LAKE SHORE GOLD CORP 6.25 PCT DEBS T.LSG.DB

RE:RE:RE:RE:RE:CIBC raises target

[bigdaddycash]

I do not think it is quite as simple as paying off the debt - there are covenants on the debt as follows:

The Debentures are convertible at the holder's option into common shares of the Company at a conversion price of C$1.40 per common share. The Debentures are not redeemable prior to September 30, 2015. On and after September 30, 2015 and prior to maturity, the Debentures may be redeemed in whole or in part from time to time at the Company's option, at a price equal to their principal amount plus accrued and unpaid interest, provided that the volume weighted average trading price of the common shares on the TSX for the 20 consecutive trading days preceding the date on which the notice of redemption is given is not less than 130% of the conversion price.

So, it would seem that the only way the current shareholders would not be diluted by conversion of the debentures into share is if on maturity of the debentures that share price of LSG was at or below $1.40 on Sep 30, 2017 - otherwise the debenture holders would be incented to convert and realize the gain.  LSG cannot redeem the debentures unless the average trading price for the 20 consecutive trasing days was not less that $1.82 (130% x $1.40).  I will certainly convert my debentures if the price hits $1.82 - no way I will let LSG redeem them at face plus accrued interest.