Echo Bay plans sale of convertible preferred shares

Gold producer Echo Bay Mines (TSE) has given notice to the U.S. Securities Exchange Commission of its intention to file a preliminary prospectus for the sale of US$100 million in convertible preferred shares.

Echo Bay says it will use the proceeds to reduce debt and enhance working capital.

The issue consists of four million US$25 perpetual preferred shares of Echo Bay Finance Corp., a new Delaware corporation, convertible into common shares of parent Echo Bay. While the shares would be non-callable for three years, the dividend would be payable on a quarterly basis.

Of the four million shares, 3.2 million will be offered in the U.S. and outside Canada by Goldman Sachs & Co. and The First Boston Corp., while the balance is offered in Canada and in other countries outside the U.S. by Wood Gundy Inc. and Burns Fry Ltd.