Diamond Fields International Ltd. has reached agreement with Firebird Global Master Fund II Holdings Ltd. to cancel a previously issued convertible debenture in the principal amount of $151,357 (the 2010 debenture) that would have matured on March 27, 2014 (refer to DFI news releases dated Oct. 19, 2010, Nov. 7, 2012, and May 24, 2013), and issue a new convertible debenture in the same principal amount at a reduced conversion price. The interest of $24,051 accrued under to the 2010 debenture will be paid to Firebird in cash.
In accordance with policies of the TSX Venture Exchange and subject to acceptance by the exchange to the same, the corporation will arrange for the cancellation of the 2010 debenture and the issuance of a new convertible debenture to Firebird in the principal amount of $151,357 (the 2014 debenture). The 2014 debenture will be for a term maturing one year from the date of issuance, with 8-per-cent interest payable semi-annually. The 2014 debenture will be 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 for up to 1,513,570 shares on or before one year from the date of issuance of the warrant at an exercise price of five cents per warrant share.
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.
