of Yukon, Canada. We urge you to read these documents for a
more complete understanding of the differences between the Notes, the Modified Notes
and the Common Stock.
Governing Documents
Notes
: Holders of the Notes have the rights set
forth in the Indenture.
Modified Notes
: Holders of the Modified Notes have the
rights set forth in the Supplemental Indenture.
Common Stock
: Holders of our Common Stock have the
rights set forth in our Articles of Incorporation, the bylaws and the laws of
Yukon, Canada.
Dividends, Distributions and Interest
Payments
Notes
: Interest accrues at 5.50% per year
on the principal amount and is payable semi-annually in arrears on June 15
and December 15 of each year.
Modified Notes
: Interest will accrue at 5.50% per
year on the principal amount and will be payable semi-annually in arrears on
June 15 and December 15 of each year.
Common Stock
: Shareholders are entitled to dividends
if, as and when declared by our board of directors. We have not declared cash
or share dividends since 1984 and have no present plans to pay any cash or
share dividends. We may declare cash or share dividends in the future only if
our earnings and capital are sufficient to justify the payment of such
dividends.
Ranking
Notes
: The Notes are unsecured obligations and
rank (1) subordinate in right of payment to future unsubordinated indebtedness,
and are effectively subordinate to the extent of the collateral securing such
indebtedness, (2) subordinate to senior secured bank indebtedness in right of
payment, and are effectively subordinate to the extent of the collateral
securing such indebtedness, (3) subordinate in right of payment to any
guarantee of the indebtedness described in (1) or (2) by us or any of our
subsidiaries for the period that the guarantee is in effect, (4) equal in right
of payment to any of our other existing and future unsecured and unsubordinated
indebtedness, and (5) senior in right of payment to all of our future
subordinated debt. However, the Notes are effectively subordinated to all
future secured debt to the extent of the security on such other indebtedness
and to all existing and future obligations of our subsidiaries.
Modified Notes
: The Modified Notes will be unsecured
obligations and rank (1) subordinate in right of payment to future
unsubordinated indebtedness, and will be effectively subordinate to the extent
of the collateral securing such indebtedness, (2) subordinate to senior secured
bank indebtedness in right of payment, and will be effectively subordinate to
the extent of the collateral securing such indebtedness, (3) subordinate in
right of payment to any guarantee of the indebtedness described in (1) or (2)
by us or any of our subsidiaries for the period that the guarantee is in
effect, (4) equal in right of payment to any of our other existing and future
unsecured and unsubordinated indebtedness, and (5) senior in right of payment
to all of our future subordinated debt. However, the Modified Notes will be
effectively subordinated to all future secured debt to the extent of the
security on such other indebtedness and to all existing and future obligations
of our subsidiaries.
Common Stock
: The Common Stock ranks junior with
respect to rights upon liquidation, dissolution or winding-up to all of our
other securities and indebtedness, including the Notes and the Modified Notes.
Conversion Rights
Notes
: Holders may convert their Notes into
shares of Common Stock at the applicable conversion rate, at any time prior to
stated maturity, in multiples of $1,000 principal amount. The conversion rate
for the Notes is 132.626 shares of Common Stock per $1,000 principal amount of Notes
(equal to a conversion price of approximately $7.54 per share), subject to
adjustment. Upon conversion, we will have the option to deliver cash, common
shares or a combination of cash and common shares. In addition, following
certain corporate transactions that occur prior to maturity, we will increase
the conversion rate for a holder who elects to convert its Notes in connection
with such corporate transactions by a number of additional common shares. You
will not receive any additional cash payment or additional shares representing
accrued and unpaid interest and additional interest, if any, upon conversion of
a Note, except in limited circumstances. Instead, interest will be deemed paid
by the common shares and cash, if any, issued to you upon conversion.
Modified Notes
: Holders may convert their Modified Notes
into shares of Common Stock at the applicable conversion rate, at any time
after the closing date of the Modified Notes offering upon three (3) days prior
written notice to the Company, in multiples of $1,000 principal amount. The
conversion rate for the Modified Notes will be 250 shares of Common Stock per
$1,000 principal amount of Modified Notes (equal to a conversion price of
approximately $4.00 per share), subject to adjustment. Upon conversion, we will
have the option to deliver cash, common shares or a combination of cash and
common shares. In addition, following certain corporate transactions that occur
prior to maturity, we will increase the conversion rate for a holder who elects
to convert its Modified Notes in connection with such corporate transactions by
a number of additional common shares. You will not receive any additional cash
payment or additional shares representing accrued and unpaid interest and
additional interest, if any, upon conversion of an Amended Note, except in
limited circumstances. Instead, interest will be deemed paid by the common
shares and cash, if any, issued to you upon conversion.
Common Stock
: In February 1999, the shareholders of
Gold Reserve Corporation approved a plan of arrangement as a result of which
Gold Reserve Corporation became a subsidiary of the Company. Generally, each
shareholder of Gold Reserve Corporation received one Class A common share of
the Company for each common share owned in Gold Reserve Corporation. Certain
U.S. holders elected, for tax reasons, to receive equity units instead of Class
A common shares. Each equity unit consists of one Class B common share of the
Company and one Gold Reserve Corporation Class B common share, which consideration
was substantially equivalent to a Class A common share and is generally
immediately convertible into a Class A common share. Holders of Class A common
shares and Class B common shares are generally entitled to one vote per share
and to vote together as a single class. Equity units, of which 500,236 were
issued and outstanding at May 31, 2012, are not listed for trading on any stock
exchange, but subject to compliance with applicable federal, provincial and
state securities laws, may be transferred.
Voting Rights
Notes
: Holders of Notes have no voting rights.
Modified Notes
: Holders of Modified Notes have no voting
rights.
Common
Stock
: Each holder of
Common Stock is entitled to one vote for each share of Common Stock owned of
record on any resolution to be passed at a meeting of shareholders.
Redemption at Holder’s Option
Notes
: Holders may require us to purchase all
or a portion of their notes on June 15, 2012 at a price equal to 100% of the
principal amount of the notes to be purchased, plus accrued and unpaid
interest, if any. In addition, if we experience specified types of fundamental
changes, holders may require us to repurchase all or a portion of their notes
at a price equal to 100% of the principal amount of the notes to be purchased,
plus accrued and unpaid interest, if any. We may choose to pay the purchase
price in connection with a purchase of the notes at the option of the holder or
upon a fundamental change in cash, common shares or any combination of cash and
common shares.
Modified Notes
: If we experience specified types of
fundamental changes, holders may require us to repurchase all or a portion of
their notes at a price equal to 100% of the principal amount of the notes to be
purchased, plus accrued and unpaid interest, if any. We may choose to pay the
purchase price in connection with a purchase of the notes at the option of the
holder or upon a fundamental change in cash, common shares or any combination
of cash and common shares.
Common Stock
: The Common Stock is not redeemable at
the holder’s option.
Redemption at Our Option
Notes
: The Notes are redeemable by the Company
any time until June 15, 2012, in whole or in part, for cash at a price equal to
100% of the principal amount being redeemed plus accrued and unpaid interest
to, but excluding, the redemption date, if the closing sale price of the Common
Shares on the NYSE-Amex is equal to or greater than 150% of the applicable
conversion price then in effect for at least 20 trading days in the period of
30 consecutive trading days ending on the trading day prior to the date of
mailing of the notice of redemption. Beginning on June 16, 2012, the Company
may, at its option, redeem all or part of the Notes for cash at a price equal
to 100% of the principal amount being redeemed plus accrued and unpaid interest
to, but excluding, the redemption date.
Modified Notes
: The Company shall have a mandatory
obligation to redeem the Modified Notes then outstanding, in whole or in part,
for an amount of cash equal to 120% of the face value thereof plus accrued and
unpaid interest upon (i) the Company’s receipt of payment of a settlement or
award with respect to its pending arbitration proceedings related to
Venezuela’s expropriation of the Brisas Project (any such settlement or award,
the “Arbitration Award”) or (ii) the Company’s receipt of proceeds from sale or
other disposition of its mining data (the “Mining Data Sale”), in each case
with 20 days’ notice to the Large Noteholders; provided, however, that the
Company’s redemption obligations in (i) and (ii) shall be limited to the amount
of the proceeds received by the Company (provided, further, that any subsequent
receipt of additional proceeds shall be applied in a similar manner until such
time as the redemption obligations have been satisfied in full).
The Company may redeem the Modified Notes,
in whole or in part upon 20 days’ notice to the Large Noteholders, for shares
of Common Stock at the conversion price plus cash for any accrued and unpaid
interest if the closing sale price of its common shares is equal to or greater
than 200% of the conversion price for at least 20 trading days in the period of
30 consecutive trading days (and, for the avoidance of doubt with respect to
the Modified Notes, this provision shall override the provision in the
Indenture that permits the Company to redeem the Notes at any time after June
16, 2012).
Common Stock
: The Common Stock is not redeemable at
our option.
Listing
Notes
: The Notes are not listed on any
securities exchange or any automated dealer quotation system.
Modified Notes
: The Modified Notes will not be listed on
any securities exchange or any automated dealer quotation system.
Common Stock
: The Common Stock is listed for trading
in Canada on the TSX Venture Exchange under the symbol “GRZ.V.” Prior to
February 1, 2012, the shares of Common Stock were traded on the TSX. The
shares are also traded in the United States on the NYSE MKT under the symbol
“GRZ.”
11. Purchases of Notes by GR
. Each of GR and its affiliates,
including its executive officers and directors, are prohibited under applicable
U.S. federal securities laws from repurchasing the Notes (or the right to
repurchase the Notes) other than through the Put Option until at least the
tenth business day after the Repurchase Date. Following such time, if any
Notes remain outstanding, GR and its affiliates may purchase Notes in the open
market, in private transactions, through a subsequent tender offer, or
otherwise, any of which may be consummated at purchase prices higher or lower
than the Repurchase Price. Any decision to purchase Notes after the
expiration of the Put Option, if any, will depend upon many factors, including
the market price of the Notes, the
amount of Notes
surrendered for purchase pursuant to the Put Option, the market price of the
Common Stock, the business and financial position of GR, and general economic
and market conditions.
12. Certain Material U.S. Federal
Income Tax Considerations for U.S. Holders.
Certain U.S. federal income tax
considerations
.
The following is a summary of certain
material U.S. federal income tax considerations relating to the exercise of the
Put Option, the acquisition, ownership, and disposition of Modified Notes,
Common Shares, cash and CVRs acquired pursuant to the Proposed Restructuring,
and the ownership and disposition of Common Shares acquired upon a conversion
of a Note or Modified Note (collectively, the “Transactions”) for U.S. Holders
(defined below).
This summary is for general information
purposes only and does not purport to be a complete analysis or listing of all
potential U.S. federal income tax consequences that may apply to a U.S. Holder.
In addition, this summary does not take into account the individual facts and
circumstances of any particular Holder that may affect the U.S. federal income
tax consequences. Accordingly, this summary is not intended to be, and should
not be construed as, legal or U.S. federal income tax advice with respect to
any Holder. Each Holder should consult its own financial advisor, legal
counsel, or accountant regarding the U.S. federal income tax consequences of
the Transactions.
Authorities
.
This summary is based on the Code, temporary, proposed and final
Treasury Regulations promulgated thereunder, published rulings of the Internal
Revenue Service (the "IRS"), published administrative positions of
the IRS, and U.S. court decisions that are applicable and, in each case, as in
effect and available, as of the date hereof. All of the authorities on which
this summary is based are subject to differing interpretations and could be
changed in a material and adverse manner at any time, and any such change could
be applied on a retroactive basis. In such event, the U.S. federal income tax consequences applicable to a U.S. Holder could differ from those described
in this summary. This summary does not discuss the potential effects, whether
adverse or beneficial, of any proposed legislation that, if enacted, could be
applied on a retroactive basis.
U.S. Holders
. For purposes of this summary, a
"U.S. Holder" is a beneficial owner of Notes, Modified Notes, Common
Shares and CVRs that, for U.S. federal income tax purposes, is (a) an
individual who is a citizen or resident of the U.S., (b) a corporation, or
other entity taxable as a corporation for U.S. federal income tax purposes,
that was created or organized in or under the laws of the U.S., any state
thereof or the District of Columbia, (c) an estate the income of which is
subject to U.S. federal income taxation regardless of its source, or (d) a
trust, if (1) a court within the U.S. can exercise primary supervision
over the trust and one or more U.S. persons have the authority to control
all substantial decisions of the trust, or (2) the trust was in existence
on August 20, 1996, and validly elected to be treated as a U.S. person.
Non-U.S. Holders
. For purposes of this summary, a
"non-U.S. Holder” is a beneficial owner of Notes, Modified Notes, Common
Shares and CVRs other than a U.S. Holder. A non-U.S. Holder should consult its
own financial advisor, legal counsel, or accountant regarding the U.S. federal income tax consequences (including the potential application of and operation
of any income tax treaties) of the Transactions.
U.S. Holders subject to special U.S.
federal income tax rules not addressed
. This summary applies only to U.S. Holders that hold the Notes,
Modified Notes, Common Shares and CVRs as “capital assets” within the meaning
of Section 1221 of the Code, and does not purport to deal with U.S. Holders
that are subject to special provisions under the Code, including U.S. Holders
that: (a) are tax-exempt organizations, qualified retirement plans, individual
retirement accounts, or other tax-deferred accounts; (b) are financial institutions,
insurance companies, real estate investment trusts, or regulated investment
companies; (c) are dealers in securities, commodities or currencies, or Holders
that are traders in securities or commodities that elect to apply a
mark-to-market accounting method; (d) have a "functional currency"
other than the U.S. dollar; (e) are subject to the alternative minimum tax
under the Code; (f) own Notes, Modified Notes, CVRs or Common Shares as part of
a straddle, hedging transaction, conversion transaction, constructive sale, or
other arrangement involving more than one position; (g) acquired Notes or Common
Shares in connection with the exercise of employee stock options or otherwise
as compensation for services; (h) hold the Notes, Modified Notes, Common Shares
or CVRs other than as capital assets within the meaning of Section 1221 of the
Code; or (i) own (directly, indirectly, or constructively) 10% or more, by
voting power or value, of the outstanding shares of the Company. Holders that
are subject to special provisions under the Code, including Holders described
immediately above, should consult their own financial advisor, legal counsel or
accountant regarding the U.S. federal income tax consequences of the Transactions.
If a partnership holds the Notes, Modified
Notes, Common Shares or CVRs, the tax treatment of a partner in the partnership
will generally depend on the status of the partner and the activities of the
partnership. This summary does not address partnerships or partners in
partnerships. A person that is a partner in a partnership holding the Notes,
Modified Notes, Common Shares or CVRs should consult its own tax advisor
regarding the tax consequences of the Transactions.
Tax consequences other than U.S. federal
income tax consequences to U.S. Holders not addressed
. Other than the discussion of certain
Canadian tax consequences set forth below, this summary does not address the
consequences arising under U.S. federal estate, gift, or excise tax laws or the
tax laws of any applicable foreign, state, local or other jurisdiction. Each Holder
should consult its own financial advisor, legal counsel, or accountant
regarding the consequences of any of these laws on the Transactions. In
addition, this summary does not address the U.S. tax consequences
to non-U.S. Holders. Each non-U.S. Holder should consult its tax financial
advisor, legal counsel, or accountant regarding the U.S. tax consequences of
the Transactions.
We have determined that we are a "passive foreign
investment company" under the U.S. Internal Revenue
Code and, as a result, there may be adverse U.S. tax
consequences for U.S. Holders
.
U.S.
Holders should be aware that we have determined that we were a "passive
foreign investment company" (a "PFIC") under Section 1297(a) of
the Code for the taxable year ended December 31, 2007, when the Notes were
issued, we have continued to be a PFIC since that time, we expect to be a PFIC
for the taxable year ending December 31, 2012, and for the foreseeable future.
