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RAPAPORT... Mountain Province Diamonds Inc. is undertaking a $75 million (CAD 95 million) rights offering to fund a cost overrun facility, the arrangement for which is contingent upon a condition precedent to drawdown its $370 million term loan facility. The junior miner's major shareholder, Dermot Desmond, intends to fully exercise his rights under the offering, according to the filing. In addition, Mountain Province entered into a standby agreement with Desmond, the terms of which include his full subscription to those rights that are not otherwise subscribed to under the offering. Mountain Province expects to offer rights to holders of its common shares at the close of business (5 p.m. EDT) on February 27, 2015, expiring at 5 p.m. EDT on March 30. The offering is subject to regulatory approval, including that of the Toronto Stock Exchange (TSX).
Under the terms of the offering, every 5.69 rights will entitle the holder to purchase one common share at a subscription price of $4 each. Shareholders who fully exercise their rights may subscribe pro rata for any additional common shares that have not been otherwise subscribed to before the expiration date. The subscription price is equal to a discount of approximately 16 percent from the volume-weighted average trading price of common shares on the TSX for the five-day period ending on February 17. The rights are expected to be listed and posted for trading on the TSX under the symbol "MPV.RT" beginning February 25 and ending on the expiration date. Rights that have not been exercised will be voided at that time.
Desmond has committed to subscribe to any common shares not otherwise subscribed to by rights holders under the offering. As compensation for performing his obligations under the standby agreement, Mountain Province will pay Desmond a fee equal to 3 percent of the aggregate subscription price to be paid for the 23,761,783 common shares to be issued. The offering is expected to increase the number of issued and outstanding common shares by approximately 17.5 percent.
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