Crew Gold seeks holder OK to convert $148.2 million bonds into shares

By Angela McDaniels

Tacoma, Wash., Aug. 17 - Crew Gold Corp. is looking to restructure a portion of its outstanding bonds and will seek bondholder approval of the proposed restructuring at a meeting before the end of August, according to a company news release.

Crew Gold has about $99.8 million of senior secured bonds due March 30, 2011, $193.5 million of unsecured convertible bonds due Dec. 1, 2010 and $20.2 million of senior unsecured bonds due Oct. 27, 2009 outstanding.

Under the proposed restructuring, the company would convert $148.2 million of the bonds into common shares, including $20 million, or 20%, of the senior secured bonds, $116.1 million, or 60%, of the convertibles and $12.1 million, or 60%, of the unsecured bonds.

The company is also planning a rights offering. Depending on the number of shares issued in the rights offering, the conversion price for the bonds denominated in Norwegian krone would be NOK 4.02 to NOK 4.61 and the conversion price for the bonds denominated in dollars would be $0.67 to $0.76.

The total number of shares issued to bondholders would be the number of shares required to ensure that the bondholders have an ownership interest of 53% following the restructuring.

The company would increase its board of directors to eight members from seven and appoint four individuals nominated by its principal bondholders to the expanded board: Robert Byford, Mitchell Gropper, Gordon Lawson and Jan Oksum.

Under the rights offering, shareholders will be given subscription rights that will entitle them to purchase up to 90 million common shares of Crew Gold for a total purchase price of NOK 90 million.

The proposed restructuring of the bonds is subject to the separate approval of the holders of the senior secured bonds, the holders of the krone-denominated tranche of the convertibles, the holders of the dollar-denominated tranche of the convertibles and the holders of the unsecured bonds.

In each case, the proposed transaction must be approved by two-thirds of bondholders represented in person or by proxy at the bondholder meeting.

Crew Gold said it has entered into voting support agreements with the most significant holders of the senior secured bonds and convertibles.

The company plans to post the full details of the restructuring on its web site early next week.

"As a result of previously announced delays in reaching full production capacity at the Lefa gold mine in Guinea, we believe that it is in the best interests of the company to reduce its financial leverage," chairman Jens Ulltveit-Moe said in the release.

"This restructuring is designed to significantly improve the company's capital structure and to provide the company with greater flexibility to execute its business plan and explore strategic alternatives."

Crew Gold is a resource exploration company based in London.

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