News... Mr. Glenn Laing reports
ECUADOR GOLD ANNOUNCES DEBENTURE OFFERING AND UNIT OFFERING TO EXISTING SHAREHOLDERS
Ecuador Gold and Copper Corp. has arranged a debenture offering to raise an aggregate gross proceeds of up to $840,000 (U.S.) through the issuance of senior secured convertible debentures and an additional offering of units of the company to raise a further amount of up to $160,000 (Canadian) through the issuance of units at a price of five Canadian cents per unit to existing shareholders of the company. The debenture offering and unit offering will enable the company to raise up to approximately $1-million, of which over 80 per cent will be used in Ecuador for the company's Condor gold project and in country working capital, and the remainder will be used as additional working capital of the company.
Each debenture bears an interest of 12 per cent per annum with the principal amount and interest due and payable on Dec. 31, 2015, unless converted into units at a price of five Canadian cents per unit on or before the maturity date. Each unit will comprise one common share and one-half common share purchase warrant of the company. Each warrant entitles the investor to acquire one additional common share of the company at an exercise price of 10 Canadian cents per share for 24 months following the date of issuance.
The sale of debentures is intended to be made to certain major shareholders of the company, including Aura International Services Ltd., in reliance of certain prospectus exemptions. Aura presently owns 129,063,587 common shares of the company, representing 52.1-per-cent ownership. Accordingly, Aura is a control person of the company under applicable securities laws and is therefore also a related party to the company. Consequently, the sale of debentures to Aura is a related party transaction, which is intended to be carried out under exemptions from the requirements of Multilateral Instrument 61-101 -- protection of minority security holders in special transactions (MI 61-101).
Under the debenture offering, the company is relying upon exemptions from the formal valuation requirements and minority shareholder approval requirements of MI 61-101 under sections 5.5(b) and 5.7(b) thereof, respectively. The company is not aware of any valuation of the company or its mineral properties. The company is entitled to rely upon the exemption under Section 5.5(b) because it is listed only on the TSX Venture Exchange and not one of the specified markets listed therein. Likewise, the company is entitled to rely on the exemption under Section 5.7(b) because the debenture offering is a distribution of securities for cash of not more than $2.5-million. Aura intends to acquire a total of $675,000 (U.S.) under the debenture offering, and if Aura were to convert such amount of debentures as well as the warrants included in the units, then Aura would hold approximately (assuming an exchange rate of $1.1284 (Canadian) to $1 (U.S.)) 151,913,687 common shares of the company representing 58.8-per-cent ownership.
The sale of units under the unit offering will be conducted in reliance upon certain prospectus exemptions, including the exemption allowing issuers to raise capital by distributing securities to existing shareholders. In accordance with the existing shareholder exemption, the company confirms there is no material fact or material change related to the company which has not been generally disclosed.
The opportunity to purchase units under the unit offering is in reliance on the existing shareholder exemption that is available to all shareholders as at the date hereof who hold common shares of the company to a maximum subscription of $15,000 (Canadian) per shareholder.