Horsham Corp., the largest single shareholder of Barrick Gold (TSE), will complete a 25-year, convertible debenture financing for gross proceeds of US$250 million.
In addition, the company has granted the underwriting group an option to buy another US$25 million worth of debentures for total proceeds of US$275 million.
The debentures, which carry a coupon paying 3%, are convertible, at the holder’s option, into common shares of Barrick, or, at the option of Horsham, into cash. They are not redeemable by the company until after a 10-year period.
The holder of the debenture may choose to acquire 32.3 Barrick common shares for every US$1,000 of principal held. This equates to a conversion price of US$31 per share. The day before the financing was announced, Barrick shares closed in New York at US$27.83.
Horsham, which also holds interests in real estate and petroleum refining companies, currently holds 16.3% of Barrick’s outstanding common shares. If all the debentures are converted, its holding in Barrick would drop by 8.9 million shares.
The debenture issue is expected to close Jan. 29.
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