Century Mining reaches shares for debt settlement with certain trade creditors
BLAINE, WA, June 3 /CNW/ - Century Mining Corporation (CMM: TSX-V) announced today that it has received signed letters from 39 trade creditors who have agreed to accept shares of Century Mining Corporation in final settlement of amounts owed by the Company. The aggregate amount of trade payables settled with creditors is $1,316,368, which at a deemed issue price of $0.25 per share represents the issuance of 5,265,472 common shares of the Company. The issuance of the shares is subject to compliance with applicable securities laws and approval by the TSX Venture Exchange. The shares will be subject to a hold period of four months and a day.
On April 28, 2009 the Company issued a press release announcing the shares for debt arrangement and erroneously referred to this arrangement as a private placement. The Company is continuing to work with several trade creditors, who are evaluating the option of taking shares for debt. Over the next several weeks, Century expects to reach the aggregate amount of $2.0 million (8.0 million shares), as originally announced on April 28, 2009.
Margaret Kent, President and CEO of Century commented, "the Company's primary goal with the shares for debt arrangement is to reduce our working capital deficit as we prepare for the closing of a larger project financing for the Lamaque Mine. We are pleased that several of our creditors have elected to become shareholders of the Company."
6 comments:
The remaining trade creditors probably want to wait for a few more days for the financing to go through, before grabbing the shares. It must have also been a bit discouraging that our share price dropped to $.19 from the $.25 conversion price.
In my view, all of the remaining (pending) trade creditors will jump for the shares in a few days, once the financing is closed off. I'm sure they are pretty smart people. If the share price jumps immediately to say $.45 then why would they not want to grab a $.20 profit (after the 4 mth hold period) on their $.25 conversion share price?
Honestly? I commend Century's staff for pulling all this together. Can you imagine the type of effort it takes to continually negotiate with 39 trade creditors (plus the ones that are pending), especially with Century down to so few staff right now, and having to focus on an endless list of other critical functions at the same time?
Production, I don't think the remaining creditors should be given the opportunity to wait until the financing goes through.
The ones that have signed on have taken the risk of accepting shares at 25 cents in lieu of debt which is a vote of confidence when the share price has been below 20 cents for most of the interim period since the deal was originally announced.
If the financing closes in a few days/weeks, then the conversion rate has to go up to the new share price after the announcement of the closing of the financing. Why should the remaining creditors get the option of waiting to get the same 25-cent deal? It's not fair to those that have taken the risk now.
If they don't sign up before the financing, then their debt should be paid with the $65 million proceeds. When the financing closes we don't need more dilution at 25 cents per share.
Yeah, I hear ya. It's not fair for the trade creditors who took the risk and have already signed up. I guess it's a difficult situation as ideally you would want to reward everyone for sticking with us over the past year (including the ones that put the share conversion deal on hold), but you would want to provide substantially extra reward to the 39 trade creditors that have already signed up. It's just like investors that buy shares in a company. The ones that put their money on the line during the most difficult times should be rewarded the most.
I think your solution sounds like a good one, where the other trade creditors (that end up signing up only after closing of the $65M US financing) should have to convert at a price much higher price than the $.25 - in this way, today's 39 trade creditors are rewarded as the $.25 becomes a discounted conversion price, thus they get to fully participate in the upside going forward.
I guess first thing is first, hopefully we can close off the $65M US deal within the next few days, and take it from there.
Oh, by the way, I thought I read somewhere (maybe in the MD&A) that first dibs on work contracts going forward will be given to trade creditors that sign up for the share conversion deal. Perhaps Century has structured it (further) to fully represent a first come first serve approach, in which today's 39 participants get put at the very front of the line for the new work contracts, ahead of others that sign up later.
Perhaps the trade creditors were really putting pressure on to be paid Right now.. I cant see Peggy giving anyone a "too sweet " deal if she didnt have to.
Post a Comment