Gold Reserve talks $75 million 15-year convertibles at 5%-5.5%, up 30%-35%, to price Monday

By Kenneth Lim

Boston, May 7 - Gold Reserve Inc. planned to price $75 million of 15-year convertible senior subordinated notes on Monday after the market closed, talked at a coupon of 5% to 5.5% and an initial conversion premium of 30% to 35%.

The convertibles were offered at par.

There is an over-allotment option for a further $11.25 million.

JP Morgan and RBC Capital Markets are the bookrunners of the registered offering.

There is a concurrent offering of 16 million shares of Gold Reserve common stock, with an over-allotment option for an additional 2.4 million shares.

The convertibles will be non-callable for the first three years. They will be callable in years four and five subject to a hurdle at 150% of the conversion price. The convertibles may be put in the fifth year.

The notes have dividend and takeover protection.

There is a cash settlement option.

Gold Reserve, a Spokane, Wash.-based gold and copper mining company, said it will use the proceeds of the deals to fund construction activities, equipment purchases and the development of its Venezuela-based Brisas project.

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