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

From SEDAR

[Golfcar72]

Excerpt from the Sprott filing on June 21, 2012.  That's an expensive deal....15% guaranteed?  Wonder what the risk of default is they are factoring in?  50%?  Higher?

 

 

6.5 Minimum Return

Notwithstanding any term of this Agreement to the contrary, the Borrower covenants and 

agrees to provide the Agent, for the benefit of the Gold Loan Facility Lenders (and any other lender to 

whom a Gold Loan Facility Lender has participated all or any part of its Individual Commitment in 

accordance with Section 12.5(b)), with a minimum effective rate of return on the full amount of the Gold 

Loan Facility Commitment Amount equal to 5% per annum, calculated daily and compounded monthly, 

provided however that if at any time prior to the Gold Loan Facility Maturity Date there has been a 

mandatory prepayment made or required pursuant to Section 6.4, the minimum effective rate of return on 

the full amount of the Gold Loan Facility Commitment Amount shall for all purposes thereafter be equal 

to 15% per annum, calculated daily and compounded monthly (the “Minimum Rate of Return”).  The 

effective rate of return on the Gold Loan Facility Commitment Amount shall be calculated on the date 

(the “Rate of Return Calculation Date”) which is the earlier of the Gold Loan Facility Maturity Date 

and the date of any prepayment of the Gold Loan Facility in whole, and such calculation shall exclude the 

value of the Gold Loan Facility Shares.  If and to the extent that, on the Rate of Return Calculation Date, 

the effective  rate of return earned by the Gold Loan Facility Lenders on the Gold Loan Facility 

Commitment Amount shall be less than the Minimum Rate of Return, the Borrower shall forthwith pay to 

the Agent for the benefit of the Gold Loan Facility Lenders an additional amount in Canadian Dollars 

equal to the difference.  For greater certainty, no actual payment made to the Agent for its own benefit or 

for the benefit of the Lenders hereunder on or in respect of or in connection with the Credit Facilities or 

the Gold Loan Facility Commitment Amount, whether paid in cash or in kind, shall be included in the 

calculation of the Minimum Rate of Return.  For greater certainty, the Minimum Rate of Return shall only 

be applicable to and calculated against any amounts not prepaid under the Gold Loan Facility pursuant to 

Section 6.4 or Section 6.8.

[kaiserwongze]

?  I thought it said if there was a prepayment of any sort then it would be 15%. Anyways, I would think that any financing that a company such as LSG could get that isn't all that dilutive would be better.  And the fact that both two of the best names in the business, FNV, and Sprott are involved with this company gives a bit of confidence to this name.

[basemetal]

It does seem expensive financing.  However, I suppose what counts is whether the financing will enable higher profits....  or does it simply enable us to continue spending "like a drunken sailor" ? I wonder if Tony still thinks it causes  minimum dilution of share values. The 5M share sweetener hardly helps, but i suppose that's the only long term element.  What

[Golfcar72]

The plan isn't very transparent, in light of the recent change in capital outlays for the mill going forward.   Clearly they needed the cash but for what - ongoing operations, mill capital to 2500tpd, or stope development?  The terms are horrible and the change from warrants to share issuance is still being swept under the rug (that cost LSG millions), but with solvency being an

[yoda2]

Sad waste And we know who is responsible.  Will be even sadder when we see the bonus he takes for 2011.