Heritage secures $75 million; Olympus settles gold loan note sale; North Peace to place units

By Stephanie N. Rotondo

Portland, Ore., June 22 - Heritage Commerce Corp. said it had completed a $75 million private placement of two series of preferred shares in a filing with the Securities and Exchange Commission on Tuesday.

The company will use the proceeds to strengthen its capital position.

A spokesperson for Olympus Pacific Minerals Inc. told Prospect News that its previously announced private placement of units had also been completed, giving the company nearly $22 million in new capital. The company had arranged the "unique" deal over the weekend.

Meanwhile, North Peace Energy Corp. announced a C$5 million private placement of units. The company will use the funds for development projects while it explores its strategic alternatives.

And, Northern Gold Mining Inc. said its previously announced private placement of flow-through and hard-dollar units had been fully subscribed. Proceeds will be used for exploration.

Heritage secures $75 million

Heritage Commerce, a San Jose, Calif.-based bank holding company, settled a $75 million private placement of series B mandatorily convertible cumulative perpetual preferred stock and series C convertible perpetual preferred stock, according to a regulatory filing.

The deal closed June 21.

The company sold 53,996 of the series B shares and 21,004 of the series C shares.

Both issues were sold at $1,000 per share and each series is non-voting.

The series B shares are automatically convertible into common shares, once the company secures shareholder approval. The initial conversion price is $3.75 per share, resulting in an initial conversion ratio of approximately 14.39 million shares. The series B preferreds pay annual cumulative cash dividends of 20%.

The series C preferreds are also automatically convertible into common shares, pending shareholder approval. The initial conversion price is also $3.75 per share, for a total of 5.6 million common shares.

Before shareholder approval is given, the series C shares will pay cumulative cash dividends at 20% per annum. Once approval is obtained, the shares will receive dividends if dividends are paid to common stock holders.

The conversion price is equal to the company's June 21 closing price.

"The success of this capital raise is a reflection of the strength of our franchise, employees and business plan as a leading community business bank in the Bay Area," said Walter Kaczmarek, president and chief executive officer, in a press release.

"For the past [18] months we have been carefully focused on improving our capital position while reducing risk and have accomplished this through the $75 million private placement. In addition to providing added insulation to weather future impacts from the continued weak economic environment, the additional capital will significantly enhance our strategic capabilities to grow our franchise and support the needs of our customers.

"The transaction will immediately improve capital ratios at the bank and at the holding company," added Kaczmarek. "On a pro forma basis all of our regulatory capital ratios will be significantly in excess of regulatory guidance."

Heritage Commerce's stock (Nasdaq: HTBK) fell 15 cents, or 4.00%, to $3.60. Market capitalization is $42.55 million.

Olympus settles gold loan note sale

Olympus Pacific Minerals completed a previously announced private placement of units containing gold loan notes, according to James. W. Hamilton, senior vice president of investor relations.

The deal priced June 19 and settled June 21. The company raised $21.96 million.

The units will hold one $10,000 8% senior secured redeemable gold delivery promissory note and one warrant equal to 3,470 common shares.

The warrants are exercisable at C$0.60 per share until May 31, 2013. The strike price represents a 114% premium over the June 18 closing price of C$0.28 on the Toronto Stock Exchange.

The gold promissory notes come due May 31, 2013. Interest on the notes is payable in gold semi-annually, beginning Nov. 30.

According to Hamilton, the interest payments in gold will equal 5,600 ounces in the first year, 8,400 in the second and 10,400 in the third, assuming that the price of gold is $900 or less. Should the price of gold move up to $1,200 or more, the company will deliver less ounces into the custodial account, with 4,200 ounces coming in year one, 6,300 ounces in year two and 7,800 ounces in year three.

"[Investors] keep the upside if it's $1,200 or more," he said.

Unique financing terms

Hamilton said the deal was brokered through Euro Pacific Capital Inc., which was founded by Peter Schiff, "quite a high-profile gold bug." He noted that the agent has been "very bullish on gold" recently and, as they "wanted to diversify," they hooked up with Olympus.

"We were fortunate to get in touch with these guys and they liked our story," Hamilton said.

And, he remarked that "it made sense to go to market with the gold loan," given the company's current trading price.

"We didn't want to go and borrow money with our stock at 28 cents," he said, adding that the company is currently producing gold and is also cash-flow positive.

"It is unique," he said of the deal.

Proceeds from the financing will be used to construct a processing facility at Olympus' high-grade Phuoc Son Mine and Bong Mieu Mine in Vietnam, as well as for general exploration and corporate purposes. Hamilton said that there is already a processing facility in place, but that Olympus is currently working on construction of a second plant. He expects that construction will be completed by the end of the year and that it will allow the company to process 80,000 to 85,000 ounces of gold in 2011.

And, some funds will be used for underground development at two of the mines, as well as for a "pretty aggressive" exploration program at its four properties in Southeast Asia.

Olympus' equity (OTCBB: OLYMF) gained 5 cents, or 17.45%, to $0.35.

Olympus Pacific Minerals is a Toronto-based gold exploration company focused on properties in Vietnam and Southeast Asia.

North Peace to raise C$5 million

North Peace Energy announced a C$5 million non-brokered private placement of units.

The Calgary, Alta.-based oil sands company will sell 25 million of the units at C$0.20 each. The units will hold one common share and one half-share warrant.

Whole warrants are exercisable at C$0.30 for one year. The strike price represents a 76% premium over the C$0.17 closing price on June 21.

Proceeds from the financing will be used to develop and implement the Top Down Steam Drive process on its existing wells, as well as for working capital.

Additionally, the company said it was continuing to explore strategic alternatives for enhancing shareholder value.

North Peace Energy's shares (TSX Venture: NPE) improved by a cent, or 5.88%, to C$0.18. Market capitalization is C$12.8 million.

Northern Gold deal fully subscribed

Northern Gold Mining said Tuesday that its previously announced C$2.5 million private placement of units was fully subscribed.

The deal originally priced June 21.

On Monday, Northern gold's top executive, Martin R. Shefsky, told Prospect News that investor response had been "extremely positive" and that dilution concerns were minimal.

"Everyone is saying, 'Take the money and build your ounces,'" he said.

Shefsky did not return requests for further comment on Tuesday.

Northern Gold is selling approximately 8.93 million flow-through units at C$0.14 each. The units contain one flow-through common share and one warrant. The warrant is exercisable at C$0.17 for 18 months.

The company is also selling 10.87 million hard-dollar units at C$0.115 each. The units consist of one common share and one warrant. The warrants are exercisable at C$0.15 for 18 months.

Proceeds will be used for exploration and working capital. Shefsky said on Monday that the funds would be primarily used at the Garrison project in northeastern Ontario.

Northern Gold's equity (TSX Venture: NGM) firmed 2 cents, or 11.11%, to C$0.15. Market capitalization is C$5.94 million.

Northern Gold Mining is a Toronto-based junior resource company focused on the acquisition and exploration of base and precious metal mineral properties.

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