By Angela McDaniels
Tacoma, Wash., May 28 - Etruscan Resources Inc. said it issued $5 million of 10% senior unsecured convertible promissory notes due May 28, 2010 to shareholders 2190776 Ontario Inc. and Conus Partners Inc. in a private placement.
Interest is calculated and compounded quarterly. It will be added to the principal of the notes and paid at maturity.
The notes can be prepaid at any time without penalty or premium.
If the notes have not been previously repaid, they will be convertible at any time after the maturity date into common shares of Etruscan at a conversion price of C$0.3602, which is the volume-weighted average trading price of the common shares on the Toronto Stock Exchange over the five trading days immediately prior to the issuance of the notes.
As part of the financing, Etruscan issued two tranches of warrants to the investors. A total of 7,717,933 X warrants - representing 50% of the principal of the notes divided by C$0.3602 - were issued at closing, with each X warrant entitling the holder to purchase one common share on or before May 28, 2011 at an exercise price of C$0.3602.
The second tranche of warrants, the Y warrants, were also issued at closing and will be exercisable from Nov. 24 through May 28, 2011. The number of shares will be determined by dividing the Canadian dollar equivalent of $2.5 million by the five-day volume-weighted average trading price of the common shares immediately prior to Nov. 24, which will also be the exercise price of the Y warrants.
The proceeds from the notes will be primarily used to fund production improvements at Etruscan's Youga Gold Mine in Burkina Faso.
2190776 Ontario holds 16.5% of the company's outstanding common shares. Conus Partners and its affiliates hold more than 10%.
Warrants pepricing
Etruscan also announced the repricing of 1.5 million unlisted common share purchase warrants held equally by RMB Australia Holdings Ltd. and Macquarie Bank Ltd. The two provided Etruscan with a $35 million senior debt facility and a $7.5 million subordinated debt facility in February.
The warrants have an exercise price of C$0.51 and expire Feb. 27, 2012. They were issued as consideration for the agreement by RMB and Macquarie to amend and waive some provisions of the debt financing.
Etruscan has agreed to amend the warrants to adjust the exercise price to C$0.3602 per common share as consideration for RMB and Macquarie agreeing to further amend some terms of the debt facility, including a waiver of the requirement to make a payment on principal of $2.5 million on June 30.
Etruscan is a gold exploration and development company based in Halifax, N.S.
| Issuer: | Etruscan Resources Inc.
|
| Issue: | Senior unsecured convertible promissory notes
|
| Amount: | $5 million
|
| Maturity: | May 28, 2010
|
| Coupon: | 10%, payable at maturity
|
| Price: | Par
|
| Conversion price: | C$0.3602 after one year
|
| Call option: | At any time
|
| Warrants: | X warrants for 7,717,933 shares; Y warrants for a number of shares to be determined in November
|
| Warrant expiration: | May 28, 2011 for both X and Y warrants; Y warrants become exercisable Nov. 24
|
| Warrant strike price: | C$0.3602 for X warrants; a to-be-determined price for Y warrants
|
| Investors: | 2190776 Ontario Inc. and Conus Partners Inc.
|
| Settlement date: | May 28
|
| Stock symbol: | Toronto: EET
|
| Stock price: | C$0.345 at cloase May 27
|
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