Pinetree Capital announces cure of default under 8% convertibles

By Jennifer Chiou

New York, Aug. 19 - Pinetree Capital Ltd. announced that it has cured a covenant default for its 8% convertible unsecured subordinated debentures due May 31, 2016 since its debt was less than 33% of the aggregate value of its total consolidated assets as of Aug. 16.

As recently reported, the company is seeking holder approval to amend the debentures following a notice of default in July.

Even though Pinetree has cured the default, it intends to proceed with an extraordinary meeting for holders on Sept. 12 to adopt amendments to the debentures, according to a press release.

The covenant breach pertained to the company's debt-to-assets ratio exceeding 33%. At June 30, the ratio was 36%.

Pinetree had until Sept. 13 to cure or obtain a waiver for the default.

The company is looking to amend the debentures at the extraordinary meeting in Toronto. It is asking holders to consent to the following:

• An amendment to the above-mentioned debt covenant to state that, for a period of nine months, Pinetree's debt-to-assets ratio cannot exceed 50%; and

• A waiver of any event of default resulting from a breach of the covenant.

When the company announced the meeting, it was also looking to increase the interest rate to 10% from 8%, effective Nov. 30.

The company said it is offering a consent fee equal to C$60 for each C$1,000 principal amount of debentures. Any debentureholder who is a Canadian resident and is otherwise eligible will be entitled to receive the consent fee in Pinetree shares on the basis of 180 common shares for every C$1,000 principal amount of notes that are voted in favor of the amendments.

The company needs consents from holders of at least two-thirds of the debentures.

According to a prior news release, Pinetree has entered into support agreements with debentureholders who collectively own in excess of C$26.7 million principal amount, or 43.9%, of the debentures, and they will vote in favor of the amendments.

The company has agreed that, among other things, if the debenture amendments are approved, it will use its best efforts to repurchase an additional C$20 million principal amount of the securities through normal-course and substantial-issuer bids and undertake an equity financing to raise at least C$5 million.

The investment banking company is based in Toronto.

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