Pinetree 8% convertible holders OK changes ahead of Sept. 12 meeting

By Marisa Wong

Madison, Wis., Sept. 10 - Pinetree Capital Ltd. said holders of about 85% of its outstanding 8% convertible subordinated debentures due May 31, 2016 have approved in writing proposed amendments to the terms of the debentures. The amendments relate to the notice of default that Pinetree received in July.

The company had originally intended to hold an extraordinary meeting of debentureholders on Sept. 12 to approve the amendments. Because the company received the needed approval, the meeting has been cancelled.

As previously reported, a covenant breach resulted from Pinetree's debt-to-assets ratio exceeding 33%. At June 30, the ratio was 36%. The company had until Sept. 13 to cure or obtain a waiver for the default.

Pinetree announced on Aug. 19 that it cured the default, since its debt was less than 33% of the aggregate value of its total consolidated assets as of Aug. 16, but would proceed with obtaining holder approval of amendments to the debentures.

The company asked holders to consent to the following changes:

• Increase the interest rate payable on the debentures to 10% from 8%, effective Nov. 30;

• Amend one of the debt covenants in the indenture governing the debentures to provide that, for a period of nine months, Pinetree's debt-to-assets ratio cannot exceed 50%, rather than the current 33% limit; and

• Waive any event of default resulting from a breach of the covenant that occurred prior to the date of the amendments.

Pinetree said it will execute a second supplemental indenture effecting the amendments on Sept. 12.

Each holder that approved the amendments is entitled to receive a consent fee of $60 for each $1,000 principal amount of debentures, provided that the holder submits a consent fee election form to Equity Financial Trust Co. by Nov. 30.

The consent fee will be paid in common shares of Pinetree to holders who elected by Sept. 10 to receive stock in lieu of a cash payment.

Pinetree said it will pay the consent fee to eligible debentureholders as soon as practicable.

Pinetree is a Toronto investment and venture capital firm focused on the small cap market. Its investments are primarily in the resources sector: precious metals, base metals, oil and gas, potash, lithium and rare earths, uranium and coal.

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