As a result, a U.S. Holder generally will be subject to adverse U.S. federal
income tax consequences, such as (i) being subject to U.S. federal income tax
at the highest rates applicable to ordinary income on at least a portion of any
"excess distribution" and gain on the sale of the Modified Notes and
Common Shares, as well as incurring an interest charge on the tax due thereon,
or (ii) at the election of the U.S. Holder, current taxation on either (A)
certain of our income or gains, regardless of whether any cash representing such
income or gain has been distributed, or (B) any increase in the fair market
value of the Common Shares as of the taxable year end, regardless of whether
such gain has been realized on a disposition of such Common Shares. These
adverse U.S. federal income tax consequences are described more fully below.
Additional adverse tax consequences could
result to U.S. Holders of the Modified Notes or Common Shares for any taxable
year in which we are (or were) a PFIC and have one or more non-U.S.
subsidiaries that is also a PFIC as to such U.S. Holders. These adverse U.S. federal income tax consequences are described more fully below.
Under certain circumstances, a U.S. Holder
that makes a timely and effective "qualified electing fund election"
(a "QEF election") will not be subject to the adverse taxation rules
for PFICs discussed above with respect to gains or excess distributions.
Instead, such U.S. Holder will be subject to U.S. federal income tax on its pro
rata share of our "net capital gain" and "ordinary
earnings" (calculated under U.S. federal income tax rules), regardless of
whether such amounts are actually distributed by us. We will satisfy record
keeping requirements and supply U.S. Holders with required information under
the QEF election rules in the event that we are a PFIC and a U.S. Holder wishes
to make a QEF election. Alternatively, a U.S. Holder may make a
"mark-to-market election" (“MTM election”) if we are a PFIC and the Common
Shares are "marketable stock" (as specifically defined). We believe
the Common Shares are "marketable stock" for this purpose. A U.S.
Holder that makes a mark-to-market election generally will include in gross
income, for each taxable year in which we are a PFIC, an amount equal to the
excess, if any, of (a) the fair market value of the Common Shares as of the
close of such taxable year over (b) such U.S. Holder's adjusted tax basis in
such Common Shares regardless of whether we have made any distributions to the
U.S. Holder.
A U.S. Holder of a Note or Modified Note may
not make a QEF election with respect to a Note or Modified Note. As a result,
a U.S. Holder of Common Shares arising from the conversion of the Note or
Modified Note, or from the Proposed Restructuring, cannot make a timely and
effective QEF election with respect to such shares if we are a PFIC at any time
during the period that such U.S. Holder holds the Note or Modified Note,
unless, as of the first day of the taxable year immediately following the
conversion, such Holder elects to recognize and be taxed under the PFIC rules
discussed above on the difference between the fair market value of the Common
Shares and his/her adjusted tax basis in the Common Shares. With respect to a
U.S. Holder who holds a Note or Modified Note, the holding period with respect
to our Common Shares acquired upon conversion of such Note or Modified Note, or
from the Proposed Restructuring, shall include the period that the Note or
Modified Note were held. The general effect of these rules is that (a) under
the adverse taxation rules for PFICs discussed above, excess distributions and
gains realized on the disposition of Common Shares received upon conversion of Notes
or Modified Notes, or from the Proposed Restructuring, will be spread over the
entire holding period for the Notes or Modified Notes and the Common Shares acquired
thereby and (b) if a U.S. Holder makes a QEF election upon conversion of the Notes
or Modified Notes, or in connection with the Proposed Restructuring, and
receipt of the Common Shares, that election generally will not be a timely QEF
election with respect to such Common Shares and thus the adverse taxation rules
with respect to PFICs discussed above will continue to apply. However, it
appears that a U.S. Holder receiving Common Shares upon the conversion of a Note
or Modified Note or in connection with the Proposed Restructuring, should be
able to avoid the adverse taxation rules for PFICs discussed above with respect
to future excess distributions and gains if such U.S. Holder makes a QEF
election effective as of the first day of the taxable year of such U.S. Holder
beginning after the receipt of such Common Shares and such U.S. Holder also
makes an election to recognize gain (which will be taxed under the adverse
taxation rules for PFICs rules discussed above) as if such Common Shares was sold
on such date at fair market value. In addition, under the Treasury
Regulations, a disposition, other than by exercise, of a Note or Modified Note
generally will be subject to the adverse taxation rules for PFICs discussed
above.
The determination of whether we and any
subsidiary will be a PFIC for a future taxable year will depend on (i) the
application of complex U.S. federal income tax rules, which are subject to
differing interpretations, and (ii) our assets and income, and our
subsidiaries' assets and income, over the course of each such taxable year. As
a result, our status and that of any subsidiary as a PFIC in any future taxable
year cannot be predicted with certainty as of the date hereof. However, we expect
that we and/or one or more of our subsidiaries will be, or will continue to be,
a PFIC for the foreseeable future. Therefore, the following summary is based
on the conclusion that we have been a PFIC since the Notes were first issued,
and the expectation that we will continue to be a PFIC in the future.
Put Option
A U.S. Holder generally will recognize a
gain (subject to the market discount rules discussed in “— Market Discount and
Amortizable Bond Premium,” below) or loss on the surrender of a Note pursuant
to the Put Option in an amount equal to the difference between (1) the amount
of cash and the fair market value of property received for such Note (other
than the portion that is properly allocable to accrued but unpaid interest, which
portion will be treated interest income), and (2) the U.S. Holder’s “adjusted
tax basis” for such Note at the time of sale. Generally, a U.S. Holder’s
adjusted tax basis for a Note will be equal to the cost of the Note to such
U.S. Holder. If applicable, a U.S. Holder’s tax basis in a Note also will be
increased by any market discount previously included in income by such U.S.
Holder pursuant to an election to include market discount in gross income
currently as it accrues, and reduced by any amortizable bond premium which the
U.S. Holder has previously elected to deduct. (See “— Market Discount and
Amortizable Bond Premium,” below) Any cash received for accrued but unpaid
interest generally will be taxable to the U.S. Holder as ordinary interest income
to the extent not previously included in gross income as interest income.
If the U.S. Holder recognizes a gain,
since the Company is, and has been, a PFIC since the Notes were issued, a U.S.
Holder generally will be liable to pay U.S. federal income tax at the highest
tax rate on ordinary income in effect for each year to which the income is
allocated plus interest on the tax, as if the gain had been recognized ratably
over each day in the U.S. Holder's holding period for the Notes while the
Company was a PFIC. If the Notes are sold at a loss, the loss should be a
capital loss be treated as short or long term capital loss depending on whether
the U.S. Holder has held the Notes for less or more than one year. The deductibility
of capital losses are subject to various limitations.
Proposed Restructuring
An exchange of a Note by a U.S. Holder
pursuant to the Proposed Restructuring will also be a taxable transaction to
such U.S. Holder for U.S. federal income tax purposes and the U.S. Holder will
recognize income, gain or loss in a similar manner as described above under
“—Put Option.” Since the Company has determined that it has been a PFIC
since the Notes were issued, each U.S. Holder of the Notes generally will, upon
disposition of the notes at a gain, be liable to pay U.S. federal income tax at
the highest tax rate on ordinary income in effect for each year to which the
income is allocated plus interest on the tax, as if the gain had been
recognized ratably over each day in the U.S. Holder’s holding period for the
notes while the Company was a PFIC
The amount of gain or loss a U.S. Holder
actually recognizes as a result of the Proposed Restructuring depends on the
aggregate value of the cash, Common Shares, Modified Notes, and CVR that the
U.S. Holder receives. Gain or loss recognized in the transaction must be
determined separately for each Note surrendered in the exchange. The
deductibility of both long-term and short-term capital loss is subject to
certain limitations. The timing of a portion of such gain or loss also
depends, in part, on the U.S. federal income tax treatment of the CVR, with
respect to which there is substantial uncertainty. Because of the CVR, the
receipt of consideration may be treated as either a “closed transaction” or an
“open transaction” for U.S. federal income tax purposes. There is no authority
directly on point addressing whether a sale of property for, in whole or in
part, contingent rights with characteristics similar to the CVR should be taxed
as “open transactions” or “closed transactions” and such question is inherently
factual in nature. Accordingly, U.S. Holders are urged to consult their
financial advisor, legal counsel or accountant regarding this issue.
The installment method of reporting any
gain is generally not available if the Notes are traded on an established
securities market. The Company understands that
the Notes are traded infrequently in transactions arranged through
brokers and that market quotations for the Notes are available. If this causes
the Notes to be treated as being traded on an established securities market for
purposes of the installment sale rules, the installment method of reporting any
gain
attributable to the receipt of a CVR will not be
available. The following discussion assumes that the Notes are traded on an
established securities market and the installment method of reporting is not
available. The CVR may be treated as debt instruments for United States
federal income tax purposes. However as such treatment is unlikely, the discussion
below does not address the tax consequences of such a characterization. You
should consult your own financial advisor, legal counsel or accountant with
respect to whether the installment method is available and the proper
characterization of the receipt of the CVR.
Contingent Value Right
Treatment
as an Open Transaction.
The receipt of the CVR would generally be
treated as an “open transaction” if the value of the CVR cannot be “reasonably
ascertained.” This determination is made based on a consideration of all of
the facts and circumstances surrounding the transfer of the CVR. If a
portion of the exchange under the Proposed Restructuring is treated as an “open
transaction” for U.S. federal income tax purposes, a U.S. Holder will generally
recognize gain for U.S. federal income tax purposes to the extent (x) the sum
of (i) the amount of cash received, (ii) the fair market value of the Common
Shares received and (iii) the issue price of the Modified Note exceeds (y) such
U.S. Holder’s adjusted tax basis in the Notes surrendered in the exchange.
Subject to the discussion below under
“—Contingent Value Right – Future Payments on the CVR”, if the transaction is
“open” for U.S. federal income tax purposes, the CVR would not be taken into
account in determining the U.S. Holder’s taxable gain and a U.S. Holder would have
no tax basis in the CVR, but would recognize gain as payments with respect to
the CVR are made or
deemed made in accordance with the
U.S. Holder’s regular method of accounting, but only to the extent the sum of
such payments (and all previous payments under the CVR), together with cash and
other property received in the exchange under the Proposed Restructuring,
exceeds such U.S. Holder’s adjusted tax basis in the Notes surrendered in the
exchange. Alternatively, U.S. Holder’s may recognize a loss in the year that
the U.S. Holder’s right to receive further payments under the CVR terminates if
the cumulative payments under the CVR are less than such Holder’s adjusted tax
basis in the Notes surrendered in the exchange.
If the receipt of the CVR is treated as an
open transaction, the application of the PFIC rules to such transaction is
uncertain. Therefore, U.S. Holders are urged to consult their own financial
advisor, legal counsel or accountant with respect to the U.S. tax treatment.
Treatment
as a Closed Transaction
.
If
the value of the CVR can be “reasonably ascertained” the transaction should
generally be treated as “closed” for U.S. federal income tax purposes, in which
event a U.S. Holder should generally recognize gain or loss for U.S. federal
income tax purposes upon the exchange equal to the difference between (x) the
sum of (i) the fair market value of the CVR received, (ii) the amount of cash
received, (iii) the issue price of the Modified Note and (iv) the fair market
value of Common Shares received and (y) such U.S. Holder’s adjusted tax basis
in the Notes surrendered in the exchange. A U.S. Holder’s initial tax basis in
the CVR should equal the fair market value of the CVR on the date of the
exchange, and the holding period of the CVRs should begin on the day following
the date of the exchange.
Market Discount and Amortizable Bond
Premium
A
U.S. Holder that acquired a Note at a “market discount,” that is, at a price
less than the Notes' stated redemption price at maturity (generally, the sum of
all payments required under the Notes other than payments of stated interest),
may be affected by the market discount rules of the Code. Subject to a de
minimis exception, the market discount rules generally require a U.S. Holder
who acquired the Notes at a market discount to treat any principal payment on
the Notes and any gain recognized on any disposition of the Notes as ordinary
income to the extent of the accrued market discount, not previously included in
income, at the time of the principal payment or the disposition of the Notes.
In general, the amount of market discount that has accrued is determined on a
straight-line basis over the remaining term of Notes as of the time of
acquisition, or, at the election of the U.S. Holder, on a constant yield
basis. An election to apply the constant yield method applies only to the Notes
with respect to which it is made and it may not be revoked.
A
U.S. Holder of the Notes acquired at a market discount also may elect to
include the market discount in income as it accrues, rather than deferring the
income inclusion until the time of a principal payment or the disposition of
the Notes. If a U.S. Holder so elects, the rules discussed above with respect
to ordinary income recognition resulting from the payment of principal on the Notes
would not apply, and the U.S. Holder’s tax basis in the Notes would be
increased by the amount of the market discount included in income at the time it
accrues. However, because the Company has been and expects to continue to be a
PFIC, any gain on the disposition of the Notes will nonetheless still be
treated as ordinary income as discussed above. This election would apply to
all market discount obligations acquired by the U.S. Holder on or after the
first day of the first taxable year to which the election applies and could not
be revoked without the consent of the IRS.
A
U.S. Holder may be required to defer until maturity of the Notes (or, in certain
circumstances, its earlier disposition) the deduction of all or a portion of
the interest expense attributable to debt incurred or continued to purchase or
carry the Notes with market discount, unless the U.S. Holder elects to include
market discount in income on a current basis.
If
a U.S. Holder acquired the Notes for a price that exceeded the Notes' stated
redemption price at maturity, the U.S. Holder generally will be considered to
have acquired the Notes with “amortizable bond premium.” A U.S. Holder may
elect to amortize amortizable bond premium on a constant yield basis. The
amount amortized in any year generally will be treated as a deduction against
the U.S. Holder’s interest income on the Notes. If the amortizable bond
premium allocable to a year exceeds the amount of interest income allocable to
that year, the excess is allowed as a deduction for that year but only to the
extent of the U.S. Holder’s prior inclusions of interest income (net of any
deductions for bond premium) with respect to the Notes. The premium on the Notes
held by a U.S. Holder that does not make the amortization election will
decrease the gain or increase the loss otherwise recognizable on the
disposition of the Notes. The election to amortize the premium on a constant yield
basis generally applies to all bonds held by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the IRS.
Modified Notes
Taxation of interest
For U.S. federal income tax purposes, stated
interest on the Modified Notes generally will be taxable to a U.S. Holder as
ordinary income at the time such interest is received or accrued, in accordance
with such U.S. Holder's method of accounting for U.S. federal income tax
purposes. Subject to applicable limitations under the Code and the U.S.
Treasury Regulations and subject to the
discussion
below, any Canadian withholding tax imposed on interest payments in respect of
the Modified Notes should be treated as a foreign income tax eligible for
credit against a U.S. Holder's U.S. federal income tax liability (or, at a U.S.
Holder's election, may, in certain circumstances, be deducted in computing
taxable income). Interest paid on the Modified Notes will be treated as income
from sources outside the U.S. The Code applies various limitations on the
amount of foreign taxes that may be claimed as a credit by U.S. taxpayers. Because of the complexity of those limitations, U.S. Holders should consult their
own tax advisors with respect to the amount of foreign taxes that can be
claimed as a credit.
It is possible that the Modified Notes
will also be issued with original issue discount (“OID”). OID exists if the
stated redemption price at maturity of the Modified Notes (generally all
payments required under the Modified Notes other than stated interest) exceeds
the issue price of the Modified Notes by more than a de minimis amount. The
issue price of the Modified Notes depends, in part, on whether the Notes are treated
as being traded on an “established market” within the 60-day period that ends
30 days after the Modified Notes are issued. The Treasury Regulations define
the term “established market” to include a system of general circulation
(including computer listings disseminated to subscribing brokers, dealers and
traders) that provides a reasonable basis to determine fair market value by
disseminating either recent price quotations or prices from actual sales. The
Company understands that
the Notes are
traded infrequently in transactions arranged through brokers and that market
quotations for the Notes are available. Therefore, it is possible that the
Notes will be treated as traded on an established market for purposes of the
Treasury Regulations. If so, the issue price of the Modified Notes will equal
the market value of the Notes on the date that the Modified Notes are issued.
If that market price is less than the stated redemption price at maturity of
the Modified Notes by more than a de minimis amount, the Modified Notes will be
considered to be issued with OID. If the Notes are not treated as traded on an
established market, the issue price of the Modified Notes should equal the face
amount of the Modified Notes and, therefore, the Modified Notes should not have
any OID.
