North American Palladium to Go Ahead With Recapitalization Transaction

North American Palladium (TSX:PDL) has entered a definitive recapitalization agreement with Brookfield Capital Partners. The recapitalization transaction was previously announced on April 15, and North American Palladium did not receive a superior proposal during its strategic review process. The company also entered a US$25 million bridge loan facility with Brookfield for temporary working capital support, which was required as a result of the previously announced suspension of milling operations at its Lac des Iles mine.

The Recapitalization will be effected by way of a court approved plan of arrangement under the Canada Business Corporations Act. Under the terms of recapitalization agreement:

• all amounts owing to Brookfield (except in respect of the bridge loan facility) will be converted into equity, resulting in Brookfield owning common shares representing 92% of the common shares outstanding on a fully-diluted basis after giving effect to the Recapitalization but prior to the rights offering;
• the 2012 and 2014 convertible debentures will be converted into equity, resulting in holders of convertible debentures owning common shares representing in aggregate 6% of the common shares outstanding on a fully diluted basis after giving effect to the Recapitalization but prior to the rights offering;
• existing holders of common shares and restricted share units will own 2% of the post-Recapitalization common shares outstanding on a fully-diluted basis but prior to the rights offering;
• the Company’s outstanding warrants and options will be terminated;
• the Company will undertake a $50 million rights offering to raise equity, pursuant to which all shareholders at that time will be able to participate, a portion of which will be used to repay any amounts outstanding under the bridge loan;
• the $50 million rights offering will be backstopped by Brookfield and other parties; and
• employees, trade creditors, equipment leases and suppliers will not be impacted.

Click here to read the North American Palladium (TSX:PDL) press release