TORONTO, Sept. 5 /PRNewswire/ -- Echo Bay Mines Ltd. (Toronto; Amex: ECO)
announced today that its Board of Directors has approved the unanimous
recommendation of the Independent Committee of Directors proposing the
issuance of up to approximately 361.5 million common shares, in exchange for
$100 million in principal amount of its capital securities plus accrued and
unpaid interest. The capital securities were issued in early 1997 and
interest may be deferred for ten consecutive semi-annual periods. The Company
first elected in March 1998 to defer, which has had the result of building up
an interest obligation that must be met in April 2003. At September 30, 2001,
the principal plus accrued interest will amount to $159.4 million; on April 1,
2003, excluding the semi-annual interest payment then due, the total would be
$183.8 million.
The Company has entered into support and lock-up agreements with
Franco-Nevada Mining Corporation Limited and Kinross Gold Corporation, which
respectively hold approximately 72 percent and 15.8 percent of the capital
securities. Each of those companies has agreed to exchange all capital
securities owned by it, including any capital securities acquired after this
announcement, on the basis of a ratio which would require the Company to issue
up to approximately 361.5 million common shares in addition to the approximate
140.6 million presently issued and outstanding, assuming all holders of
capital securities elect to exchange. The exchange ratio between the
respective aggregate ownership interest of capital security holders and
present shareholders is accordingly 72:28. These agreements are conditional
upon 1) 90 percent of the remaining capital security holders agreeing, prior
to the Company mailing proxy solicitation materials to its shareholders, to
exchange on the same terms as Franco-Nevada and Kinross; 2) consent of the
Company's syndicated bankers to the transactions, and 3) receipt of any
necessary regulatory approvals.
The share issuance will be presented to shareholders for their
consideration and approval will be recommended.
The Company has, on an ongoing basis, considered strategic alternatives
available to it and its shareholders. BMO Nesbitt Burns were retained as
independent financial advisors to assist in this review. Having considered
the advice provided by BMO Nesbitt Burns and all other meaningful
alternatives, the Independent Committee and the Board of Directors concluded
that the conversion of the capital securities was the best way to preserve and
enhance shareholder value.
The Company is pleased that Franco-Nevada Mining Corporation Limited and
Kinross Gold Corporation have agreed to support the transaction and will urge
shareholders to vote in its favour. Management expects to mail proxy
materials to shareholders on a timely basis and proceed to secure all required
regulatory approvals to allow for the conversion of all, or substantially all,
of the capital securities for common shares by the end of 2001.
Echo Bay mines gold and silver in North America. The primary markets for
its shares are the American and Toronto stock exchanges.
SOURCE Echo Bay Mines Ltd.
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Related links:
http://www.echobay.com
CONTACT:
Lois-Ann Brodrick, Vice President and
Secretary of Echo Bay Mines Ltd., +1-303-714-8838
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