Gold Reserve amends interest payment terms, conversion price of new, old 11% convertibles

By Marisa Wong

Madison, Wis., May 7 - Gold Reserve Inc. announced changes to the terms of its proposed $12 million issuance of new convertible notes and changes to nearly all of the $25.3 million outstanding principal amount of previously modified notes.

Previously, the interest related to the notes would be paid in kind and convertible into common stock. Now, interest will be accrued and capitalized quarterly at a rate of 11% per year and be payable in cash at maturity on Dec. 31, 2015 but will not be convertible into common stock.

In addition, the conversion price of the new and existing notes will be reduced to $3.50 per share instead of the previously announced $3.75 per share. In other words, each $1,000 of notes will be convertible, at the option of the holder, into 285.71 shares of class A common shares.

All other terms of the new and existing notes will be the same as previously announced in April.

The transaction is expected to be completed this month.

"The net effect of these two changes will actually result in 1.3 million fewer shares being issued upon conversion, thereby reducing the potential dilution to existing shareholders," president Doug Belanger said in a press release.

The mining company is based in Spokane, Wash.

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