If the Modified Notes are issued with more than a de
minimis amount of OID, each U.S. Holder will generally be required to include the
OID in its income as it accrues, regardless of its regular method of tax
accounting, using a constant yield method, possibly before such U.S. Holder
receives any payment attributable to such income.
The rules regarding original issue discount are
complex. Accordingly, each U.S. Holder is urged to consult its own
financial advisor, legal counsel or accountant
regarding the OID rules and their potential application to the Modified Notes.
Conversion of an Modified
Note
A U.S. Holder generally will not recognize
any income, gain or loss upon conversion of the Modified Notes into Common
Shares, except with respect to (i) cash received in lieu of a fractional Common
Shares, or (ii) Common Shares that are attributable to accrued but unpaid
interest not previously included in gross income. To the extent the Company
pays cash to a U.S. Holder upon a conversion of the Modified Notes instead of
delivering Common Shares, such U.S. Holder should recognize gain or loss, if
any, in the same manner as described below under "Sale, Retirement or
Other Taxable Disposition of the Modified Notes." Cash received in lieu
of a fractional Common Shares upon conversion will be treated as a payment in
exchange for such fractional shares. Accordingly, the receipt of cash in lieu
of a fractional Common Shares generally will be treated as described below
under "— The Common Shares." Amounts that are attributable to
accrued but unpaid interest generally will be taxable to the U.S. Holder as ordinary
interest income to the extent not previously included in gross income.
A U.S. Holder's initial tax basis in the Common
Shares received on conversion of the Modified Notes will be the same as the
U.S. Holder's adjusted tax basis in the Modified Notes at the time of
conversion, reduced by any tax basis allocable to a fractional share treated as
exchanged for cash. However, the tax basis of Common Shares received upon a
conversion with respect to accrued but unpaid interest should equal the fair
market value of such Common Shares. The holding period for the Common Shares received
on conversion generally will include the holding period of the Modified Notes that
are converted. To the extent any Common Shares issued upon a conversion are
allocable to accrued interest, however, the U.S. Holder's holding period for
such Common Shares may commence on the day following the date of delivery of
the Common Shares.
Constructive dividends
The conversion rate of the Modified Notes
is subject to adjustment under certain circumstances. Under Section 305 of the
Code, adjustments to the conversion rate that increase a U.S. Holder's
proportionate share of the Company's assets or the Company's earnings may in
certain circumstances result in a constructive dividend that is taxable to such
U.S. Holder to the extent of the Company's current and accumulated earnings and
profits, as determined under U.S. federal income tax principles. Generally, an
increase in the conversion rate pursuant to a bona-fide reasonable formula
which has the effect of preventing the dilution of the interest of U.S. Holders
in the Modified Notes will not be considered to result in a constructive
dividend. However, certain adjustments provided in the Modified Notes
(including, without limitation, adjustments to the conversion rate of the Modified
Notes in connection with cash dividends to the Company's shareholders) will not
qualify as being pursuant to a bona-fide reasonable formula. If such
adjustments are made, a U.S. Holder will, to the extent of the Company's
current and accumulated earnings and profits, be deemed to have received a
constructive dividend even though such U.S. Holder has not received any cash or
property as a result of the
adjustment. In addition,
a failure to adjust the conversion price of the Modified Notes to reflect a
stock dividend or similar event could in some circumstances give rise to a
constructive dividend to U.S. Holders of shares of Common Shares.
Sale, Retirement or
Other Taxable Disposition of the Modified Notes
Upon a sale, taxable exchange, retirement,
redemption, repurchase or other taxable disposition of a Modified Note, a U.S.
Holder generally will recognize gain or loss equal to the difference between
the amount received upon such taxable disposition (less any amount attributable
to accrued but unpaid interest, which will be taxable as ordinary income, if
not previously included in gross income) and the U.S. Holder’s adjusted tax
basis in the Modified Note at that time.
Loss realized by a U.S. Holder on the
sale, taxable exchange, retirement or other taxable disposition of a Modified
Note generally will be treated as U.S. source capital loss, and will be
long-term capital loss if, at the time of sale, exchange, retirement or other
taxable disposition, the Modified Note has been held for more than one year;
otherwise, the capital loss will be short-term. The deductibility of capital
losses is subject to limitations.
Since
the Company is, has been, and expects to continue to be a PFIC, a U.S. Holder
generally will, upon disposition of the Modified Notes at a gain, be liable to
pay U.S. federal income tax at the highest tax rate on ordinary income in
effect for each year to which the income is allocated plus interest on the tax,
as if the gain had been recognized ratably over each day in the U.S. Holder's
holding period for the notes while the Company was a PFIC.
The Common Shares
Passive foreign
investment company (“PFIC”)
The Company has determined that it was a
PFIC under Section 1297(a) of the Code for the taxable year ended December 31,
2007, when the Notes were issued, it has continued to be a PFIC since that
time, and the Company expect to be a PFIC for the taxable year ending December
31, 2012, and for the foreseeable future. Accordingly, special U.S. federal income tax rules apply to the acquisition, ownership and disposition of Common
Shares.
Sections 1291 through 1298 of the Code
contain special rules applicable with respect to foreign corporations that are
PFICs. A foreign company will be considered a PFIC if 75% or more of its gross
income (including a pro rata share of the gross income of any company (United States or foreign) in which the company is considered to own 25% or more of the
shares by value) in a taxable year is passive income (the "Income
Test"). Alternatively, a foreign company will be considered a PFIC if at
least 50% of the assets (averaged over the four quarter ends for the year) of
the company (including a pro rata share of the assets of any company of which
the company is considered to own 25% or more of the shares by value) in a
taxable year are held for the production of, or produce, passive income (the
"Asset Test").
For the taxable year ended December 31,
2011, the Company determined that it was a PFIC under the Income Test. In
addition, the Company expects that it will be a PFIC under the Income Test for
the taxable year ending December 31, 2012, and, as a result, will be treated as
a PFIC for such taxable year. The determination of whether the Company and any
of its subsidiaries will be a PFIC for a taxable year depends on (i) the
application of complex U.S. federal income tax rules, which are subject to
differing interpretations, and (ii) the assets and income of the Company and
its subsidiaries over the course of each such taxable year. As a result,
whether the Company and any of its subsidiaries will be PFICs for any taxable
year cannot be predicted with certainty as of the date of this prospectus.
Accordingly, there can be no assurance that the Company and any of its
subsidiaries will or will not be a PFIC for any taxable year. However, the
Company expects it will continue to be a PFIC for each subsequent taxable year
prior to the year any production begins, and this summary is based on that
expectation.
For taxable years in which the Company is
a PFIC, each U.S. Holder, in the absence of an election by such U.S. Holder to
treat the Company as a "qualified electing fund" (
i.e.
, a QEF
election), or an election by such U.S. Holder to "mark-to-market" his
Common Shares (
i.e.
, an "MTM election"), as discussed below,
will, upon certain distributions by the Company or upon disposition of the Common
Shares at a gain, be liable to pay U.S. federal income tax at the highest tax
rate on ordinary income in effect for each year to which the income is
allocated plus interest on the tax, as if the distribution or gain had been
recognized ratably over each day in the U.S. Holder's holding period for the Common
Shares while the Company was a PFIC.
A U.S. Holder who owns the Common Shares
during a period when the Company is a PFIC will be subject to the foregoing
PFIC rules, even if the Company ceases to be a PFIC, unless such U.S. Holder
makes a QEF election in the first year of the U.S. Holder's holding period for
the shares of the Company and in which the Company is considered a PFIC (a
"timely QEF election"). A U.S. Holder who makes such a timely QEF
election will be entitled to treat any future gain on the sale of the Common
Shares as capital gain. Additionally, a U.S. Holder who makes a QEF election
will, for each taxable year the Company is a PFIC, include in income a pro rata
share of the ordinary earnings of the Company as ordinary income and a pro rata
share of any net capital gain of the Company as long-term capital gain, subject
to a separate election to defer payment of taxes (such deferral is subject to
an interest charge). For the U.S. Holder to make the QEF election, the Company
must agree to supply annually to the U.S. Holder the "PFIC
Annual Information Statement" described in Treasury
Regulations and permit the U.S. Holder access to certain information in the
event of an audit by the U.S. tax authorities. The Company will prepare and
make the statement available to U.S. Holders, and will permit access to the
information.
Treasury Regulations provide that a holder
of an option, warrant or other right to acquire stock of a PFIC, such as a
convertible note, may not make a QEF election that will apply to the convertible
note or to the stock subject to the convertible note. Under Treasury
Regulations, if a U.S. Holder holds a note that is convertible into stock of a
PFIC, the holding period with respect to shares of stock of the PFIC acquired
upon conversion of the note shall include the period that the convertible note
was held. The general effect of these rules is that (a) under the adverse
taxation rules for PFICs discussed above, excess distributions and gains
realized on the disposition of common shares in a PFIC received upon conversion
of convertible notes will be spread over the entire holding period for the
notes and the common shares acquired thereby and (b) if a U.S. Holder makes a
QEF election upon conversion of the notes and receipt of the common shares,
that election generally will not be a timely QEF election with respect to such
common shares and thus the adverse taxation rules with respect to PFICs
discussed above will continue to apply. Therefore, U.S. Holders that receive
Common Shares upon the conversion of a Note or Modified Note, on in connection
with the Proposed Restructuring, will not be able to make a timely QEF election
with respect to such Common Shares. However, it appears that a U.S. Holder
receiving Common Shares upon the conversion of a Note or Modified Note, or in
connection with the Proposed Restructuring, should be able to avoid the adverse
taxation rules for PFICs discussed above with respect to future excess
distributions and gains if such U.S. Holder makes a QEF election effective as
of the first day of the taxable year of such U.S. Holder beginning after the
receipt of such Common Shares and such U.S. Holder also makes an election to
recognize gain (which will be taxed under the adverse taxation rules for PFICs
rules discussed above) as if such Common Shares were sold on such date at fair
market value (a "Gain Recognition Election").
A U.S. Holder who receives Common Shares
upon the conversion of a Note or Modified Note, or in connection with the
Proposed Restructuring,, and makes a Gain Recognition Election as described
above and a QEF election effective as of the first day of the taxable year of
such U.S. Holder beginning after the receipt of such Common Shares (and
complies with certain U.S. federal income tax reporting requirements), should
not have any material adverse U.S. federal income tax consequences as a result
of the QEF election if the Company has no ordinary earnings or net capital
gains during such taxable year. The Company currently expects that it will not
have any ordinary earnings or net capital gains in future years in which it may
be a PFIC. However, no assurance can be given as to this expectation. Each
U.S. Holder is urged to consult its own financial advisor, legal counsel, or
accountant concerning the application of the U.S. federal income tax rules
governing PFICs to its particular circumstances.
Each U.S. Holder choosing to make a QEF
election would be required annually to file an IRS Form 8621 (Return by a
Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund)
with such U.S. Holder's timely filed U.S. federal income tax return (or
directly with the IRS if the U.S. Holder is not required to file an income tax
return). Such U.S. Holder must include on IRS Form 8621 its income as
reflected in the PFIC Annual Information Statement it receives from the
Company. If the Company determines that it was a PFIC during the taxable year,
within two months after the end of each such taxable year the Company will make
available the PFIC Annual Information Statement.
As part of the Hiring Incentives to
Restore Employment Act of 2010 (the “Act”), new reporting requirements were
added under Section 1298(f) of the Code for U.S. persons who are shareholders
in a PFIC (the “Section 1298(f) Requirements”). The Internal Revenue Service
and Treasury are developing further guidance regarding these reporting
requirements. In the interim, the Section 1298(f) Requirements are suspended
pending release of a subsequent revision of Form 8621, modified to reflect the
requirements of Section 1298(f), as set forth in guidance to be included in
future Treasury Regulations. You should consult your financial advisor, legal
counsel, or accountant regarding the specific reporting obligations to you
(including as a result of the Act).
As an alternative to the QEF election, a
U.S. Holder may make an MTM election with respect to the Common Shares. The
MTM election requires that the PFIC stock in question be "marketable stock"
as defined under the rules governing the MTM election. The Common Shares are marketable
stock as required under the MTM rules. If a U.S. Holder makes the MTM
election, it must recognize as ordinary income or loss each year an amount
equal to the difference as of the close of the taxable year (or actual
disposition of the Common Shares) between the fair market value of the Common Shares
and the adjusted tax basis in the Common Shares. Losses would be allowed only
to the extent of net mark-to-market gain previously included in income by the
U.S. Holder under the election for prior taxable years. If the U.S. Holder
makes the MTM election, distributions from the Company with respect to the Common
Shares will be treated as if the Company is not a PFIC, except that the lower
tax rate on dividends for U.S. Holder that are individuals would not be
applicable.
In addition, special rules would apply to
U.S. Holders of the Common Shares for any taxable year in which the Company is
a PFIC and has one or more subsidiaries that is also a PFIC as to such U.S.
Holder (a "Subsidiary PFIC"). In such case, U.S. Holders of the Common
Shares generally would be deemed to own their proportionate interest in any
Subsidiary PFIC and be subject to the PFIC rules with respect to such
Subsidiary PFIC regardless of the percentage ownership of such U.S. Holders in
the Company. If a subsidiary of the Company is a PFIC and a U.S. Holder does
not make a QEF election as to such subsidiary, as described above, the U.S.
Holder could incur liability for the deferred tax and interest charge described
above if the Subsidiary PFIC makes a distribution, or an interest in the
Subsidiary PFIC is disposed of in whole or in part, or the U.S. Holder disposes
of all or part of its common shares. A QEF election must be made separately
for each PFIC and thus a QEF election made with respect to the Company will not
apply to
any Subsidiary PFIC. If a subsidiary of the
Company is a PFIC, a QEF election for such subsidiary could accelerate the
recognition of taxable income and may result in the recognition of ordinary
income. Additionally, a U.S. Holder of Common Shares that has made a MTM
election for his Common Shares could be subject to the PFIC rules with respect
to the income of a Subsidiary PFIC even though the value of the Subsidiary PFIC
has already been subject to tax as a result of the MTM election. A MTM
election would not be permitted for a Subsidiary PFIC.
Due to the complexity of the PFIC, QEF and
MTM elections rules, a U.S. Holder should consult its own financial advisor,
legal counsel, or accountant regarding the status of the Company and its
subsidiaries as PFICs and the eligibility, manner and advisability of making a
QEF election or a MTM election and how the PFIC rules may affect the U.S.
federal income tax consequences of a U.S. Holder's acquisition, ownership and
disposition of Modified Notes and Common Shares.
Contingent Value Right
The U.S. federal income tax treatment of
the CVR is not clear. Therefore, each U.S. Holder is urged consult with its
own financial advisor, legal counsel, or accountant regarding the U.S. tax
treatment of the CVR. Set forth below is a summary of a couple potential ways
in which future payments on a CVR, if any, could be treated for U.S. tax
purposes.
Future Payments on the CVR
Treatment as an Open Transaction
. If the transaction is treated as an
“open transaction,” a payment pursuant to a CVR to a U.S. Holder of a CVR
should be treated as a payment for the sale or exchange of the
Notes. Depending on the treatment of the CVR, a portion of that
payment could be treated as interest under either Section 483 of the
Code (related to interest on deferred payments) or Sections 1271 - 1275 (related
to imputed interest rules). The portion of the payment pursuant to a
CVR that is not treated as interest under the Imputed Interest Rules will
generally be treated as a payment with respect to the sale of the Notes, as
discussed above.
Treatment as a Closed Transaction
. If the transaction is treated as a
“closed transaction,” there is no direct authority with respect to the tax
treatment of holding and receiving payments with respect to property similar to
the CVR. It is possible that payments received with respect to a CVR, up to the
amount of the Holder’s adjusted tax basis in the CVR, may be treated as a
non-taxable return of a United States Holder’s adjusted tax basis in the CVR,
with any amount received in excess of basis treated as gain from the
disposition of the CVR. Additionally, a portion of any payment received with
respect to a CVR may constitute imputed interest or as ordinary income under
the Section 483 Rules. If not treated as described above, payments with respect
to a CVR may be treated as either (i) payments with respect to a sale of a
capital asset, (ii) ordinary income or (iii) dividends.
