High North postpones meeting for 12% convertibles due April 4, 2015

Company lacks funds to repay convertibles, seeks waiver

By Susanna Moon

Chicago, April 23 – High North Resources Ltd. said it has postponed the noteholder meeting for its C$8.67 million 12% convertible subordinated debentures due April 4, 2015.

The meeting will now be held June 4 in Calgary, Alta. The meeting was originally set for noon ET on May 21 in Calgary, Alta. The record date remains unchanged at April 6.

The meeting was postponed to allow more time for High North to prepare the meeting materials to be mailed to holders before the meeting, according to a company press release.

As previously announced, the company lacks funds to meet its obligations under the 12% convertibles and is seeking holder approval to amend the terms.

The company said on March 13 that the current state of the oil and gas industry prompted it to conduct an investigation into and exhaust a variety of financial and strategic alternatives to enable it to pay the amounts due on the convertibles. The company previously said it believes that the amendments provide the best available solution and will allow it to continue as a going concern.

Because the meeting will be held after the maturity date, High North will be in default unless the holders of a majority of the principal amount of convertibles instruct the trustee to waive the event of default by requisition in writing.

High North asked debentureholders to vote for waiving the event of default by March 30, the previous release said. If approved, the waiver will remain in effect until the earlier of the conclusion of the meeting, the cancellation of the meeting and July 30.

Amendments

If approved, the amendments will provide the debentureholders with three options.

Option A will

• Give High North a one-time right to redeem the outstanding principal amount of the convertibles by converting them into shares at a conversion price of C$0.06 through July 30; and

• Allow High North to pay all of the accrued interest in common shares. Interest on the interest accrued from the maturity date up to but excluding the redemption date will be waived.

Option B will

• Extend the maturity date to April 4, 2017;

• Lower the interest rate to 6% per annum, calculated annually and not in advance, not compounded and payable in cash only, effective from April 4;

• Provide that interest will accrue from April 4 and will be payable on April 4, 2017;

• Reduce the conversion price to C$0.18 per common share from C$0.85 per common share, subject to customary anti-dilution adjustments; and

• Allow High North to pay all of the accrued interest in common shares. Interest on the interest accrued from April 4 up to but excluding the date of the supplemental indenture will be waived.

Option C will give debentureholders the option to elect option A for a portion of their convertibles and option B for the remainder.

Holders who do not select an option will be deemed to have selected option A.

The holders of at least two-thirds of the debentures represented at the meeting must vote in favor of the extraordinary resolution in order for it to pass.

If the amendments are approved, the company will execute a supplement indenture by July 30.

The amendments are not subject to any shareholder vote.

High North is a Calgary, Alta.-based company that explores, develops and produces oil and natural gas.

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