Golden Star Resources’ $65 million five-year convertibles talked 6.5%-7% yield, up 20%-25%

By Rebecca Melvin

New York, July 25 – Golden Star Resources Ltd. launched $65 million of five-year convertible senior notes early Monday that were expected to be priced after the market close and talked to yield 6.5% to 7% with an initial conversion premium of 20% to 25%, according to market sources.

As part of the Rule 144A and Regulation S deal, Golden Star has entered into exchange and purchase agreements with two holders of its 5% convertible senior unsecured debentures due June 1, 2017 to exchange for about $40 million principal amount of the new paper.

Concurrently with the offering of new convertibles, Golden Star is pricing $30 million of common shares.

The new notes are non-callable for three years and then provisionally callable if pricing of the common stock exceeds 130% of the conversion price.

There are no investor puts. The notes settle in stock, cash or a combination of stock and cash at the issuer’s option.

Proceeds of the offerings are being used to repurchase debt, including the convertibles and a term loan with Ecobank Ghana Ltd. Remaining funds will be used for general corporate purposes. The company will not receive any cash proceeds from the exchange.

Golden Star is a Littleton, Colo.-based gold mining firm with share listings on the New York Stock Exchange, Toronto Stock Exchange and Ghana Stock Exchange.

Its NYSE-listed shares were down 14 cents, or 14%, in the early going on Monday at $0.8594.

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