Sale, Exchange or Other
Taxable Disposition of CVR
A U.S. Holder generally will recognize
gain or loss for U.S. federal income tax purposes on the sale, exchange or
other taxable disposition of the CVR in an amount equal to the difference
between the amount realized from such sale, exchange or other taxable
disposition and the U.S. Holders’ adjusted tax basis in such CVR. A loss
should be treated as a capital loss and capital losses are subject to certain
limitations. The treatment of a gain is unclear since the Company is a PFIC.
Therefore, each U.S. Holder is urged to consult its own tax advisor regarding
the U.S. tax treatment of any gain or loss on the sale, exchange or other
taxable disposition of the CVR.
Information Reporting; Backup Withholding
Tax
In general, interest payments, dividend
payments, other taxable distributions on the Company’s Common Shares, proceeds
from the disposition of Common Shares, Notes or Modified Notes, and other
so-called “reportable payments” as defined by the Code paid by a
U.S. paying agent or other U.S. intermediary to a non-corporate U.S.
Holder may be subject to information reporting to the IRS and possible
U.S. backup withholding (currently imposed at a rate of 28%). Backup
withholding generally would not apply to a U.S. Holder that timely
furnishes a correct taxpayer identification number and makes any other required
certifications or if the U.S. Holder is otherwise exempt from backup
withholding. U.S. Holders that are required to establish their exempt
status generally must provide such certification on IRS Form W-9 (Request
for Taxpayer Identification Number and Certification) or a substitute Form W-9.
Amounts withheld as backup withholding may
be credited against the U.S. Holder’s U.S. federal income tax liability.
Additionally, a U.S. Holder may obtain a refund of any excess amounts withheld
under the backup withholding regime by timely filing the appropriate claim for
refund with the IRS and furnishing any required information.
Each U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the information
reporting and backup withholding tax rules.
The foregoing summary does not discuss all
aspects of U.S. taxation that may be relevant to particular U.S. Holders in
light of their particular circumstances and income tax situations. U.S.
Holders should consult their own financial advisors, legal counsels,
or accountants as to the particular tax consequences to
them of the Transactions, including the effect of any US federal, state, local,
foreign or other tax laws.
13. Certain Material Canadian
Federal Income Tax Considerations.
The following is, as of the
date hereof, a general summary of the principal Canadian federal income tax
considerations applicable to a holder of Notes in respect of the exercise of
the Put Option, participation in the Proposed Restructuring and participation
in the Replacement Restructuring.
This summary is based upon the
current provisions of the Income Tax Act (Canada) and the regulations
thereunder (the “Canadian Tax Act”), specific proposals to amend the Canadian
Tax Act (the “Tax Proposals”) which have been announced by or on behalf of the
Minister of Finance (Canada) prior to the date hereof, and an understanding of
the current published administrative policies and assessing practices of the
Canada Revenue Agency (the “CRA”). This summary assumes that the Tax Proposals
will be enacted in the form proposed and does not take into account or
anticipate any other changes in law, whether by way of judicial, legislative or
governmental decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations discussed in this
prospectus. No assurances can be given that the Tax Proposals will be enacted
as proposed or at all, or that legislative, judicial or administrative changes
will not modify or change the statements expressed in this prospectus.
This summary is of a general
nature only and is limited to Canadian federal income tax considerations. This
summary is not intended to be, nor should it be construed to be, legal or tax advice
to any particular Holder, and no representations with respect to the income tax
consequences to any particular prospective purchaser are made. Accordingly,
Holders should consult their own tax advisors for advice with respect to the
tax consequences to them of exercising their Put Option and/or participating in
the Proposed Restructuring or the Replacement Restructuring, including the
application and effect of other tax laws of any country, province, state or
local tax authority. This summary is addressed to current holders of Notes and
assumes a degree of familiarity with the Canadian tax considerations currently
applicable in respect of the Notes.
For the purposes of the
Canadian Tax Act all amounts arising in respect of the Notes, Common Shares or
CVR must generally be translated into Canadian dollars based on the noon day
rate quoted by the Bank of Canada or another rate of exchange that is
acceptable to the Minister of National Revenue (Canada).
Holders resident in Canada
This portion of the summary is
applicable only to a Holder who, at all relevant times, for the purposes of the
Canadian Tax Act (i) is resident in Canada; (ii) deals at arm’s length and is
not affiliated with the Company; and (iii) holds Notes and any Common Shares or
CRVs acquired on conversion of such Notes or under the Proposed Restructuring
as capital property (a “Resident Holder”). Any Notes, Common Shares or CVRs
will generally be considered to be capital property to a Resident Holder unless
the Resident Holder holds such properties in the course of carrying on a
business or has acquired them in a transaction or transactions considered to be
an adventure in the nature of trade. Certain Resident Holders whose Notes or
Common Shares might not otherwise qualify as capital property may be entitled
to make the irrevocable election provided by subsection 39(4) of the Canadian
Tax Act to have the Notes and every other “Canadian security” (as defined by
the Canadian Tax Act) owned by such Resident Holder in the taxation year of the
election and in all subsequent taxation years deemed to be capital property.
Holders should consult their own advisors in light of their own circumstances
in determining whether the Notes, Common Shares or CVRs will be capital
property to them for purposes of the Canadian Tax Act.
This summary is not applicable
to a Resident Holder that is a “financial institution” (as defined in the
Canadian Tax Act for purposes of the mark-to-market rules), a Resident Holder
that is a “specified financial institution”, a Resident Holder an interest in
which is a “tax shelter investment” (all as defined in the Canadian Tax Act) or
a Resident Holder that has made an election to use a functional currency other
than Canadian dollars for purposes of the Canadian Tax Act. Such Resident
Holders should consult their own tax advisors having regard to their particular
circumstances.
Disposition
of Notes pursuant to exercise of Put Option
On the disposition of a Note
pursuant to the Exercise of the Put Option, a Resident Holder will generally
be required to include in income the amount of interest accrued or deemed to
accrue on the Note from the date of the last interest payment to the date of
disposition, to the extent that such amount has not otherwise been included in
the Resident Holder’s income for the taxation year or a previous taxation year.
In addition, the disposition will give rise to a capital gain (or capital loss)
on the Note to the extent that the proceeds of disposition, net of any accrued
interest and any other amount included in computing income and any reasonable
costs of disposition, exceed (or are less than) the adjusted cost base of the
Note to the Resident Holder immediately before the disposition. Such capital
gain or loss will be treated as described below under “Tax treatment of capital
gains and losses”.
Tax
treatment of capital gains and losses
One-half of the amount of any
capital gain (a “taxable capital gain”) realized by a Resident Holder in a
taxation year generally must be included in the Resident Holder’s income for
that year, and one-half of the amount of any capital loss (an “allowable
capital loss”) realized by a Resident Holder in a taxation year may generally
be deducted from taxable capital gains realized by the Resident Holder in that year.
Allowable capital losses in excess of taxable capital gains may be carried back
and deducted in any of the three preceding taxation years or carried forward
and deducted in any subsequent taxation year against net taxable capital gains
realized in such years to the extent and under the circumstances described in
the Canadian Tax Act.
Participation in Proposed
Restructuring
In connection with the
participation in the Proposed Restructuring, the Company shall pay to each
Holder the amount of accrued interest on the Notes held by such Holder. In the
case of a Resident Holder, the amount so received will be required to be
included in income to the extent that the interest has not otherwise been
included in the income of the Resident Holder for the taxation year or a
previous taxation year.
On participation in the
Proposed Restructuring by a Resident Holder in respect of a particular Note,
the Resident Holder will be considered to dispose of 70% of the Note for a
combination of cash, Common Shares and a pro-rata portion of the CVR. On such
disposition, provided that the Resident Holder does not make a joint election
with the Company under section 85 of the Canadian Tax Act in respect of such
disposition, the Resident Holder’s proceeds of disposition will be equal to the
amount of the cash received plus the fair market value of the Common Shares and
interest in the CVR so received. Resident Holders who may wish to make such a
joint election should consult their own tax advisors as to the advisability of,
and requirements for, making such a joint election, including as to the
resulting proceeds of disposition of the 70% portion of the Note where such an
election is made.
Because the amount to be
received as a result of the CVR, if any, is uncertain, the fair market value
thereof is unclear. Resident Holders will be required to value the CVR based on
all available facts and circumstances. Such valuation will not be binding on
the CRA.
The disposition of the 70%
portion of the Note will give rise to a capital gain (or capital loss) to the
extent that the proceeds of disposition, net of any accrued interest and any
other amount included in computing income and any reasonable costs of
disposition, exceed (or are less than) the adjusted cost base of the portion of
the Note disposed of, determined immediately before the disposition. Such
capital gain or loss will be treated as described above under “Tax treatment of
capital gains and losses”.
The income tax considerations
in respect of the acquisition of Common Shares and CVR under the Proposed
Restructuring are discussed below under the headings “Acquisition of Common
Shares” and “Acquisition of CVR”, respectively.
On the participation by a
Resident Holder in the Proposed Restructuring in respect of a particular Note,
the remaining 30% of the Note will be amended and remain outstanding. Although
the matter is not free from doubt, such amendment should not give rise to a
disposition of such portion of the Note for Canadian income tax purposes and
accordingly, the Canadian tax treatment of interest thereunder, of the
disposition of such Note and of the conversion of such Note to Common Shares
should be the same as the current treatment of such items under the existing
Notes.
Acquisition, Holding and Disposition
of Common Shares
Where a Resident Holder
acquires Common Shares under the Proposed Restructuring, the cost to the
Resident Holder of such Common Shares will be equal to their fair market value
at the time the Common Shares are acquired, provided that the Resident Holder
does not make a joint election with the Company under section 85 of the
Canadian Tax Act in respect of the disposition of 70% of the Notes under the
Proposed Restructuring. Resident Holders who may wish to make such an election should
consult their own tax advisors as to the advisability of, and requirements for,
making such an election, including as to the resulting cost of the Common
Shares where such an election is made.
Where a Resident Holder
acquires Common Shares on conversion of a Note pursuant to the conversion
privilege, the Resident Holder will not be considered to realize a capital gain
(or capital loss) on the conversion. The cost to the Resident Holder of the
Common Shares acquired on the conversion will be equal to the Resident Holder’s
adjusted cost base of the Note immediately before the conversion. Under the
current administrative practice of the CRA, a Resident Holder who receives cash
not in excess of $200 in lieu of a fraction of a common share upon conversion
of a note may either treat this amount as proceeds of disposition of a portion
of a note (thereby realizing a capital gain or capital loss) or alternatively
may reduce the adjusted cost base of the Common Shares received on the
conversion by the amount of the cash received.
The adjusted cost base to the
Resident Holder of any Common Shares acquired on the conversion or under the
Proposed Restructuring will be determined by averaging the cost of the Common
Shares so acquired with the adjusted cost base of all other Common Shares held
by such Resident Holder as capital property.
A
Resident Holder who disposes of or is deemed to have disposed of a Common Share
will realize a capital gain (or incur a capital loss) equal to the amount by
which the proceeds of disposition in respect of the common share exceed (or are
exceeded by) the aggregate of the adjusted cost base of such common share and
any reasonable expenses associated with the disposition. In certain
circumstances, the amount of any resulting capital loss must be reduced to the
extent of any dividends or deemed dividends received by the Resident Holder on
the Common Share, to the extent and under the circumstances set forth in the
detailed provisions of the Canadian Tax Act. Such capital gains and capital
losses will be subject to tax in the manner described above under the heading
“Tax treatment of capital gains and losses”.
Dividends (including deemed
dividends) received on Common Shares by a Resident Holder who is an individual
(and certain trusts) will be included in income and be subject to the gross-up
and dividend tax credit rules normally applicable to taxable dividends received
by an individual from taxable Canadian corporations. An enhanced dividend tax
credit will be available in respect of “eligible dividends” (as defined in the
Canadian Tax Act) paid by the Company.
Acquisition,
Holding and Disposition of CVR
Where a Resident Holder
acquires an interest in the CVR under the Proposed Restructuring, the cost to
the Resident Holder of such interest will be equal to its fair market value at
the time such interest is so acquired.
A Resident Holder who disposes
of an interest in the CVR should realize a capital gain (or capital loss) to
the extent that the proceeds received therefor, net of any costs of
disposition, exceed (or are less than) the adjusted cost base of the interest
in the CVR to the Resident Holder. A Resident Holder who receives an interim
payment under a CVR should realize a capital gain (or capital loss) to the
extent that the amount of the payment exceeds (or is less than) the
attributable portion of the adjusted cost base of the CVR to the Resident
Holder.
Participation in Replacement
Restructuring
On the participation by a
Resident Holder in the Replacement Restructuring in respect of a particular
Note, the Note will be amended and remain outstanding. Although the matter is
not free from doubt, such amendment should not give rise to a disposition of
the Note for Canadian income tax purposes and accordingly, the Canadian tax
treatment of interest thereunder, of the disposition of such Note and of the
conversion of such Note to Common Shares should be the same as the current
treatment of such items under the existing Notes.
Holders not resident in Canada
This portion of the summary is
applicable to a Holder who, at all relevant times for purposes of the Canadian
Tax Act, (i) is not resident or deemed to be resident in Canada, (ii) deals at
arm’s length with the Company, (iii) holds Notes and any Common Shares or CVR
acquired on a conversion of such Notes or under the Proposed Restructuring as
capital property and (iv) does not use or hold, and is not deemed to use or
hold such properties in the course of carrying on, or otherwise in connection
with, a business in Canada (a “Non-Resident Holder”). Any Notes, CVR or Common
Shares will generally be considered to be capital property to a Non-Resident
Holder unless the Non-Resident Holder holds such properties in the course of
carrying on a business or has acquired them in a transaction or transactions
considered to be an adventure in the nature of trade. Except as expressly
provided, this summary does not deal with special situations, such as
particular circumstances of traders or dealers in securities, tax exempt
entities, insurers, and financial institutions.
Disposition of Notes pursuant
to exercise of Put Option
A Non-Resident Holder will not
be subject to any non-resident withholding tax and, provided that the Notes do
not constitute “taxable Canadian property” for the purposes of the Canadian
Tax Act will not be subject to any other Canadian income tax, in respect of any
payment by the Company to the Non-Resident Holder pursuant to the exercise of
the Put Option and resulting disposition of the Notes.
Provided that Common Shares are
listed on a “designated stock exchange” (which currently includes the TSX), the
Notes held by a particular Non-Resident Holder generally will not constitute
taxable Canadian property unless at any time during the five-year period
immediately preceding the disposition of the Notes (i) the Non-Resident Holder,
persons with whom the Non-Resident Holder did not deal at arm’s length, or the
Non-Resident Holder together with such persons, owned 25% or more of the issued
shares of any class or series of the Company’s capital stock and (ii) more than
50% of the fair market value of the Common Shares was derived directly or
indirectly from certain resource properties, timber resource properties or real
or immovable properties situated in Canada (or a combination thereof).
Participation in Proposed
Restructuring
In
connection with the participation in the Proposed Restructuring, the Company
shall pay to each Holder the amount of the accrued interest on the Notes held
by such Holder. No non-resident withholding tax or other Canadian income tax
will apply to the payment of such interest to a Non-Resident Holder.
On participation in the
Proposed Restructuring by a Non-Resident Holder in respect of a particular
Note, the Non-Resident Holder will be considered to dispose of 70% of the Note
for a combination of cash, Common Shares and a pro-rata portion of the CVR. A
Non-Resident Holder will not be subject to any non-resident withholding tax in
respect of such disposition and, provided that the Notes do not constitute
“taxable Canadian property” for the purposes of the Canadian Tax Act (as
discussed above under the heading “Disposition of Notes pursuant to exercise of
Put Option”), will not be subject to any other Canadian income tax in respect
of such disposition.
On the participation by a
Non-Resident Holder in the Proposed Restructuring in respect of a particular
Note, the remaining 30% of the Note will be amended and remain outstanding.
