Shareholder Approval to Be Sought in Writing
VANCOUVER, BC--(Marketwired - March 03, 2016) -
Midas Gold Corp.
Shareholder Approval to be Sought in Writing
In accordance with the policies of the Toronto Stock Exchange (the "TSX"), where a private placement has a material effect on control of the issuer; the private placement is for a number of listed securities greater than 25% of securities of the issuer which are outstanding; and where the anti-dilution provisions of the Notes provide for adjustments for events for which not all securityholders are compensated and may result in securities being issued at a price lower than market price less the applicable discount, the approval of shareholders is required, either by an ordinary resolution obtained at a meeting of shareholders or by the written consent of shareholders holding more than 50% of the outstanding common shares, excluding the votes attached to the securities held by insiders benefiting from those anti-dilution provisions.
In light of the significant support shown through the signing of written voting support agreements by shareholders holding in excess of 50% of the outstanding Midas Gold common shares ("Shares"), as disclosed in a news release dated February 29, 2016, Midas Gold is proceeding with seeking shareholder approval of the Offering in writing rather than at a meeting of shareholders, which is expected to accelerate the timing of the closing of the Offering compared to the expected timeframe if a meeting were required.
Securities Issuable Under the Offering
Assuming that all of the Notes are converted into Shares and issuance of the Advisory Fee Shares (as defined below), a total of up to 156,252,470 Shares (representing 97.15% of the Company's currently issued and outstanding Shares) would be issued under the Offering, resulting in the currently issued number of Shares increasing from 160,829,280 Shares to 317,081,750 Shares. Completion of the Offering would result in, among other things, Paulson having ownership of Shares, or Notes convertible into Shares, representing more than 20% of Midas Gold's outstanding Shares; Paulson would hold 97,437,165 Shares representing 30.73% of the then-issued Shares (assuming conversion of all of the Notes and issuance of the Advisory Fee Shares) or 37.68% of the then-issued Shares (assuming conversion of only Paulson's Notes into Shares, issuance of the Advisory Fee Shares and no Shares being purchased under the Existing Shareholder Offering). As at the date of this news release, Paulson does not hold any Shares nor any securities convertible into Shares.
The table below sets out the potential amount of Notes (and Shares into which such Notes are convertible) that could be held by Paulson upon completion of the Offering, based on the minimum, median and maximum amounts of gross proceeds raised under the Existing Shareholder Offering. Paulson's participation in the Note Offering shall be for an amount equal to C$55,204,000 less the amount raised under the Existing Shareholder Offering.
Table 1: Possible Share Ownership by Paulson
|Paulson Ownership Scenario||Proceeds under Existing Shareholder Offering||Shares issuable under Existing Shareholder Offering||Proceeds under Paulson Note Offering||Shares issuable under Paulson Note Offering||Percentage of Shares held by Paulson (1)||Total gross proceeds of Offering|
|Median||C$10,350,750||29,231,149 Shares||C$44,853,250||126,668,314 Shares||44.00%||C$55,204,000|
|Maximum||Nil||0 Shares||C$55,204,000||155,899,463 Shares||49.17%||C$55,204,000|
|(1)||On a partially diluted basis, assuming: (a) conversion of Notes held by Paulson; (b) only Notes (and not Shares) will be issued under the Existing Shareholder Offering; and (c) issuance of the Advisory Fee Shares.|
|(2)||The Company currently expects that existing shareholders will participate under the Existing Shareholder Offering to the maximum extent of C$20,701,500. As a result, and assuming conversion of 100% of all of the Notes, it is anticipated that Paulson would own approximately 30.73% of the outstanding Shares.|
As disclosed on February 22 and 29, 2016, the Notes will have a term of seven years and may be converted into Shares at a price of C$0.3541 per Share (the "Conversion Price"), subject to adjustment in certain circumstances. Any Shares purchased under the Existing Shareholder Offering will be sold at a price of C$0.3541 per Share, being equal to the Conversion Price. The terms of the Offering were negotiated at arm's length and the Conversion Price of C$0.3541 is equal to the volume-weighted average trading price ("VWAP") of the Shares for the 10 trading days prior to announcement of the transaction, or a 5.04% discount to the VWAP for the five trading days prior to the announcement.
The Notes will be created and issued under an indenture and a guarantee indenture (the "Guarantee Indenture"), to be dated as of the date of closing and to be entered into between Midas Gold, a subsidiary of Midas Gold (the "Subsidiary") and Computershare Trust Company of Canada. A summary of the material terms of the Notes is set out below.
Table 2: Illustrative Examples of Dilution from Hypothetical Future Financings,
if Issued below the Conversion Price(1)
|Example Offering Price||Number of Shares Outstanding Immediately Prior to Additional Offering||Number of Shares to be issued under the Additional Offering||Adjusted Conversion Price||Number of Shares Issuable under Notes with Adjusted Conversion Price||
Number and Percentage of
Then-Outstanding Shares held by Paulson (2)(4)
|C$0.30||160,829,280||40,207,320||C$0.3433||160,813,331(2) (99.99%)(3)||100,508,332 (33.29%)|
|(1)||Any Additional Offerings in which the Offering Price is less than 95% of the Conversion Price then in effect will result in further downward adjustments.|
|(2)||Assuming only Notes (and no Shares) will be issued under the Existing Shareholder Offering and assuming issuance of the Advisory Fee Shares.|
|(3)||Number of Shares issuable using the adjusted Conversion Price expressed as a percentage of the 160,829,280 Shares currently issued and outstanding.|
|(4)||On a partially diluted basis, assuming conversion of Notes held by Paulson at the adjusted Conversion Price.|
8. Default: The Notes will contain customary events of default and cure provisions, including cross defaults with existing and future indebtedness in excess of C$5.0 million.
