Apollo Gold Corporation (TSX: APG)(NYSE Amex: AGT) (“Apollo”)
and Linear Gold Corp. (TSX:LRR) (“Linear”) announce that Apollo has
unwound its Canadian dollar currency hedges that were originally
entered into in connection with Apollo’s US$70 million Black Fox
Project Facility Agreement (the “Facility Agreement”). As a result
of this action, gross proceeds to Apollo were approximately US$8.2
million, which will be used to reduce the debt outstanding under
the Facility Agreement.
Following this repayment, Apollo’s indebtedness will be reduced
to approximately US$51.8 million. Additionally, post closing of the
proposed business combination of Apollo and Linear (the “Merger”),
expected to be completed by the end of the second quarter of 2010,
the combined company will further repay US$10 million to the
project lenders to reduce the Project Facility to approximately
US$41.8 million.
Enhanced Financial Flexibility
R. David Russell, Chief Executive Officer (“CEO”) and President
of Apollo, said, “We acted opportunistically to close out our
in-the-money foreign currency contracts in order to reduce our
indebtedness. This US$8.2 million repayment, together with the
US$10 million repayment from proceeds of Linear’s Cdn$25 million
private placement on March 19, 2010, have reduced interest payments
annually by US$1.3 million.”
Wade K. Dawe, CEO and President of Linear, said, “The collapse
of the foreign currency hedge to further reduce debt is an
important step in our plan to strengthen Apollo’s balance sheet.
Following completion of the Merger, we believe that the
recapitalized company will be in a strong position to emphasize
underground production at Black Fox and to take advantage of growth
opportunities for our shareholders going forward. Having
significantly deleveraged the balance sheet, our new company is
well positioned as an emerging Canadian mid-tier gold
producer.”
Linear and Apollo entered into a definitive arrangement
agreement (the “Agreement”), dated March 31, 2010, in respect of
the previously announced business combination pursuant to which the
businesses of Apollo and Linear will be combined by way of a court
approved plan of arrangement, subject to a number of conditions
precedent, including approval of the shareholders of each of Apollo
and Linear. The Agreement provides that Linear shareholders will
receive 5.4742 Apollo shares for each Linear share.
Proposed Share Consolidation and Name Change
As a part of the Merger, Apollo and Linear believe that it is in
the best interests of the combined company (“New Company”) to
effect a name change and share consolidation currently anticipated
to be on the basis of one post-consolidation New Company common
share for every four Apollo common shares outstanding immediately
prior to the share consolidation.
Such consolidation and name change will be submitted to the
Apollo shareholders for approval at the shareholder meeting to
approve matters relating to the Merger (the “Meeting”) and would
only be effective upon such approval and the closing of the Merger.
Both Apollo and Linear believe that the share consolidation will
allow the combined company greater access to the capital markets,
including access to those institutions and investors who invest in
stocks with a US$1 minimum price, and potential enhanced trading
liquidity. The proposed new name for the New Company will be
determined over the coming weeks and included in the management
information circulars to be mailed to shareholders.
If approved by the Apollo shareholders and implemented by the
New Company, the proposed name change and share consolidation would
affect all New Company shareholders uniformly, including existing
Linear shareholders who, after giving effect to the Merger and the
consolidation, will receive 1.37 New Company shares for each Linear
share on completion of the Merger (5.474 divided by 4).
The proposed share consolidation would not affect any New
Company shareholder’s percentage ownership interests or
proportionate voting power, except to the extent that the share
consolidation results in any shareholders owning a fractional New
Company common share (an “New Company Share”) (in which case each
fractional New Company Share that is less than one-half of one New
Company Share will be cancelled without any compensation therefor
and each fractional New Company Share that is at least one-half of
one New Company Share will be adjusted upward to one whole New
Company Share). Following the share consolidation, the New Company
Shares will have the same voting rights and will be identical in
all other respects to the Apollo shares now authorized.
Both the proposed share consolidation and name change must be
approved by at least two-thirds of the votes cast at the
Meeting.
Proxy Solicitor
Both Apollo and Linear have engaged Laurel Hill Advisory Group,
200-366 Bay Street, Toronto, Ontario, M5H 4B2, to assist in their
respective proxy solicitation efforts.
Apollo shareholders with questions about the Merger may call
the Proxy Solicitor at:1-888-987-3940 or collect at
416-637-4661.
Linear shareholders with questions about the Merger may call
the Proxy Solicitor at:1-888-987-3949 or collect at
416-637-4661.