Although the matter is not free from doubt, such amendment should not give rise
to a disposition of such portion of the Note for Canadian income tax purposes
and accordingly, the Canadian tax treatment of interest thereunder and of the
conversion of such Note to Common Shares should be the same as the current treatment
of such items under the existing Notes. As a result, the Non-Resident Holder
should not be subject to any non-resident withholding tax or other Canadian
income tax in respect of such interest or conversion.
Acquisition, holding and disposition
of Common Shares
Dividends on Common Shares paid
or credited to a Non-Resident Holder by the Company are subject to Canadian
withholding tax at the rate of 25%, subject to a reduction of such rate under
an applicable income tax convention. Where the Non-Resident Holder is a
resident of the United States and is entitled to the benefits of the Canada
United States Income Tax Convention (the “Convention”), the rate of withholding
tax on such dividends is generally limited to 15% of the gross amount of the
dividend (or 5% in the case of a Non-Resident Holder that is a corporation
beneficially owning at least 10% of the Company’s voting shares). Under the
Convention, dividends paid by the Company to certain religious, scientific,
charitable, certain other tax-exempt organizations and certain pension
organizations that are resident in, and exempt from tax in, the United States
are exempt from Canadian withholding tax. Provided that certain administrative
procedures are observed regarding registration of such organizations, the
Company will not be required to withhold such tax from dividends paid to such
organizations. If qualifying organizations fail to follow the required
administrative procedures, the Company will be required to withhold tax and the
organizations will have to file with the CRA a claim for refund to recover
amounts withheld.
A Non-Resident Holder will
generally not be subject to tax under the Canadian Tax Act in respect of a
capital gain realized on the disposition of a Common Share, unless the Common
Share constitutes “taxable Canadian property” as defined in the Canadian Tax
Act at the time of the disposition. A Common Share that is listed on a
designated stock exchange (which currently includes the TSX) will generally not
be taxable Canadian property to a Non-Resident Holder unless at any time during
the five-year period immediately preceding the disposition (i) the Non-Resident
Holder, persons with whom the Non-Resident Holder did not deal at arm’s length,
or the Non-Resident Holder together with such persons, owned 25% or more of the
issued shares of any class or series of the Company’s capital stock and (ii)
more than 50% of the fair market value of the Common Shares was derived
directly or indirectly from certain resource properties, timber resource
properties or real or immovable properties situated in Canada (or a combination
thereof). In addition, in certain circumstances set out in the Tax Act, Common
Shares should be deemed to be taxable Canadian property. By reason of the
Convention, even if a Common Share constitutes taxable Canadian property to a
particular Non-Resident Holder that is entitled to the benefits of the
Convention, no tax will generally be payable under the Canadian Tax Act on a
capital gain realized on the disposition of such shares, provided the value of
such shares at the time of disposition is not derived principally from “real
property situated in Canada” as defined in the Convention.
Acquisition, holding and disposition
of CVR
The CVR will not constitute
taxable Canadian property for the purposes of the Canadian Tax Act. A
Non-Resident Holder will generally not be subject to non-resident withholding
tax or other Canadian income tax in respect of any payments under the CVR or in
respect of any gain or loss arising on the disposition of a CVR.
Participation in Replacement
Restructuring
On participation by a Non-Resident
Holder in the Replacement Restructuring in respect of a particular Note, the
Note will be amended and remain outstanding. Although the matter is not free
from doubt, such amendment should not give rise to a disposition the Note for
Canadian income tax purposes and accordingly, the Canadian tax treatment of
interest thereunder, of the disposition of such Note and of the conversion of
such Note to Common Shares should be the same as the current treatment of such
items under the existing Notes.
14. Additional
Information.
GR is subject to the reporting and other
informational requirements of the Exchange Act and, in accordance therewith,
files reports and other information with the SEC. Such reports and other
information can be inspected and copied at the Public Reference Section of
the SEC located at 100 F Street, Washington D.C. 20549. Such material may
also be accessed electronically by means of the SEC’s home page on the
Internet at www.sec.gov. Also, the Company
files reports and other announcements with the Canadian securities regulatory
agencies, which can be viewed on-line at www.sedar.com.
GR has filed with the SEC a Tender Offer
Statement on Schedule TO, pursuant to Section 13(e)(4) of the
Exchange Act and Rule 13e-4 promulgated thereunder, furnishing certain
information with respect to the Put Option and the Offer for Alternative
Election. The Tender Offer Statement on Schedule TO, together with any
exhibits and any amendments thereto, may be examined and copies may be obtained
at the same places and in the same manner as set forth above.
The documents listed below contain
important information about GR and its financial condition.
• GR’s annual
report on Form 10-K for its fiscal year ended December 31, 2012;
• GR’s reports on
Form 6-K filed on May 30, 2012 and May 31, 2012;
• All other
reports filed pursuant to Section 13(a) or 15(d) of the Exchange
Act since the end of the fiscal year covered by the Form 10-K mentioned
above;
• All documents
required to be filed with the SEC by GR pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Amended Notice;
and
• The description
of Capital Stock set forth in the Registration Statement on Form F-10 (File No.
333-142655) filed on May 7, 2007 including any amendment or report filed with
the SEC for the purpose of updating such description.
In the event of conflicting information in
these documents, the information in the latest filed documents should be
considered correct.
15. No Solicitations
. GR has not employed any
persons to make solicitations or recommendations in connection with the Put Option
or the Offer for Alternative Election.
16. Definitions
. All capitalized terms used but not
specifically defined herein shall have the meanings given to such terms in the
Indenture.
17. Conflicts
. In the event of any conflict between
this Amended Notice and the accompanying Repurchase Notice on the one hand and
the terms of the Indenture or any applicable laws on the other hand, the terms
of the Indenture or applicable laws, as the case may be, will control.
18. Certain Securities Law
Considerations
.
Certain U.S. Securities Law Considerations
All of the outstanding Notes and the common
shares into which the Notes may be converted or used by the Company to satisfy
the Notes were registered with the are now freely tradable under the Securities
Act by persons who are not our affiliates and who have not (directly or indirectly)
acquired their securities from any of our affiliates in the past six months. The
modification of the Notes and the issuance of Common Shares upon participation in
the Proposed Restructuring is intended to be exempt from registration pursuant to
Section 3(a)(9) of the Securities Act. Section 3(a)(9) provides an exemption from
registration for any security exchanged by an issuer with its existing security
holders exclusively where no commission or other remuneration is paid or given directly
or indirectly for soliciting such exchange. When securities are exchanged for other
securities of an issuer under Section 3(a)(9), the securities received assume, in
essence, the character of the exchanged securities for purposes of the Securities
Act. Thus, the common shares issued in connection with the Proposed
Restructuring will be freely tradable under the Securities Act by any person who
is not an affiliate of ours and who has not (directly or indirectly) acquired the
Common Stock (or the Notes restructured pursuant to the Proposed Restructuring)
from any of our affiliates in the past six months.
Certain Canadian Securities Law
Considerations
The Common Shares, Modified Notes and
Contingent Value Rights to be issued to Holders resident in Canada will be
issued pursuant to exemptions from the prospectus requirements of applicable
Canadian securities laws and will be freely tradeable in Canada subject to
restrictions applicable to Holders who are “control persons” in respect of the
Company pursuant to such laws.
None of
GR or its board of directors or employees are making any recommendation to any
Holder as to whether to surrender or refrain from surrendering Notes for
repurchase or to participate in the Alternative Transaction pursuant to this Amended
Notice. Each Holder must make his, her or its own decision whether to
surrender his, her or its Notes for repurchase and, if so, the principal amount
of Notes to surrender based on their own assessment of current market value and
other relevant factors.
|
GOLD RESERVE INC.
|
|
|
|
June 1, 2012
|
ANNEX A
BOARDS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names
of each of the members of GR’s board of directors and executive officers.
Name
|
Position Held
|
Rockne J. Timm
|
Chief Executive Officer and
Director
|
A. Douglas Belanger
|
President and Director
|
Robert A. McGuinness
|
Vice President Finance and
Chief Financial Officer
|
Mary E. Smith
|
Vice President
Administration and Secretary
|
James P. Geyer
|
Director
|
James H. Coleman
|
Q.C., Director
|
Patrick D. McChesney
|
Director
|
Chris D. Mikkelsen
|
Director
|
Jean Charles Potvin
|
Director
|
Exhibit 99(a)(1)(B)
REPURCHASE NOTICE WITH RESPECT TO PUT
RIGHT
GOLD RESERVE INC.
5.50% SENIOR SUBORDINATED CONVERTIBLE
NOTES DUE 2022
CUSIP Number: 38068N AB4
Pursuant to the Company Repurchase Notice
Dated May 16, 2012, as amended
TO:
|
GOLD RESERVE INC.
926
West Sprague Avenue,
Suite
200,
Spokane,
WA 99201
Tel:
(509) 623-1500
Fax:
(509) 623-1634
|
|
|
THE BANK OF NEW YORK MELLON
|
|
Bank of New York Mellon Corporation
101 Barclay Street - 7 East
New York, New York 10286
Attn: Ms. Carolle Montreuil
Tel: (212) 815-5920
Fax: (212) 298-1915
|
|
|
The undersigned registered owner of this
Note hereby irrevocably acknowledges receipt of a notice from Gold Reserve Inc.
(“GR”) regarding the right of holders to elect to require GR to repurchase the
Notes and requests and instructs GR to repay the entire principal amount of
this Note, or the portion thereof (which is $1,000 or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture at the
price of 100% of such entire principal amount or portion thereof, together with
accrued Interest to, but excluding, June 15, 2012, to the registered holder
hereof. Capitalized terms used herein but not defined shall have the
meanings ascribed to such terms in the Indenture. The Notes shall be
repurchased by GR as of June 15, 2012 pursuant to the terms and conditions
specified in the Indenture.
NOTICE: The above signatures of the holder(s) hereof
must correspond with the name as written upon the face of the Note in every
particular without alteration or enlargement or any change whatever.
Note Certificate Number (if applicable):
Principal amount of Notes:
Principal amount to be repurchased (if less than all):
Social Security or Other Taxpayer Identification Number:
DTC Account:
Name:
Contact Information:
Exhibit
99(a)(1)(C)
NOTICE OF WITHDRAWAL
OF SURRENDER OF
GOLD RESERVE INC.
5.50% SENIOR SUBORDINATED CONVERTIBLE NOTES DUE 2022
WITH RESPECT TO PUT RIGHT
CUSIP Number: 38068N AB4
Pursuant to the Company Repurchase Notice
dated May 16, 2012, as amended
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE
15, 2012 (THE “REPURCHASE DATE”). HOLDERS OF NOTES MUST SUBMIT A REPURCHASE
NOTICE NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON JUNE 15, 2012 IN ORDER
TO RECEIVE $1,000 PER $1,000 PRINCIPAL AMOUNT OF NOTES PLUS ANY ACCRUED AND
UNPAID INTEREST TO BUT EXCLUDING THE REPURCHASE DATE (THE “REPURCHASE PRICE”).
REPURCHASE NOTICES MAY BE WITHDRAWN IF THE REGISTERED HOLDER SUBMITS AND THE
PAYING AGENT RECEIVES THIS COMPLETED AND SIGNED NOTICE OF WITHDRAWAL AT OR
BEFORE 5:00 P.M., NEW YORK CITY TIME, ON JUNE 15, 2012. HOLDERS MUST ALSO
SURRENDER A NOTE SUBJECT TO A VALID AND TIMELY REPURCHASE NOTICE TO THE PAYING
AGENT BEFORE RECEIVING ANY REPURCHASE PRICE FOR THAT NOTE.
HOLDERS
THAT SURRENDER THROUGH DTC NEED NOT SUBMIT A PHYSICAL REPURCHASE NOTICE TO THE
PAYING AGENT IF SUCH HOLDERS COMPLY WITH THE TRANSMITTAL PROCEDURES OF DTC.
The Paying Agent is:
Bank of New York Mellon Corporation
101 Barclay Street - 7 East
New York, New York 10286
Attn: Ms. Carolle Montreuil
Tel: (212) 815-5920
Fax: (212) 298-1915
All capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Company Repurchase
Notice, dated May 16, 2012, as amended, and the accompanying Repurchase Notice,
of Gold Reserve Inc. (“GR”), relating to the repurchase by GR, at the option of
the Holder thereof, of GR’s 5.50% Senior Subordinated Convertible Notes due
2022 (the “Notes”) for $1,000 per $1,000 principal amount of the Notes plus any
accrued and unpaid interest to but excluding the Repurchase Date, subject to
the terms and conditions of the Indenture and the Put Option.
This Notice of Withdrawal is to be
completed by registered Holders of Notes desiring to withdraw the delivery of a
Repurchase Notice with respect to such Notes in the Put Option if (i) a Repurchase
Notice has previously been delivered to the Paying Agent, or (ii) delivery of a
Repurchase Notice has been previously made pursuant to the procedures of the
DTC described under the caption “Procedures to be Followed by Holders Electing
to Surrender Notes for Repurchase” in the Company Repurchase Notice, as amended.
Ladies and Gentlemen:
The Undersigned hereby withdraws the
Undersigned’s previously delivered Repurchase Notice with respect to the Notes
described below.
The Undersigned understands that the
withdrawal of the Repurchase Notice with respect to Notes previously
surrendered in this Put Option, effected by this Notice of Withdrawal, may not
be rescinded and that such Notes will no longer be deemed to be validly
surrendered for repurchase for purposes of the Undersigned’s Repurchase Notice.
Such withdrawn Notes may be re-surrendered for repurchase only by following the
procedures for surrendering set forth in the Company Repurchase Notice, as
amended, and in the accompanying Repurchase Notice.
All authority conferred or agreed to be
conferred in this Notice of Withdrawal shall not be affected by and shall
survive the death or incapacity of the Undersigned, and any obligations of the
Undersigned under this Notice of Withdrawal shall be binding upon the heirs,
personal and legal representatives, trustees in bankruptcy, successors and
assigns of the Undersigned.
*
* *
DESCRIPTION OF NOTES BEING WITHDRAWN
Name(s) and Address(es) of Registered Holder(s)
(Please fill in exactly as name(s) appear(s) on Notes)(1)
|
|
Notes Being Withdrawn
(Attach additional signed list, if necessary)
|
|
|
|
Security Certificate
Number(s)(2)
|
|
Principal Amount
Represented by
Notes
|
|
Principal Amount
Being Withdrawn(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Amount
Being Withdrawn
|
|
|
|
|
|
(1)
Must correspond exactly to the name(s) that appear(s) on the certificate(s) for the Notes and the Paying Agent’s record of registered Holders or, if surrendered by a DTC participant, exactly as such participant’s name(s) and address(es) appear(s) on the security position listing of DTC.
(2)
Need not be completed if the Notes are being surrendered for repurchase by book-entry transfer.
(3)
Unless otherwise specified, the entire aggregate principal amount evidenced by such Notes will be deemed to have been withdrawn.
METHOD OF DELIVERY
o
CHECK HERE IF NOTES WERE PHYSICALLY DELIVERED TO THE PAYING AGENT.
o
CHECK HERE IF NOTES WERE DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE PAYING AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Surrendering Institution:
Address:
Telephone:
Facsimile:
Contact Person:
Date Surrendered:
DTC Account Number:
Transaction Code Number:
The principal amount, if any, of Notes which remain subject to the original Repurchase Notice and which have been or will be delivered for repurchase by GR:
SIGN HERE
(To Be Completed by All Registered Holders of Notes Being Withdrawn)
Must be signed by registered Holder(s) exactly as name(s) appear(s) on the Notes or on a security position listing or by person(s) authorized to become registered Holder(s) of the Notes by documents transmitted with this Notice of Withdrawal. If the signature is by an attorney-in-fact, executor, administrator, trustee, guardian, partner, officer of a corporation or another party acting in a fiduciary or representative capacity, please set forth the signer’s full title.
|
(Signature(s) of Registered Holder(s) or Authorized Signatory)
|
|
Date: , 2012
|
|
Name(s):
|
|
(Please Print)
|
|
Capacity (full title):
|
|
|
Area Code(s) and Telephone Number(s):
|
|
|
|
|
|
|
The Guarantee Below Must be Completed.
|
|
|
GUARANTEE OF SIGNATURE(S)
|
|
Authorized Signature:
|
|
|
Name:
|
|
|
Title:
|
|
|
Name of Eligible Institution:
|
|
|
Address:
|
|
|
Area Code and Telephone Number:
|
|
|
|
(Include Zip Code)
|
|
Date: , 2012
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit 99(a)(1)(D)
What Number to Give the Paying Agent
The Holder is required to give the Paying
Agent his, her or its taxpayer identification number (“TIN”) (e.g., Social
Security Number or Employer Identification Number). If the Notes are held
in more than one name or are held not in the name of the actual owner, consult
the enclosed “Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9” for additional guidance on which number to report.
