Sunshine Mining moves to prop up its common stock

Silver producer Sunshine Mining & Refining (NYSE) plans to do away with its preferred stock and merge with a subsidiary in an effort to bolster the stock price.

The company reached an agreement with three of the largest holders of the Cumulative Redeemable Preferred Stock (recently valued at US$11.94). The three control 25% of the 7.2 million outstanding preferred shares.

The preferred stock has not inhibited the company’s ability to operate effectively, says President John Simko. But he adds that “its potential dilutive effect on the common stockholders was acting as a depressant to the common stock price.”

After the merger, the company would retain its original name and each common share of Sunshine would automatically become a common share of the new company. Each preferred share would be converted to newly issued common shares, with an option for warrants to purchase common stock.

The maximum shares issuable would be 66 million, raising the total number of shares to 250 million.

Recently, Sunshine’s common stock has been hovering under the US$2 mark.

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