High North: Court OKs arrangement for 12% convertibles due April 2015

By Toni Weeks

San Luis Obispo, Calif., June 10 – High North Resources Ltd. announced that the Supreme Court of British Columbia has issued a final order approving the company’s plan of arrangement for its C$8.67 million 12% convertible subordinated debentures due April 4, 2015. Debentureholders approved the amendments on June 4, according to a press release.

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

The company reported that at a June 4 meeting in Calgary, Alta., debentureholders representing 88.64% of the bonds voted to approve amendments to the bond indenture. High North needed approval by 75% of the principal amount of debentures outstanding to pass the amendments.

The meeting had originally been set for noon ET on May 21, but the company postponed it to allow more time for High North to prepare for the mailing of the meeting materials. The record date remained unchanged at April 6.

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 believed that the amendments provide the best available solution and would allow it to continue as a going concern.

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

High North asked debentureholders to vote for waiving the event of default, and if approved, the waiver would remain in effect until the earlier of the conclusion of the meeting, the cancellation of the meeting and July 30.

Amendments

As previously noted, the amendments provided the debentureholders with three options.

The company announced on Wednesday that following court approval, debentureholders holding 4,011 debentures in the principal amount of C$4,011,000, or about 46% of the debentures, elected for Option A, whereby their respective debentures will be redeemed in exchange for common shares. Additionally, debentureholders holding 4,659 in the principal amount of C$4,659,000, or about 54% of debentures, elected for Option B, whereby the debentures will continue to be held as debentures and will be subject to the terms of a supplemental debenture indenture.

As already noted, 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 did not select an option were deemed to have selected option A.

Following approval, the closing of the arrangement will be completed by July 15, the release said.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.