PAYING AGENT’S NAME:
The Bank of New York Mellon
Name (as shown on your income tax return)
Business Name, if different from above
Check appropriate box:
|
o
Individual/Sole proprietor
o
Partnership
|
o
Corporation
o
Other (Specify)
|
|
|
|
Address
City, State, and ZIP Code
|
|
|
|
|
|
SUBSTITUTE
Form W-9
|
Part 1
—Taxpayer Identification Number—Please provide your TIN in the
box at right and certify by signing and dating below. If
awaiting TIN, write “Applied For.”
|
Social Security Number
OR
Employer Identification Number
|
Department of the Treasury Internal
Revenue Service
|
PART 2
—For Exempt Payees—Check the box if you are exempt from backup
withholding.
|
|
|
Payer’s Request for TIN and
Certification
|
PART 3—Certification—Under penalties of perjury, I
certify that:
|
|
|
|
(1) The number shown on this form is my correct taxpayer
identification number (or I am waiting for a number to be issued to me),
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup
withholding, and
(3) I am a U.S. person (including a U.S. resident alien).
Certification Instructions.
—You must cross out item 2 above if you
have been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends on
your tax return.
The Internal Revenue Service does not require your consent to
any provision of this document other than the certifications required to
avoid backup withholding.
|
|
|
|
SIGNATURE:
|
|
|
DATE:
|
|
|
|
|
|
|
|
|
NOTE:
|
FAILURE TO COMPLETE AND RETURN THIS
FORM MAY RESULT IN BACKUP WITHHOLDING OF 28% OF ANY GROSS PAYMENTS
MADE TO YOU PURSUANT TO THE PUT OPTION. PLEASE REVIEW THE ENCLOSED “GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE
FORM W-9” FOR ADDITIONAL DETAILS.
|
YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER
IDENTIFICATION NUMBER
I certify under penalties of perjury that
a taxpayer identification number has not been issued to me, and either
(a) I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service Center or
Social Security Administration Office, or (b) I intend to mail or deliver
an application in the near future. I understand that if I do not provide
a taxpayer identification number by the time of payment, 28% of all reportable
payments made to me thereafter will be withheld.
IMPORTANT: The Repurchase Notice must be received by the
Paying Agent at the address set forth on the first page of the Repurchase
Notice no later than 5:00 p.m., New York City time, on June 15, 2012.
Payment of the Repurchase Price with respect to Notes subject to a valid and
timely Repurchase Notice will not be made until the Paying Agent receives the
Notes or confirmation of book-entry transfer of the Notes and all other
required documents.
Exhibit
99(a)(1)(E)
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines For Determining the Proper
Identification Number to Give the Payer
—Social Security Numbers (“SSNs”) have nine digits separated by
two hyphens: i.e., 000-00-000. Employer Identification Numbers (“EINs”)
have nine digits separated by only one hyphen: i.e., 00-0000000. The
table below will help determine the number to give the payer. All “section”
references are to the Internal Revenue Code of 1986, as amended. “IRS” is
the Internal Revenue Service.
For this type of account:
|
|
Give the Name and SOCIAL
SECURITY number or
Employer Identification number
of—
|
|
|
|
|
|
|
1.
|
Individual
|
|
The individual
|
|
|
|
|
|
|
2.
|
Two or more individuals (joint account)
|
|
The actual owner of the account or, if combined funds, the first
individual on the account(1)
|
|
|
|
|
|
|
3.
|
Custodian account of a minor (Uniform Gift to Minors Act)
|
|
The minor(2)
|
|
|
|
|
|
|
4.
|
a. The usual revocable savings trust (grantor
is also trustee)
|
|
The grantor–trustee(1)
|
|
|
|
|
|
|
|
b. So-called trust account that is not a legal
or valid trust under State law
|
|
The actual owner(1)
|
|
|
|
|
|
|
5.
|
Sole proprietorship or disregarded entity owned by an individual
|
|
The actual owner(3)
|
|
|
|
|
|
|
For this type of account:
|
|
Give the Name number and
EMPLOYER
IDENTIFICATION number of—
|
|
|
|
|
|
|
6.
|
Disregarded entity not owned by an individual
|
|
The owner
|
|
|
|
|
|
|
7.
|
A valid trust, estate, or pension trust
|
|
The legal entity(4)
|
|
|
|
|
|
|
8.
|
Corporation or LLC electing corporate status on Form 8832
|
|
The corporation or the LLC
|
|
|
|
|
|
|
9.
|
Association, club, religious, charitable, educational or other
tax-exempt organization
|
|
The organization
|
|
|
|
|
|
|
10.
|
Partnership or multi-member LLC
|
|
The partnership or LLC
|
|
|
|
|
|
|
11.
|
A broker or registered nominee
|
|
The broker or nominee
|
|
(1) List first and circle
the name of the person whose SSN you furnish. If only one person on a
joint account has an SSN, that person’s number must be furnished.
(2) Circle the minor’s name
and furnish the minor’s SSN.
(3) You must show your
individual name and you may also enter your business or “doing business as”
name on the second line. You may use either your SSN or EIN (if you have
one), but the Internal Revenue Service encourages you to use your SSN.
(4) List first and circle
the name of the legal trust, estate or pension trust. (Do not furnish the
Taxpayer Identification Number of the personal representative or trustee unless
the legal entity itself is not designated in the account title).
NOTE:
If no name is circled when more than one name is listed, the number will be
considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
How to Get a TIN
If you do not have a TIN, apply for one immediately. If you
are a United States person, your TIN is generally your SSN or your employer
identification number (EIN). To apply for an SSN, obtain Form SS-5,
Application for a Social Security Card, at the local office of the Social
Security Administration or get this form on-line at www.ssa.gov. Use Form
SS-4, Application for Employer Identification Number, to apply for an
EIN. If you are a resident alien and do not have and are not eligible to
get a social security number, your TIN is your IRS individual taxpayer
identification number (ITIN). Use Form W-7, Application for IRS Individual
Taxpayer Identification Number, to apply for an ITIN. You can get Forms
W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676) or from
the IRS web site at www.irs.gov. You can apply for an EIN online by
accessing the IRS website at www.irs.gov/businesses and clicking on Employer
Identification Number under Starting a Business. All Section references
herein are to the Internal Revenue Code of 1986, as amended.
If you do not have a TIN, write “Applied For” in Part 1, sign and
date the form, and give it to the payer. For interest and dividend
payments and certain payments made with respect to readily tradable
instruments, you will generally have 60 days to get a TIN and give it to the
requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN.
Note:
Writing “Applied For” on the form means that you have already applied for a TIN
or that you intend to apply for one soon. As soon as you receive your
TIN, complete another Form W-9, include your TIN, sign and date the form, and
give it to the requester.
CAUTION:
A disregarded domestic entity that has a foreign owner must use the appropriate
Form W-8.
Payees Exempt from Backup Withholding
Individuals (including sole proprietors) are NOT exempt from
backup withholding. Corporations are exempt from backup withholding for
certain payments, such as interest and dividends.
Note:
If you are exempt from backup withholding, you should still complete Substitute
Form W-9 to avoid possible erroneous backup withholding. If you are
exempt, enter your correct TIN in Part 1, check the “Exempt” box in Part 2, and
sign and date the form. If you are a nonresident alien or a foreign
entity not subject to backup withholding, give the requester the appropriate
completed Form W-8, Certificate of Foreign Status.
The following is a list of payees that are exempt from backup
withholding.
An organization exempt from
tax under section 501(a), any individual retirement plan (“IRA”), or a
custodial account under section 403(b)(7) if the account satisfies the
requirements of section 401(f)(2).
The United States or any of
its agencies or instrumentalities.
A state, the District of
Columbia, a possession of the United States, or any of their political
subdivisions or instrumentalities.
A foreign government, a
political subdivision of a foreign government, or any of their agencies or
instrumentalities.
An international organization
or any agency or instrumentality thereof.
Other payees that may be
exempt from backup withholding include:
A corporation.
A foreign central bank of
issue.
A dealer in securities or
commodities registered in the United States, the District of Columbia, or a
possession of the United States.
A futures commission merchant
registered with the Commodity Futures Trading Commission.
A real estate investment
trust.
An
entity registered at all times during the tax year under the Investment Company
Act of 1940.
A financial institution.
A middleman known in the
investment community as a nominee or custodian.
A trust exempt from tax under
Section 664 or described in Section 4947.
A common trust fund operated
by a bank under Section 584(a).
Exempt payees should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE REQUESTER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, CHECK THE “EXEMPT” BOX IN PART 2 ON THE FACE OF
THE FORM IN THE SPACE PROVIDED, SIGN AND DATE THE FORM AND RETURN IT TO THE
REQUESTER.
Privacy Act Notice.
Section 6109 requires most recipients of dividend, interest or
other payments to give correct TINs to payers who must report this information
to the IRS. The IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. The IRS may also provide
this information to the Department of Justice for civil and criminal litigation
and to cities, states, the District of Columbia, and U.S. possessions to carry
out their tax laws. The IRS may also disclose this information to other
countries under a tax treaty, or to federal and state agencies to enforce
federal nontax criminal laws, or to federal law enforcement and intelligence
agencies to combat terrorism.
You must provide your TIN whether or not you are required to file
a tax return. Payers must generally withhold 28% of taxable interest,
dividends, and certain other payments to a payee who does not give a TIN to a
payer. Certain penalties may also apply.
Penalties
Failure to Furnish TIN.
If you fail to furnish your correct TIN to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to
Withholding.
If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
Criminal Penalty for Falsifying Information.
Willfully falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
Misuse of TINs.
If the requester discloses or uses TINs in violation of federal
law, the requester may be subject to civil and criminal penalties.
IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the IRS, we
inform you that any U.S. tax advice contained in this communication (including
any attachments) is not intended or written to be used, and cannot be used, for
the purpose of (i) avoiding penalties under the Internal Revenue Code. This
communication is written to accompany the Company Repurchase Notice, as amended.
Each person should seek advice based on its particular circumstances from an
independent tax advisor.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX ADVISOR OR THE
INTERNAL REVENUE SERVICE.
Exhibit 99(a)(1)(F)
GOLD RESERVE INC.
Letter of Transmittal
ELECTION TO ACCEPT OFFER TO PARTICIPATE IN ALTERNATIVE
ELECTION
Shares of our Common Stock, Modified Notes, Contingent
Value Rights and Cash
for any and all of our issued and outstanding
5.50% Convertible Notes Due 2022
(CUSIP No.
38068N AB4
)
Pursuant to the Amended Company Repurchase Notice and
Notice of Offer for Alternative Election dated June 1, 2012
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON JUNE 29, 2012, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE
EXTENDED, THE “
EXPIRATION DATE
”).
HOLDERS MUST VALIDLY TENDER THEIR
NOTES PRIOR TO THE EXPIRATION DATE TO BE ELIGIBLE TO RECEIVE THE OFFER
CONSIDERATION
. TENDERS OF NOTES MAY BE WITHDRAWN PRIOR TO THE EXPIRATION
DATE.
The Agent for the Offer is:
[Name]
By Registered or Certified Mail, Hand, Overnight
Courier or
by Facsimile Transmission (for Eligible Institutions
only)
[Name]
[Address]
Attn: [ ]
Phone: [ ]
Fax: [ ]
Delivery of this
Letter of Transmittal (this “
Letter of Transmittal
”) to an address other
than as set forth above, or transmission of instructions via a fax number other
than as listed above, will not constitute a valid delivery. The method of
delivery of this Letter of Transmittal, Notes and all other required documents
to the Agent, including delivery through DTC and any acceptance or Agent’s
Message delivered through ATOP (as defined below), is at the election and risk
of Holders.
Capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Amended Company Repurchase Notice and Notice of Offer for
Alternative Election dated June 1
, 2012 (as the same may be amended or
supplemented from time to time, the “
Offer
”) of Gold Reserve Inc., a
corporation organized under the laws of Yukon, Canada (the “
Company
”).
All of the Notes are
currently held in book-entry form through the facilities of The Depository
Trust Company (“
DTC
”), whose nominee is the record owner of the Notes on
the Company’s records. This Letter of Transmittal may be used by any record
owner of Notes to tender those Notes for the Offer Consideration. It may also
be used by any DTC participant that has Notes credited to its DTC account to
tender those Notes for the Offer Consideration. However, DTC participants may
instead tender their Notes through DTC’s Automated Tender Offer Program (“
ATOP
”)
and in that event need not complete this Letter of Transmittal. Persons who
hold interests in Notes but are not the record owners of the Notes (other than
DTC participants) must cause the DTC participant through which they hold their
interest (directly or indirectly through brokers, banks or others) to execute
the tender on their behalf.
Solely for the purposes
of this Letter of Transmittal, we refer to any person who is listed as the
record owner of Notes on the Company’s records, as well as any DTC participant
that has Notes credited to its DTC account, as the “
Holder
” of those
Notes. We refer to any person listed as the record owner of Notes on the
Company’s records as the “
Registered Holder
” of those Notes.
This Letter of
Transmittal need not be completed by a DTC participant tendering Notes through
ATOP. However, as described in the Offer, a DTC participant who tenders Notes
through ATOP will be deemed to be bound by the terms of the Offer and this
Letter of Transmittal with respect to Notes so tendered and accepted.
|
|
|
|
|
TENDER OF NOTES
|
¨
CHECK HERE IF
CERTIFICATES REPRESENTING TENDERED NOTES ARE ENCLOSED HEREWITH.
¨
CHECK HERE IF
TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT
MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
Date Tendered:
|
List below the Notes to
which this Letter of Transmittal relates. If the space provided below is
inadequate, list the information requested on a separately executed schedule
and affix the schedule to this Letter of Transmittal. Tenders of Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. No alternative, conditional or contingent tenders will be accepted.
This
Letter of Transmittal need not be completed by Holders tendering Notes through
ATOP.
|
|
|
|
|
|
|
DESCRIPTION OF NOTES TENDERED
|
5.50% Convertible Notes due 2022
(CUSIP
No.
38068N AB4
)
|
|
|
|
|
Name(s) and Address(es) of Registered
Holder(s) or Name of DTC Participant and
Participant’s DTC Account Number in
which Notes are Held (Please fill in, if blank)
|
|
Certificate
Number(s)*
|
|
Aggregate
Principal
Amount
Represented
|
|
Principal Amount
Tendered**
|
|
|
|
|
|
|
|
* Need
not be completed by Holders tendering by book-entry transfer.
** Unless
otherwise specified, it will be assumed that the entire aggregate principal
amount represented by the Notes described above is being tendered. Only
Holders may validly tender their Notes pursuant to the offer.
|
If not already printed
above, the name(s) and address(es) of the Registered Holder(s) should be
printed exactly as they appear on the certificate(s) representing Notes
tendered hereby or, if tendered by a participant in DTC, exactly as such
participant’s name appears on a security position listing as the owner of the
Notes.
