Securities Law & Instruments

Headnote

Clause 104(2)(c) - relief granted from the issuerbid requirements of Part XX in connection with the proposedrepurchase of an "out of the money" convertible debenturewhere an investment dealer has opined that the convertibilityfeature is of no material value, the offer is made to two accreditedinvestors, and the debenture indenture specifically contemplatesthe repurchase of the debentures by private agreement.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am.,s. 104(2)(c) and Part XX.

IN THE MATTER OF

THE SECURITIES ACT R.S.O.1990 CHAPTER S.5

AS AMENDED (the "Act")

AND

IN THE MATTER OF

ELDORADO GOLD CORPORATION

 

ORDER

(Clause 104(2)(c))

UPON the application of Eldorado GoldCorporation ("Eldorado") to the Ontario SecuritiesCommission (the "Commission") for an order pursuantto clause 104(2)(c) of the Act exempting Eldorado from the requirementsof Part XX of the Act and the regulations thereunder in connectionwith Eldorado's invitation to Brant Investments Limited ("Brant")to make an offer to Eldorado to sell to Eldorado an aggregateprincipal amount of US$2,000,000 8.25% convertible debentures;

AND UPON considering the applicationand the recommendation of the staff of the Commission;

AND UPON Eldorado having representedto the Commission as follows:

1. Eldorado is governed by the Canada BusinessCorporations Act and its head office is in Vancouver,British Columbia.

2. Eldorado, together with its subsidiaries,is engaged principally in the mining and processing of goldore and the exploration, acquisition and development of gold-bearingmineral properties.

3. Eldorado is a reporting issuer in Ontarioand has been for more than 12 months.

4. As at May 31, 2002, the authorized sharecapital of Eldorado consists of an unlimited number of commonshares (the "Shares") and an unlimited number ofconvertible non-voting shares, of which there were approximately166,985,008 Shares, and no convertible non-voting shares,issued and outstanding.

5. The Shares are listed and posted for tradingon the Toronto Stock Exchange. The Shares closed at CDN$1.33per Share at the close of business on June 20, 2002.

6. An aggregate principal amount of US$10,000,0008.25% convertible debentures ("Debentures") wereissued pursuant to a trust indenture (the "Trust Indenture")dated as of November 3, 1994 between Eldorado CorporationLtd. and Montreal Trust Company of Canada (now ComputershareTrust Company of Canada) and are due November 1, 2004.

7. The Trust Indenture was supplemented onApril 19, 1996 and November 19, 1996 (hereafter referred toas the "Supplemented Indenture") to reflect thatEldorado Corporation Ltd. was continued under the laws ofCanada, to correct some minor typographical errors, and toreflect the amalgamation of Eldorado Corporation Ltd. withHRC Development Corporation to form Eldorado Gold Corporationand the assumption of the successor company of all the obligationsof the predecessor company under the Trust Indenture.

8. It is a term of the Debentures that Eldoradopay interest semi-annually at an annual rate of 8.25% on May1 and November 1 in each year.

9. The Debentures were issued pursuant toa prospectus dated February 22, 1995.

10. The Debentures are not listed on an exchange.

11. None of the Debentures are currently ownedby any insiders of the Eldorado.

12. Under the Supplemented Indenture, theprincipal amount under the Debentures is convertible (the"Convertibility Feature") at the option of the holderat any time prior to maturity into Shares at a conversionprice of US$3.25 (the "Conversion Price"), subjectto adjustment from time to time. No such adjustment has takenplace.

13. Under section 3.6(1) of the SupplementedIndenture, Eldorado is permitted to acquire the Debenturesby private contract at any price not exceeding the "RedemptionPrice" at which such Debentures could, at the time ofpurchase, be redeemed by Eldorado, plus, in each case, costsof purchase.

14. The "Redemption Price" is definedin Section 3.2(1) of the Supplemented Indenture as follows:

"The price payable by the Companyon any redemption of Debentures shall be equal to the principalamount of the Debentures to be redeemed, together with accruedand unpaid interest on the principal amount of the Debentures,or part thereof, to the date fixed for redemption."

15. Eldorado intends to invite (the "Offer")Brant to make an offer to Eldorado to sell to Eldorado anaggregate principal amount of US$2,000,000 Debenture (the"Brant Debenture") in return for approximately 1,597,867Shares.

16. Brant is a corporation governed underthe laws of Canada. Its registered and business office islocated in Toronto, Ontario. To the best of Eldorado's information,knowledge and belief, Brant holds the Brant Debenture on behalfof two beneficial holders that are "accredited investors"as defined under OSC Rule 45-501, that are located in Ontarioand that are not related parties of Eldorado as defined underOSC Rule 61-501.

17. The Offer constitutes an issuer bid underthe Act and as such must comply with Part XX of the Act andthe regulations thereunder.

18. The Shares have not traded above the ConversionPrice since 1997, and Eldorado has received an opinion froman investment dealer that the Convertibility Feature is ofno material value.

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to clause 104(2)(c)of the Act that Eldorado be exempt from Part XX of the Act andthe regulations thereunder in connection with the acquisitionof the Brant Debenture by Eldorado pursuant to the Offer.

July 5, 2002.

"Robert L. Shirriff"                    "H.Lorne Morphy"