9. Use of Proceeds: Midas Gold will use the proceeds for permitting and feasibility studies for the Stibnite Gold Project and for working capital and general corporate purposes.
Investor Rights Agreement
On closing of the Offering, Paulson, the Subsidiary and Midas Gold will enter into an investor rights agreement (the "Investor Rights Agreement") containing the following terms:
Certain insiders of the Company (the "Participating Insiders") have advised that they will participate in the Offering as set out below. Midas Gold will exclude votes attaching to the Shares beneficially owned or controlled by the Participating Insiders who will be purchasing Notes under the Offering and their related parties and joint actors (as applicable), for the purposes of determining whether shareholder approval of the Offering has been obtained.
Table 3: Insider Participation in the Offering
Name and Position
|Number of Shares held (1)||
Percentage of Outstanding
Shares held (1)
|Securities to be purchased under Offering (1)||Percentage of participation in Offering (1)|
|Peter Nixon Director & Chairman||73,000||0.045%||C$35,410 in Notes||0.06%|
|Donald Young Director||27,000||0.017%||C$10,623 in Notes||0.02%|
|Keith Allred Director||28,571||0.017%||C$20,538 in Notes||0.04%|
|Stephen Quin Director, President & CEO||1,622,200||1.009%||C$35,410 in Shares
|Darren Morgans CFO||25,000||0.016%||C$7,082 in Shares
|Anne Labelle VP, Legal & Sustainability||170,000||0.106%||C$106,230 in Shares
|Wayne Hubert Director||147,000||0.091%||C$131,017 in Notes||0.24%|
|(1)||Beneficially owned, directly or indirectly, or over which control is exercised by such insider and their related parties and joint actors.|
|(2)||This amount is expected to be comprised of Notes in the aggregate principal amount of C$197,588 (convertible into up to 558,000 Shares) and 420,000 Shares (for aggregate gross proceeds of C$148,722) for an aggregate of up to 978,000 Shares, which Shares represent 0.61% of the Company's currently issued and outstanding 160,829,280 Shares.|
|(3)||On a partially diluted basis assuming conversion of all Notes held by the Participating Insiders, the Participating Insiders as a group would collectively hold, upon completion of the Offering, less than 2% of the then-outstanding Shares.|
|(4)||Midas Gold will exclude votes attaching to an aggregate of 275,571 Shares (representing approximately 0.17% of the Company's issued and outstanding Shares), being the Shares beneficially owned or controlled by Peter Nixon, Donald Young, Keith Allred and Wayne Hubert (all of whom have advised that they will be purchasing Notes under the Offering), for the purposes of determining whether shareholder approval of the Offering has been obtained.|
Advisors and Fees
Haywood Securities Inc. ("Haywood") is acting as financial advisor to Midas Gold. Dumoulin Black LLP is acting as Canadian legal counsel, and Dorsey & Whitney LLP is acting as US legal counsel to Midas Gold; Thorsteinssons LLP and Covington & Burling LLP provided Canadian and US tax advice, respectively, to Midas Gold. Goodmans LLP is acting as Canadian counsel to Paulson and Kleinberg, Kaplan, Wolff & Cohen P.C. is acting as US tax counsel to Paulson.
In consideration for Haywood's services, Midas Gold has agreed to pay Haywood an advisory fee, of which Midas may elect to pay a portion through the issuance of up to 353,007 Shares at an issue price of C$0.3541 per Share (the "Advisory Fee Shares"), subject to TSX approval.
It is expected that the Offering will close as soon as practicable following receipt of shareholder and regulatory approval which is expected to be in mid-March 2016.
This news release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and may not be offered or sold within the United States unless an exemption from such registration is available.
Statements contained in this news release that are not historical facts are "forward-looking information" or "forward-looking statements" (collectively, "Forward-Looking Information") within the meaning of applicable Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. Forward-Looking Information includes, but is not limited to, disclosure regarding possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action; the anticipated participation of existing shareholders in the Existing Shareholder Offering and the corresponding participation of Paulson in the Note Offering; the projected level of dilution; and the plans for obtaining shareholder approval, projected timing and plans for completion of the Offering, expected use of proceeds and business objectives. In certain cases, Forward-Looking Information can be identified by the use of words and phrases such as "anticipates", "expects", "understanding", "has agreed to" or variations of such words and phrases or statements that certain actions, events or results "would", "occur" or "be achieved". Although Midas Gold has attempted to identify important factors that could affect Midas Gold and may cause actual actions, events or results to differ materially from those described in Forward-Looking Information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended, including, without limitation, the risks and uncertainties related to the Offering not being completed in the event that the conditions precedent thereto are not satisfied; uncertainties related to raising sufficient financing in a timely manner and on acceptable terms. In making the forward-looking statements in this news release, Midas Gold has applied several material assumptions, including the assumptions that (1) the conditions precedent to completion of the Offering will be fulfilled so as to permit the Offering to be completed in mid-March 2016; (2) all necessary approvals and consents, including shareholder approval by written consent, in respect of the Offering will be obtained in a timely manner and on acceptable terms; and (3) general business and economic conditions will not change in a materially adverse manner. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. Except as required by law, Midas Gold does not assume any obligation to release publicly any revisions to Forward-Looking Information contained in this news release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
For further information about Midas Gold Corp., please contact:
Manager, Investor Relations