No offer to exchange
is being made to, nor will tenders of Notes be accepted from or on behalf of,
persons in any jurisdiction in which the making or acceptance of any offer to
exchange would not be in compliance of the laws of such jurisdiction.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby
tenders to Gold Reserve Inc., a corporation organized under the laws of Yukon,
Canada, upon the terms and subject to the conditions set forth in this Letter
of Transmittal and the Offer (collectively, the “
Offer Documents
”),
receipt of which is hereby acknowledged, the principal amount or amounts of
Notes indicated in the table above entitled “Description of Notes Tendered”
under the column heading “Principal Amount Tendered” (or, if nothing is
indicated therein, with respect to the entire aggregate principal amount
represented by the Notes described in such table). The undersigned represents
and warrants that the undersigned has the Offer Documents and agrees to all of
the terms and conditions herein and in the Offer Documents.
The undersigned agrees
and acknowledges that, by the execution and delivery of this Letter of
Transmittal (or agreeing to the terms of this Letter of Transmittal pursuant to
an Agent’s Message), the undersigned grants written consent to the termination
of the Covenant described in the Offer with respect to the Notes being tendered
hereby.
The undersigned
understands that tenders of Notes pursuant to the procedures described in the
Offer under the heading “The Offer — Procedures for Tendering Notes” and in
this Letter of Transmittal (including the accompanying instructions) will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions described in the Offer and this Letter of
Transmittal. The undersigned represents and warrants that the undersigned has
full power and authority to surrender and deliver to you the above-listed
Notes, to tender, sell and assign the Notes being tendered pursuant hereto, and
generally to enter into the agreement described above (and to act pursuant
hereto), in each case without restriction and on behalf of the undersigned, the
Registered Holder (if not the undersigned) and all other persons, if any, who
have an interest in such Notes. The undersigned hereby represents and warrants
that, in addition to itself, this Letter of Transmittal and the agreement
described above is binding upon the Registered Holder (if not the undersigned)
and all such other persons, without restriction. The undersigned shall, upon
request, execute and deliver any additional documents necessary or desirable to
complete the surrender of such Notes.
The undersigned further
represents and warrants that, when the Company accepts the Notes tendered
hereby for the Offer Consideration, it will acquire good and marketable title
to the Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim.
The undersigned hereby
irrevocably constitutes and appoints the Agent as the undersigned’s true and
lawful agent and attorney-in-fact, with full power of substitution, such power
of attorney being deemed to be an irrevocable power coupled with an interest,
to deliver to the Company the above-described Notes (together with all
accompanying evidence of authenticity), against receipt by the Agent (as agent
of the undersigned) of certificates representing that number of shares of
Common Stock, Modified Notes and cash that the undersigned is entitled to
receive for such Notes pursuant to the Offer. The Company shall be responsible
for the issuance and delivery of the certificate representing the Contingent
Value Rights to the undersigned. All authority conferred or agreed to be
conferred herein shall survive the death or incapacity of the undersigned and
all obligations of the undersigned shall be binding upon the successors, heirs,
executors, administrators, legal representatives and assigns of the
undersigned.
The undersigned
understands that tenders of Notes pursuant to any one of the procedures
described in the Offer and in the instructions hereto will constitute an agreement
between the undersigned and the Company upon the terms and subject to the
conditions of the Offer. Subject to, and effective upon, the acceptance of the
Notes tendered hereby, by executing and delivering this Letter of Transmittal
(or agreeing to the terms of this Letter of Transmittal pursuant to an Agent’s
Message) the undersigned (without limiting the foregoing): (i) irrevocably
sells, assigns, and transfers to or upon the order of the Company all right,
title and interest in and to, and all claims in respect of or arising or having
arisen as a result of the undersigned’s status as a holder of the Note(s)
tendered thereby; (ii) waives any and all rights with respect to the Notes
tendered; (iii) releases and discharges the Company from any and all
claims such holder may have, now or in the future, arising out of or related to
the Notes; and (iv) consents to the termination of the Covenant as
provided above.
The undersigned
recognizes that, under certain circumstances set forth in the Offer, the Company
may terminate or amend the offer or may postpone the acceptance for exchange of
Notes tendered, and may not be required to exchange any of the Notes tendered
hereby other than in accordance with the terms and conditions of the Offer.
The undersigned
understands that a valid tender of the Notes is not made in acceptable form and
risk of loss therefore does not pass until receipt by the Agent of this Letter
of Transmittal (or an Agent’s Message in lieu thereof), duly completed, dated
and signed, together with all accompanying evidences of authority and any other
required documents and signature guarantees in form satisfactory to the Company
(which may delegate power in whole or in part to the Agent). All questions as
to validity, form and eligibility of any tender of the Notes hereunder
(including time of receipt) and acceptance of tenders and withdrawals of the
Notes will be determined by the Company in its sole judgment (which may
delegate power in whole or in part to the Agent).
Unless otherwise indicated
under “Special Exchange Instructions,” please issue shares of Common Stock the
Modified Notes, and a check for any cash premium, accrued interest and payments
in lieu of fractional shares, and direct the Company to issue the
Contingent Value Rights, all in the name(s) of the
Registered Holder (for credit to the DTC account of the undersigned DTC
participant, if applicable) specified in the table above. Similarly, unless
otherwise indicated under “Special Delivery Instructions,” please mail the
certificates representing shares of Common Stock, the Modified Notes and issue
and a check for any cash premium, accrued interest and payments in lieu of
fractional shares (and accompanying documents, as appropriate), and cause the
Company to mail the Contingent Value Rights, to the undersigned at the address
shown below the undersigned’s signature(s). In the event that both the “Special
Exchange Instructions” and the “Special Delivery Instructions” are completed,
please issue certificates representing shares of Common Stock and any
untendered Notes and a check for any cash premium, accrued interest and
payments in lieu of fractional shares in the name(s) of, and forward
certificates representing shares of Common Stock and any untendered Notes and
such check to, the person(s) so indicated.
Your bank or broker can
assist you in completing this form. The instructions included with this Letter
of Transmittal must be followed. Questions and requests for assistance or for
additional copies of the Offer and this Letter of Transmittal may be directed
to the information agent, whose address and telephone number appears on the
final page of this Letter of Transmittal. See Instruction 9 below.
|
|
|
|
|
|
|
|
|
SPECIAL EXCHANGE INSTRUCTIONS
To be completed ONLY if certificates for
shares of Common Stock, the Modified Notes, the Contingent Value Rights and
the check for any cash premium, accrued interest and cash in lieu of
fractional shares, are to be issued in the name of someone other than the
Registered Holder or, in the case of such check, the undersigned.
|
|
|
|
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if certificates for
shares of Common Stock the Modified Notes, the Contingent Value Rights and
the check for any cash premium, accrued interest and cash in lieu of fractional
shares, are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above.
|
|
|
|
Issue Certificate(s) to:
|
|
|
|
Mail Certificate(s) to:
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Name:
|
|
|
|
|
(PLEASE PRINT)
|
|
|
|
|
|
(PLEASE PRINT)
|
|
|
|
|
|
Address:
|
|
|
|
|
|
Address:
|
|
|
|
|
(INCLUDE
ZIP CODE)
|
|
|
|
|
|
(INCLUDE
ZIP CODE)
|
|
|
|
|
|
|
|
(TAX
IDENTIFICATION OR SOCIAL SECURITY NO.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(SEE SUBSTITUTE FORM W-9 BELOW OR
FORM W-8, AS APPLICABLE)
|
|
|
|
|
|
|
PLEASE COMPLETE AND SIGN BELOW
(This page is to be completed and signed by all
tendering Holders except Holders executing the tender through DTC’s ATOP
system.)
By completing, executing
and delivering this Letter of Transmittal, the undersigned hereby tenders the
principal amount of the Notes listed in the box above labeled “Description of
Notes Tendered” under the column heading “Principal Amount Tendered” (or, if
nothing is indicated therein, with respect to the entire aggregate principal
amount represented by the Notes described in such box).
(Must be signed by the
Registered Holder(s) exactly as the name(s) appear(s) on certificate(s)
representing the tendered Notes or, if the Notes are tendered by a participant
in DTC, exactly as such participant’s name appears on a security position
listing as the owner of such Notes. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please set forth the
full title and see Instruction 2.)
Dated:
(Please Print)
Capacity (Full Title):
Address:
(Including Zip Code)
Area Code and Telephone Number:
Tax Identification or Social Security Number:
(REMEMBER TO COMPLETE ACCOMPANYING SUBSTITUTE FORM
W-9)
MEDALLION SIGNATURE GUARANTEE
(ONLY IF REQUIRED—SEE INSTRUCTIONS 1 AND 2)
Authorized Signature of Guarantor:
Name of Firm:
Address:
Area Code and Telephone Number:
[Place Seal Here]
INSTRUCTIONS
FORMING PART OF THE OFFER
1.
LETTER OF
TRANSMITTAL
. This Letter of Transmittal is being provided to you to effect the
tender of Notes for shares of Common Stock, Contingent Value Rights and the
payment of cash, and acceptance of the Offer.
2.
SIGNATURES
.
(a) All signatures must correspond exactly with the way your name is
written on the Note certificate(s) without alteration, variation or any change
whatsoever (unless you are a DTC participant).
(b) If this Letter of
Transmittal is signed by a participant in DTC whose name is shown on a security
position listing as the owner of the Notes tendered hereby, the signature must
correspond with the name shown on the security position listing as the owner of
such Notes.
(c) If the Note(s)
surrendered with this Letter of Transmittal is (are) owned of record by two or
more joint owners, all such owners must sign this letter of transmittal.
(d) If your Note(s) are
registered in different names on several certificates, it will be necessary to
complete, sign and submit as many separate Letters of Transmittal as there are
different registrations of Notes.
(e) If this Letter of Transmittal
is signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity and such person is not the registered holder of the
Note(s), such person must indicate their capacity when signing this Letter of
Transmittal and must submit proper evidence of his or her authority to act.
3.
SIGNATURE GUARANTEE
.
Each signature on this Letter of Transmittal or any notice of withdrawal, as
the case may be, must be guaranteed unless the Notes surrendered for exchange
pursuant hereto are tendered (i) by the Registered Holder of the Notes who
has not completed either the box entitled “Special Exchange Instructions” or
the box entitled “Special Delivery Instructions” in this Letter of Transmittal,
or (ii) for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agent Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program, each known as an eligible institution. In the event that a
signature on this Letter of Transmittal or a notice of withdrawal, as the case
may be, is required to be guaranteed, such guarantee must be by an eligible
institution. If the Holder is a person other than the signer of this Letter of
Transmittal, see Instruction 6 below.
4.
DESCRIPTION OF
NOTES TENDERED
. Please review and, if required, make any corrections to, the
form entitled “Description of Notes Tendered” which sets forth the Notes which
are to be delivered to the Agent with this Letter of Transmittal upon your
acceptance of the Offer.
5.
INADEQUATE SPACE
.
If the space provided is inadequate, the numbers of the Note certificate(s)
delivered for exchange should be listed on a separate signed schedule and
attached hereto.
6.
ENDORSEMENTS
.
Unless this Letter of Transmittal is signed by the Registered Holder(s) of the
Notes tendered hereby (or by a participant in DTC whose name appears on a
security position listing as the owner of such Notes), such Notes must be
endorsed or accompanied by appropriate instruments of transfer, and be
accompanied by a duly completed proxy entitling the signer to tender such Notes
on behalf of such Registered Holder(s) (or such participant), and each such
endorsement, instrument of transfer or proxy must be signed exactly as the name
or names of the Registered Holder(s) appear on the Notes (or as the name of
such participant appears on a security position listing as the owner of such
Notes); signatures on each such endorsement, Instrument of transfer or proxy
must be guaranteed by an eligible institution.
7.
PARTIAL TENDERS
(NOT APPLICABLE TO HOLDERS OF THE NOTES WHO TENDER BY BOOK-ENTRY TRANSFER)
.
If fewer than all the Notes represented by any Note certificate delivered to
the Exchange
Agent
are to be tendered, fill in the number of Notes that are to be tendered in the
box entitled “Principal Amount Tendered.” In such case, a new Note certificate
for the remainder of the Notes represented by the old Note certificate will be
sent to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the “Special Exchange Instructions” or “Special Delivery
Instructions” boxes on this Letter of Transmittal, as promptly as practicable
following the expiration or termination of the Offer. All Notes represented by
Note certificates delivered to the Agent will be deemed to have been tendered
unless otherwise indicated.
8.
SPECIAL DELIVERY
INSTRUCTIONS
. Unless instructions to the contrary are given in the Special
Delivery Instructions on this letter of transmittal, certificates for shares of
Common Stock issued pursuant to this Letter of Transmittal, together with the
Modified Notes, the Contingent Value Rights and a check for any cash premium,
accrued interest and cash in lieu of fractional shares, will be mailed to the
Holder.
9.
ADDITIONAL COPIES
.
Additional copies of this Letter of Transmittal may be obtained from, and all
inquires with respect to the surrender of the Notes should be made directly to
the Company, at its address and telephone numbers listed on the back of this
Letter of Transmittal.
10.
BACKUP WITHHOLDING
.
U.S. INTERNAL REVENUE SERVICE CIRCULAR 230
NOTICE: TO ENSURE COMPLIANCE WITH INTERNAL REVENUE SERVICE CIRCULAR 230,
HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX
ISSUES CONTAINED OR REFERRED TO IN THIS DOCUMENT OR ANY DOCUMENT REFERRED TO
HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY HOLDERS
FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE
U.S. INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN FOR USE IN
CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED
HEREIN; AND (C) HOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
Federal income tax law
imposes “backup withholding” unless a surrendering U.S. holder, and, if
applicable, each other payee, has provided such holder’s or payee’s correct
taxpayer identification number (“
TIN
”) which, in the case of a holder or
payee who is an individual, is his or her social security number, and certain
other information, or otherwise establishes a basis for exemption from backup
withholding. Completion of the attached Substitute Form W-9 should be used for
this purpose. If the Agent (or other withholding agent, as applicable) is not
provided the correct TN, the holder or payee may be subject to a $50 penalty
imposed by the Internal Revenue Service (the “
IRS
”). Exempt holders and
payees (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and information
reporting requirements, provided that they properly demonstrate their
eligibility for exemption. Exempt U.S. holders should furnish their TIN, check
the exemption in Part 2 of the attached Substitute Form W-9, and sign, date and
return the Substitute Form W-9 to the Agent. In order for a non-U.S. holder to qualify
as an exempt recipient, that non-U.S. holder should submit a properly completed
IRS Form W-8, as applicable (which are available from the Agent) signed under
penalties of perjury, attesting to that non-U.S. holder’s foreign status.
In addition to penalties,
failure to provide the Agent (or other withholding agent, as applicable) with
the correct information or an adequate basis for an exemption from backup
withholding may result in backup withholding at a current rate of 28% (or such
other rate specified by the Internal Revenue Code of 1986, as amended (the “
Code
”))
on payments paid to the holder or other payee pursuant to the Offer. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained, provided that the required information is furnished to
the IRS on a timely basis.
A U.S. holder (or
other payee) should write “Applied For” in the space for the TIN provided on
the attached Substitute Form W-9 and must also complete the attached
“Certificate of Awaiting Taxpayer Identification Number” if such U.S. holder
(or other payee) has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the Agent is not provided with a TIN
by the time of payment, the Agent may backup withhold 28% on payments made
pursuant to the offer. A U.S. holder who writes “Applied For” in the space in
Part 1 in lieu of furnishing his or her TIN should furnish the Agent with such
holder’s TIN as soon as it is received.
For
further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a TIN if you do not
have one and how to complete the Substitute Form W-9 if the Notes are held in
more than one name), consult the enclosed
Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9
.
11.
DELIVERY OF THIS
LETTER OF TRANSMITTAL AND CERTIFICATES FOR NOTES OR BOOK-ENTRY CONFIRMATIONS
.
The method of delivery of Notes, Letters of Transmittal and all other required
documents is at the election and risk of the noteholder. If delivery is by
mail, it is recommended that registered mail, properly insured, with return
receipt requested, be used. Instead of delivery by mail, it is recommended that
the noteholder use an overnight or hand delivery service. In all cases,
sufficient time should be allowed to assure timely delivery.
12.
MUTILATED, LOST,
STOLEN OR DESTROYED CERTIFICATES FOR NOTES
. Any Holder whose certificates
for Notes have been mutilated, lost, stolen or destroyed should contact the
Agent at the address or telephone number set forth on the back cover of this
Letter of Transmittal to receive information about the procedures for obtaining
replacement certificates for Notes.
