Muscocho companies to convert loans into common shares

Loans worth a total of $23.5 million from Echo Bay Mines (TSE) will be converted into common shares, Muscocho Explorations (TSE), Flanagan McAdam Resources (TSE) and McNellen Resources (TSE) report.

The $11 million loan to Muscocho will be converted into 2.75 million shares at $4 per share, which will boost Echo Bay’s interest in the company to almost 8.8 million shares or 26.9% on a fully diluted basis.

The companies have an agreement that Echo Bay will not increase its interest in Muscocho beyond 33% until April 29, 1989, and by no more than an additional 1% per year for the six years thereafter.

The $7.5 million loan to Flanagan McAdam will be converted into 1.86 million shares at $4.05 per share, which will increase Echo Bay’s interest in Flanagan McAdam to 3.58 million shares or 22.8% on a fully diluted basis.

The $5 million loan to McNellen will be converted into two million shares at $2.50 per share; Echo Bay will own 4.86 million shares or 27.8% of McNellen on a fully diluted basis.

Echo Bay has agreed not to boost its interest in either Flanagan McAdam or McNellen until April 29, 1989. For the 6-year period thereafter, Echo Bay may increase its holdings in the two companies up to 33% on a fully diluted basis.