Campbell offering held up

A rights offering by Campbell Resources (CCH-T, CBLRF-O) to assist the restructuring of the financially troubled company is ready, its final prospectus having been approved by securities regulators. But administrative problems have forced Campbell to delay the issue.

Toronto Stock Exchange rules required Campbell to give prior notice of the implementation of the rights issue, a requirement Campbell did not meet in time. The result is that the company must now extend the offering to subscribers of special warrants that were automatically exercised on Sept. 27. There were 125 million special warrants.

The offering gives Campbell shareholders one right for every share they hold, with five rights tradable for three units, priced at 8 each, up to the end of business on Nov. 6. The units, in turn, split into a share and half a purchase warrant, with a whole warrant exercisable at 15 until May 26, 2008. An accelerator clause allows Campbell to force exercise of the warrants within a year of the expiry if the 20-day, volume-weighted average of the share price goes above 20.

The original rights offering gave Campbell up to $5 million for operations at the Joe Mann gold mine and Copper Rand copper mine, and at the Corner Bay development project, all in the Chibougamau area of north-central Quebec. Extending the rights to the special-warrant holders would not affect the amount of cash to be raised, but would spread the ultimate share issue around a larger pool of shareholders.

Campbell entered creditor protection in June 2005 and in May of this year concluded a financing deal with Nuinsco Resources (NWI-T, NUIRF-O) and Sprott Securities to raise enough cash to clear its liabilities. Nuinsco has a 12% interest in Campbell and can increase that to 27% under the terms of a warrant issue. Those warrants have the same conditions as those that will be issued through the rights offering.