About Apollo
Apollo is a growing gold producer that operates the wholly owned
Black Fox Mine in Ontario, Canada, which commenced gold production
in May 2009. Apollo is also exploring the adjoining Grey Fox and
Pike River properties, all in the Timmins gold district in Ontario,
Canada, as well as the Huizopa Joint Venture, (80 percent Apollo
and 20 percent Minas De Coronado, S. de R.L. de C.V.), an early
stage, gold-silver exploration project, approximately 16 kilometers
(10 miles) southwest of Minefinders Dolores gold-silver mine, in
the Sierra Madres in Chihuahua, Mexico.
About Linear
Linear Gold Corp. is a well financed gold exploration and
development company committed to maximizing shareholder value
through a strategy of mine development, focused exploration, and
effective risk management through selective partnerships and
acquisitions. Linear's flagship development property located near
Uranium City, Saskatchewan, hosts an economic gold deposit and is
now in the development stage to become a 70,000 - 90,000 ounce per
year gold producer. Linear also holds an extensive and diverse
portfolio of mineral projects in the Dominican Republic and
Mexico.
Forward-looking Statements
Certain statements in this press release relating to the
proposed Merger are “forward-looking statements” within the meaning
of securities legislation. These statements include statements
regarding the use of proceeds from the unwinding of the foreign
currency hedge, the timing of the completion of the arrangement
with Linear Gold Corp. and the share consolidation’s ability to
allow the combined company greater access to the capital markets
and enhanced trading liquidity. Apollo does not intend, and does
not assume any obligation, to update these forward-looking
statements. These forward-looking statements represent management's
best judgment based on current facts and assumptions that
management considers reasonable, including that the required
approval will be obtained from the shareholders of Apollo or
Linear, that all third party regulatory and governmental approvals
to the Merger will be obtained and all other conditions to
completion of the Merger will be satisfied or waived, that
operating and capital plans will not be disrupted by issues such as
mechanical failure, unavailability of parts, labour disturbances,
interruption in transportation or utilities, or adverse weather
conditions, that there are no material unanticipated variations in
budgeted costs, that contractors will complete projects according
to schedule, and that actual mineralization on properties will not
be less than identified mineral reserves. Apollo makes no
representation that reasonable business people in possession of the
same information would reach the same conclusions. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the companies to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. In particular, fluctuations in the
price of gold or in currency markets could prevent the companies
from achieving their targets. Other factors are disclosed under the
heading “Risk Factors” and elsewhere in Apollo documents filed from
time to time with the Toronto Stock Exchange and the NYSE Amex
Equities Exchange and, on SEDAR and with other regulatory
authorities, including the United States Securities and Exchange
Commission.
Additional Information and Where to Find It
In connection with Apollo’s and Linear’s solicitation of proxies
with respect to the meeting of shareholders of each of Apollo and
Linear to be called with respect to the proposed plan of
arrangement, Apollo will file a proxy statement with the SEC and
with regulatory authorities in Canada and Linear will file an
information circular with regulatory authorities in Canada.
SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/INFORMATION
CIRCULAR WHEN IT IS FINALIZED AND DISTRIBUTED TO SHAREHOLDERS
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Shareholders will be
able to obtain a free-of-charge copy of Apollo’s proxy statement
(when available) and other relevant documents filed with the SEC
and with regulatory authorities in Canada from the SEC’s website at
http://www.sec.gov and from SEDAR at http://www.sedar.com, as
applicable. Shareholders will be able to obtain a free-of-charge
copy of Linear’s information circular (when available) and other
relevant documents filed with regulatory authorities in Canada on
SEDAR at http://www.sedar.com. Shareholders of Apollo will also be
able to obtain a free-of-charge copy of the proxy statement and
other relevant documents (when available) by directing a request by
mail or telephone to Apollo Gold Corporation, 5655 South Yosemite
St., Suite 200, Greenwood Village, Colorado 80111-3220 or (720)
886-9656, or from Apollo’s website, www.apollogold.com.
Shareholders of Linear will also be able to obtain a free-of-charge
copy of the information circular and other relevant documents (when
available) by directing a request by mail or telephone to Linear
Gold Corp., Suite 502, 2000 Barrington Street, Halifax, Nova Scotia
B3J 3K1 or (902) 422-1421, or from Linear’s website,
www.lineargoldcorp.com.
Interests of Participants in the Solicitation of
Proxies
Apollo and certain of its directors, executive officers and
other members of its management and employees may, under the rules
of the SEC, be deemed to be “participants” in the solicitation of
proxies from its shareholders in connection with the proposed
merger. Information concerning the interests of the persons who may
be considered “participants” in the solicitation is set forth in
Apollo’s proxy statements and Annual Reports on Form 10-K
(including any amendments thereto), previously filed with the SEC,
and in the proxy statement relating to the plan of arrangement when
it becomes available. Copies of these documents can be obtained,
without charge, at the SEC’s internet website at www.sec.gov or by
directing a request to Apollo at the address above.
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