On March 27, 2014, the TSX Venture Exchange accepted the issuance of a new Diamond Fields International Ltd. convertible debenture in the total principal amount of $151,357 (the 2014 debenture) to Firebird Global Master Fund II Holdings Ltd., which replaces the 2010 debenture that matured March 27, 2014 (refer to March 25, 2014, news release).
Accordingly, on March 27, 2014, the company issued the 2014 debenture, which is for a one-year term maturing March 26, 2015, with 8-per-cent interest payable semi-annually. The debenture is convertible into a total of 3,027,140 units at a conversion price of five cents per unit. Each unit comprises one common share and one-half share purchase warrant, each whole warrant entitling the holder to acquire one additional common share on or before March 26, 2015, at a price of five cents per warrant share.
Any shares that may be issued on conversion of the debenture or on exercise of the warrant will be subject to a hold period under applicable Canadian securities laws expiring on July 28, 2014, and will be subject to such further restrictions on resale as may apply under applicable foreign securities laws.
Proceeds of this financing will be applied toward general working capital.
As disclosed in the March 25, 2014, news release, as an insider, Firebird is a related party of the corporation under applicable Canadian securities laws. Firebird may, by exercising its conversion rights and exercising the warrants issued to it pursuant to the 2014 debenture, acquire up to an additional 4,540,710 common shares in the capital stock of the corporation, which would increase its pro rata shareholdings in the corporation. All of the independent directors of the corporation, acting in good faith, have determined that the fair market value of the securities being issued and the consideration paid are reasonable, and as the value of the related-party transaction is less than 25 per cent of the corporation’s market capitalization, the transaction is exempt from the formal valuation and minority shareholder approval requirements of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.