PAYER’S NAME: [ ]
|
|
|
|
|
SUBSTITUTE
Form
W-9
Department of the
Treasury
Internal
Revenue Service
Payer’s Request for
Taxpayer
Identification Number
(“TIN”) and
Certification
|
|
Name
(as shown on your income tax return)
_______________________________________________________________________
Business
Name, if different from above
_______________________________________________________________________
Check
appropriate box:
¨
Individual/Sole
proprietor
¨
Corporation
¨
Partnership
¨
Other
Address
_______________________________________________________________________
City,
state, and ZIP code
_______________________________________________________________________
|
|
Part 1 —
Taxpayer Identification Number — Please provide your
TIN in the box at right and certify by signing and dating below. If awaiting
TIN, write “Applied For.”
|
|
Social Security Number
OR
Employer
Identification Number
|
|
PART
2 —
For Payees Exempt from Backup
Withholding — Check the box if you are NOT subject to backup withholding
¨
|
|
PART
3 — Certification — Under penalties of perjury, I certify that:
(1) The
number shown on this form is my correct taxpayer identification number (or I
am waiting for a number to be issued to me), and
(2) I
am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service
(IRS) that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding, and
(3) I
am a U.S. citizen or a U.S. person (defined below).
Certification Instructions
. — You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding
because you have failed to report all interest and dividends on your tax
return. However, if after being notified by the IRS stating that you were
subject to backup withholding you received another notification from the IRS
stating you are no longer subject to backup withholding, do not cross out
item 2.
|
|
The
Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding.
SIGNATURE
DATE
|
CERTIFICATE
OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties
of perjury that a taxpayer identification number has not been issued to me, and
either (1) I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service Center or
Social Security Administration Office, or (2) I intend to mail or deliver
an application in the near future. I understand that if I do not provide a
taxpayer identification number by the time of payment, 28% of all reportable
payments made to me will be withheld.
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines For
Determining the Proper Identification Number to Give the Payer –
Social Security Numbers (“
SSNs
”) have nine
digits separated by two hyphens:
i.e.
, 000-00-0000. Employer
Identification Numbers (“
EINs
”) have nine digits separated by only one
hyphen:
i.e.
, 00-0000000. The table below will help determine the number
to give the payer. All “section” references are to the Code.
|
|
|
|
|
|
|
For this
type of account:
|
|
GIVE THE NAME
AND SOCIAL SECURITY
NUMBER or EMPLOYER
IDENTIFICATION
NUMBER of
—
|
|
For this
type of account:
|
|
GIVE THE NAME
AND EMPLOYER
IDENTIFICATION
NUMBER of
—
|
|
|
|
|
1. Individual
|
|
The individual
|
|
7. A
valid trust, estate, or pension trust
|
|
Legal entity (4)
|
|
|
|
|
2. Two
or more individuals (joint account)
|
|
The actual owner of the
account or, if combined funds, the first individual on the account (1)
|
|
8. Corporation
or LLC electing corporate status on Form 8832
|
|
The corporation
|
|
|
|
|
3. Custodian
account of a minor (Uniform Gift to Minors Act)
|
|
The minor (2)
|
|
9. Association,
club, religious, charitable, educational or other tax-exempt organization
|
|
The organization
|
|
|
|
|
4. a.
The usual revocable savings trust (grantor is also trustee)
|
|
The
grantor-trustee (1)
|
|
10. Partnership
or multi-member LLC
|
|
The partnership or LLC
|
b. So-called
trust account that is not a legal or valid trust under state law
|
|
The
actual owner (1)
|
|
11. A
broker or registered nominee
|
|
The broker or nominee
|
|
|
|
|
5. Sole
proprietorship or single-owner LLC
|
|
The owner (3)
|
|
12. Account
with the Department of Agriculture in the name of a public entity (such as a
state or local government, school district, or prison) that receives
agricultural program payments
|
|
The public entity
|
|
|
|
|
6. Disregarded
entity not owned by an individual
|
|
The owner
|
|
|
|
|
(1)
|
List first and circle the
name of the person whose SSN you furnish. If only one person on a joint
account has an SSN, that person’s number must be furnished.
|
(2)
|
Circle the minor’s name and
furnish the minor’s SSN.
|
(3)
|
You must show your
individual name and you may also enter your business or “doing business as”
name. You may use either your SSN or EIN (if you have one). If you are a sole
proprietor, the Internal Revenue Service encourages you to use your SSN.
|
(4)
|
List first and circle the
name of the legal trust, estate or pension trust. (Do not furnish the
Taxpayer Identification Number of the personal representative or trustee
unless the legal entity itself is not designated in the account title).
|
NOTE: If no name is
circled when more than one name is listed, the number will be considered to be
that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Purpose of Form
A person who is required
to file an information return with the Internal Revenue Service (the “
IRS
”)
must get your correct Taxpayer Identification Number (“
TIN
”) to report,
for example, income paid to you, real estate transactions, mortgage interest
you paid, acquisition or abandonment of secured property, cancellation of debt,
or contributions you made to an individual retirement account. Use Substitute
Form W-9 only if you are a U.S. person (including a resident alien), to give
your correct TIN to the requester (the person requesting your TIN) and, when
applicable, (1) to certify the TIN you are giving is correct (or you are
waiting for a number to be issued), (2) to certify you are not subject to
backup withholding, or (3) to claim exemption from backup withholding if
you are a exempt payee. The TIN provided must match the name given on the
Substitute Form W-9. For federal tax purposes, you are considered a U.S. person
if you are: (1) an individual who is a U.S. citizen or U.S. resident
alien, (2) a partnership, corporation, company, or association created or
organized in the United States or under the laws of the United States, (3) an
estate (other than a foreign estate), or (4) a domestic trust (as defined
in Treasury Regulations section 301.7701-7).
How to Get a TIN
If you do not have a TIN,
apply for one immediately. To apply for an SSN, obtain Form SS-5, Application
for a Social Security Card, at the local office of the Social Security
Administration or get this form on-line at
www.ssa.gov/online/ss-5.pdf
.
You may also get this form by calling 1-800-772-1213. You can apply for an EIN
online by accessing the IRS website at
www.irs.gov/businesses
and
clicking on Employer ID Numbers under Related Topics. Use Form W-7, Application
for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or
Form SS-4, Application for Employer Identification Number, to apply for an EIN.
You can get Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM
(1-800-829-3676) or from the IRS web site at www.irs.gov.
If you do not have a TIN,
write “Applied For” in Part 1, sign and date the form, and give it to the
payer. For interest and dividend payments and certain payments made with
respect to readily tradable instruments, you will generally have 60 days to get
a TIN and give it to the payer. If the payer does not receive your TIN within
60 days, backup withholding, if applicable, will begin and continue until you
furnish your TIN.
Note: Writing “Applied
For” on the form means that you have already applied for a TIN OR that you
intend to apply for one soon. As soon as you receive your TIN, complete another
Form W-9, include your TIN, sign and date the form, and give it to the payer.
CAUTION:
A disregarded domestic entity that has a foreign owner
must use the appropriate Form W-8.
Payees Exempt from
Backup Withholding
Individuals (including
sole proprietors) are NOT exempt from backup withholding. Corporations are
exempt from backup withholding for certain payments, such as interest and
dividends.
Note: If you are exempt
from backup withholding, you should still complete Substitute Form W-9 to avoid
possible erroneous backup withholding. If you are exempt, enter your correct
TIN in Part 1, check the “Exempt” box in Part 2, and sign and date the form. If
you are a nonresident alien or a foreign entity not subject to backup
withholding, give the requester the appropriate completed Form W-8, Certificate
of Foreign Status.
The following is a list
of payees that may be exempt from backup withholding and for which no
information reporting is required. For interest and dividends, all listed
payees are exempt except for those listed in item (9). For broker transactions,
payees listed in (1) through (13) and any person registered under the
Investment Advisers Act of 1940 who regularly acts as a broker are exempt.
Payments subject to reporting under sections 6041 and 6041A are generally
exempt from backup withholding only if made to payees described in items
(1) through (7). However, the following payments made to a corporation
(including gross proceeds paid to an attorney under section 6045(f), even if
the attorney is a corporation) and reportable on Form 1099-MISC are not exempt
from backup withholding: (i) medical and health care payments,
(ii) attorneys’ fees, and (iii) payments for services paid by a
federal executive agency. Only payees described in items (1) through (5) are
exempt from backup withholding for barter exchange transactions and patronage
dividends.
|
(1)
|
An organization exempt from
tax under section 501(a), or an individual retirement plan (“
IRA
”), or
a custodial account under section 403(b)(7), if the account satisfies the
requirements of section 401(f)(2).
|
|
(2)
|
The United States or any of
its agencies or instrumentalities.
|
|
(3)
|
A state, the District of
Columbia, a possession of the United States, or any of their subdivisions or
instrumentalities.
|
|
(4)
|
A foreign government, a
political subdivision of a foreign government, or any of their agencies or
instrumentalities.
|
|
(5)
|
An international
organization or any of its agencies or instrumentalities.
|
|
(7)
|
A foreign central bank of
issue.
|
|
(8)
|
A dealer in securities or
commodities registered in the United States, the District of Columbia, or a
possession of the United States.
|
|
(9)
|
A futures commission
merchant registered with the Commodity Futures Trading Commission.
|
|
(10)
|
A real estate investment
trust.
|
|
(11)
|
An entity registered at all
times during the tax year under the Investment Company Act of 1940.
|
|
(12)
|
A common trust fund
operated by a bank under section 584(a).
|
|
(13)
|
A financial institution.
|
|
(14)
|
A middleman known in the
investment community as a nominee or custodian.
|
|
(15)
|
An exempt charitable
remainder trust, or a non-exempt trust described in section 4947.
|
Exempt payees described
above should file Form W-9 to avoid possible erroneous backup withholding.
FILE
THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, CHECK
THE “EXEMPT” BOX IN PART 2 ON THE FACE OF THE FORM IN THE SPACE PROVIDED, SIGN
AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments that are
not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045, 6049,
6050A and 6050N, and their regulations.
Privacy Act Notice.
Section 6109 of the Internal Revenue Code
requires you to give your correct TIN to persons who must file information
returns with the IRS to report interest, dividends, and certain other income
paid to you, mortgage interest you paid, the acquisition or abandonment of
secured property, cancellation of debt, or contributions you made to an IRA or
Archer MSA or HSA. The IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. The IRS may also provide this
information to the Department of Justice for civil and criminal litigation and
to cities, states, and the District of Columbia to carry out their tax laws.
The IRS may also disclose this information to other countries under a tax
treaty, or to federal and state agencies to enforce federal nontax criminal
laws and to combat terrorism.
You must provide your TIN
whether or not you are required to file a tax return. Payers must generally
withhold 28% of taxable interest, dividends, and certain other payments to a
payee who does not give a TIN to a payer. The penalties described below may
also apply.
Penalties
Failure to Furnish
TIN.
If you fail to furnish your
correct TIN to a payer, you are subject to a penalty of $50 for each such
failure unless your failure is due to reasonable cause and not to willful
neglect.
Civil Penalty for
False Information With Respect to Withholding.
If you make a false statement with no reasonable
basis which results in no imposition of backup withholding, you are subject to
a penalty of $500.
Criminal Penalty for
Falsifying Information.
Willfully
falsifying certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
Misuse of TINs.
If the payer discloses or uses TINs in violation of
federal law, the payer may be subject to civil and criminal penalties.
FOR ADDITIONAL
INFORMATION, CONTACT YOUR TAX ADVISOR OR THE INTERNAL REVENUE SERVICE.
In
order to tender, a Holder should send or deliver a properly completed and
signed Letter of Transmittal, certificates for Notes and any other required
documents to the Agent at the address set forth below or tender pursuant to
DTC’s Automated Tender Offer Program.
The Agent for the Offer is:
[Name]
[Address]
[Address]
Attn: [ ]
Phone: [ ]
Fax:
[ ]
Any questions or requests
for assistance or for additional copies of the Offer or this Letter of
Transmittal may be directed to the Company at the address, email address and
telephone numbers set forth below. A Holder may also contact such Holder’s
broker, dealer, custodian bank, depository, trust company or other nominee for
assistance concerning the offer.
Exhibit 99(a)(1)(G)
Form of Notice of Withdrawal of Election to
Participate in Alternative Election
(Alternative Election)
GOLD RESERVE INC.
Offer
Shares of our Common Stock, Modified Notes, Contingent
Value Rights and Cash
for any and all of our issued and outstanding
5.50% Convertible Notes due 2022
(CUSIP No. 38068N AB4)
Pursuant to the Amended Company Repurchase Notice and
Notice of Offer for Alternative Election June 1, 2012
|
THE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON JUNE 29, 2012, UNLESS EXTENDED (SUCH TIME AND
DATE, AS THE SAME MAY BE EXTENDED, THE “
EXPIRATION DATE
”).
HOLDERS
MUST VALIDLY TENDER THEIR NOTES PRIOR TO THE EXPIRATION DATE TO BE ELIGIBLE
TO RECEIVE THE OFFER CONSIDERATION
. TENDERS OF NOTES MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE.
|
The
undersigned acknowledges receipt of the Amended Company Repurchase Notice and
Notice of Offer of Alternative Election (the “Offer”) of Gold Reserve Inc. (the
“Company”), a corporation organized under the laws of Yukon, Canada, relating
to the Company’s outstanding 5.50% Senior Subordinated Convertible Notes due
2022 (the “Notes”) that are validly tendered and not validly withdrawn, on the
terms and subject to the conditions set forth in the Offer and the appropriate
letter of transmittal. All withdrawals of Notes previously tendered in the
Offer must comply with the procedures described in the Offer.
The
undersigned has identified in the table below the Notes that are being
withdrawn from the Offer:
Series
|
|
Date(s) such Notes were tendered
|
5.50% Convertible Notes due 2022
|
|
|
|
TOTAL LIQUIDATION
PREFERENCE OF SERIES B PREFERRED STOCK TO BE WITHDRAWN:
|
|
AGGREGATE PRINCIPAL
AMOUNT OF NOTES WITHDRAWN:
|
*
|
If any Notes were tendered
through The Depository Trust Company (DTC), please provide the DTC
Participant Number.
This form should only be used for withdrawals of Notes
delivered through DTC if the undersigned needs to withdraw Notes on the final
day of the Offer and withdrawal through DTC is no longer available.
Otherwise, the DTC form of withdrawal should be used for such Notes
.
|
You
may transmit this Notice of Withdrawal to the Agent at the address listed on
the Offer.
This notice of withdrawal must be signed below by the
registered holder(s) of the Notes tendered as its or their names appear on the
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by endorsements and documents transmitted with the
letter of transmittal used to tender such securities. If signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer or other person
acting in a fiduciary or representative capacity, please set forth the full
title of such persons.
Name(s):
Account Number(s):
Signature(s):
Capacity (full title):
Address (including Zip Code):
Area Code and Telephone
Number:
Tax Identification or Social
Security No.:
Dated:
,
2012
DTC Participant Number
(applicable for Exchange Securities tendered through DTC only)
The Company will determine
all questions as to the validity, form and eligibility (including time of
receipt) of any notice of withdrawal in its sole discretion. None of the
Company, the agent (as defined in the Offer) or any other person is under any
duty to give notice of any defects or irregularities in any notice of
withdrawal and none of them will incur any liability for failure to give any
such notice.
NR-12-05
Gold Reserve Announces Amendment to Tender Offer Notice of
Right of Repurchase for 5.50% Senior Subordinated Convertible Notes due 2022
and Proposed Restructuring for Noteholders
SPOKANE,
WASHINGTON June 1,
2012
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.
Company Contact
A. Douglas Belanger, President
926 W. Sprague Ave., Suite 200
Spokane, WA 99201 USA
Tel. (509) 623-1500
Fax (509)
623-1634
"
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."
Gold Reserve (AMEX:GRZ)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Gold Reserve (AMEX:GRZ)
Historical Stock Chart
Von Jul 2023 bis Jul 2024