Birch Mountain Resources Ltd. (BMD: TSX and AMEX) has issued a $31.5 million principal amount floating rate convertible senior secured debenture to Tricap Partners Ltd. in connection with refinancing of the existing credit facility extended to the Company by an affiliate lender of Tricap.
Joel Jarding, Birch Mountain's President & COO states, "Tricap has acquired the Convertible Debenture as an investment in Birch Mountain and we welcome their proven industry and financial expertise in value creation."
The Convertible Debenture has a maturity date of June 30, 2012 and bears an interest rate of prime rate plus 4.0%, calculated daily and compounded and payable monthly. The initial principal amount of the Convertible Debenture is convertible, at the election of Tricap, in whole or in part, into common shares of the Company, at an exercise price equal to the lower of (i) $0.80 per common share and, (ii) the then current market price, subject to certain anti-dilution adjustments. Prior to December 31, 2008, the Convertible Debenture is convertible only in the event of a change of control of Birch Mountain or an event of default.
In addition, until approval by a majority of shareholders of Birch Mountain is obtained (which the Company has agreed to use commercially reasonable efforts to seek no later than June 11, 2008), Tricap may only convert such portion of the Convertible Debenture that would not result in Tricap holding more than 20% of the then outstanding Common Shares, except upon the occurrence of a change of control event, whereby Tricap may exercise the conversion right in full. Interest amounts owing on the Convertible Debenture may also be converted into Common Shares at the election of Tricap.
The proceeds of the financing have been used to repay and replace the existing senior secured bridge facility provided by Brookfield Bridge Lending Fund Inc. to Birch Mountain and the expanded debt will be used to facilitate ongoing value development.
The strategic review initiated by the Board of Directors in September 2007 is ongoing as the Company continues with its operational growth and development of the Muskeg Valley Quarry and Hammerstone Project. -- www.cnxmarketlink.com
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