Gold Reserve Inc. (TSX VENTURE:GRZ) (OTCQB:GDRZF) (“Gold Reserve” or the
“Company”) is pleased to announce an agreement in principle with its
largest noteholders to issue up to US $12 million of new convertible
notes (“New Notes”) due December 31, 2015 and modify, amend and extend
the maturity date of nearly all of its US$25.3 million outstanding
principal amount of previously modified notes (“Modified Notes”) from
June 29, 2014 to December 31, 2015. The terms are binding subject to TSX
Venture Exchange approval and definitive documents. The Company will
issue the New Notes with an original issue discount of 2.5% of the
principal amount and will pay a cash extension fee of 2.5% of the
principal amount of the Modified Notes being extended.
The New Notes and the Modified Notes (as amended from the date of
closing) (collectively the "Notes") will bear interest at a rate of 11%
per year, which will be paid in kind quarterly and added to the
principal amount of the Notes. The Notes will be convertible, at the
option of the holder, into 266.67 shares of Class A common shares per US
$1,000 (equivalent to a conversion price of US $3.75 per common share)
at any time upon prior written notice to the Company. The Modified Notes
previously had an interest rate of 5.5% and a conversion price of US
$4.00 per common share.
The Notes will be senior unsecured obligations of the Company, equal in
rank to any future senior obligations of the Company and subject to
certain terms including restrictions regarding: the pledging of assets
and incurrence of certain capital expenditures or additional
indebtedness without consent of Noteholders; participation rights in
future equity or debt financing; redemption at a price equal to 120% of
the outstanding principal balance plus accrued interest upon the
issuance of a final arbitration award pursuant to the Company’s
arbitration proceedings with the Government of Venezuela related to
Venezuela's expropriation of the Company’s Brisas Project, provided the
Company shall not be obligated to effect any redemption until certain
amounts of cash proceeds are received and subject to minimum capital and
operating needs of the Company; and restrictions on any amendment or
modification to any terms of the Notes without offering such terms to
all holders of the Notes on an equitable and pro-rata basis. The
transaction is expected to be completed in May 2014.
Doug Belanger, President stated, “We appreciate the continued support of
our shareholders and noteholders during the arbitration process.
Extending the maturity of the notes and raising additional funds will
allow the Company to pursue the arbitration process through to its full
conclusion.”
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements that state Gold
Reserve's or its management's intentions, hopes, beliefs, expectations
or predictions for the future including without limitation statements
with respect to the proposed issuance of the New Notes and modification
of the Modified Notes and the arbitration proceedings. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by management at this
time, are inherently subject to significant business, economic and
competitive uncertainties and contingencies.
We caution that such forward-looking statements involve known and
unknown risks, uncertainties and other risks that may cause the actual
outcomes, financial results, performance, or achievements of Gold
Reserve to be materially different from our estimated outcomes, future
results, performance, or achievements expressed or implied by those
forward-looking statements.
Numerous factors could cause actual results to differ materially from
those in the forward-looking statements, including without limitation,
the risk that the Company may not receive necessary regulatory approvals
for the issuance of the New Notes or modification of the Modified Notes
and the risk that the Company and the current holders of the Modified
Notes may not be able to reach agreement on definitive documentation for
the issuance of the New Notes or modification of the Modified Notes.
This list is not exhaustive of the factors that may affect any of
Gold Reserve's forward-looking statements. Investors are cautioned not
to put undue reliance on forward-looking statements. All subsequent
written and oral forward-looking statements attributable to Gold Reserve
or persons acting on its behalf are expressly qualified in their
entirety by this notice. Gold Reserve disclaims any intent or obligation
to update publicly or otherwise revise any forward-looking statements or
the foregoing list of assumptions or factors, whether as a result of new
information, future events or otherwise, subject to its disclosure
obligations under applicable rules promulgated by the SEC.
In addition to being subject to a number of assumptions,
forward-looking statements in this release involve known and unknown
risks, uncertainties and other factors that may cause actual results and
developments to be materially different from those expressed or implied
by such forward-looking statements, including those factors outlined in
the "Cautionary Statement Regarding Forward-Looking Statements" and
"Risks Factors" contained in Gold Reserve's filings with the Canadian
provincial securities regulatory authorities and the SEC, including Gold
Reserve's Annual Information Form and Annual Report on Form 40-F for the
year ended December 31, 2013, filed with the Canadian provincial
securities regulatory authorities and the SEC, respectively.
Further information regarding the Company can be located at www.goldreserveinc.com,
www.sec.gov
and www.sedar.com.
“Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this
release.”
Copyright Business Wire 2014