Debt Capitalisation Issue


 
TIDMHIF 
 
HIDEFIELD GOLD PLC 
 
                      DEBT CAPITALISATION ISSUE 
 
 
On 25 July 2008 Hidefield Gold plc ("Hidefield" or "the Company") 
announced that it had entered into a convertible loan facility 
agreement with Hamilton Capital Partners Limited ("Hamilton"), a 
company with which Kenneth P. Judge, Chairman of the Company, is 
connected, for an amount of up to GBP1,000,000 (the "Facility 
Agreement").  Since that date, approximately GBP350,000 (excluding 
accrued interest) has been made available by Hamilton pursuant to the 
Facility Agreement. 
 
Hamilton had discussions with a number of potential investors to 
invite them to participate in the convertible loan facility on terms 
consistent with the Facility Agreement.  As a result, the Company 
received advances and financial accommodations from George Robinson 
and Abdul Rahman Kayed (the "Investors").  However, due to the 
deteriorating economic climate in the second half of 2008 and early 
2009, the falling share price of the Company and related difficulties 
facing junior exploration companies seeking funding, the Investors 
required that the terms under which they were prepared to invest be 
substantially different to those originally contemplated in the 
Facility Agreement.  This was not achievable under the Facility 
Agreement and the terms of these advances were not formally 
documented at the times of advance. 
 
The Company has entered into a loan agreement with Hamilton, George 
Robinson and Abdul Rahman Kayed (the "Lenders") dated 30 April 2009 
(the "Loan Agreement") in order to consolidate the advances made by 
the Lenders to the Company and formalise their terms.  The Loan 
Agreement therefore replaces and supersedes the Facility Agreement 
and, pursuant to its terms, the Company shall repay the outstanding 
amounts plus all interest accrued on 30 September 2009.  Interest 
will accrue at a rate of 14 per cent. per annum.  The Company can 
chose to prepay the outstanding amounts and to set off any obligation 
to repay or prepay any amounts under the Loan Agreement against any 
obligation then due to the Company by the Lenders.  The loans may 
become immediately repayable to the Lenders upon the occurrence of an 
event of default by the Lenders giving notice to the Company.  An 
event of default occurs when, inter alia, the Company fails to pay 
any amount due under the Loan Agreement when it falls due or the 
Company becomes insolvent. 
 
Debt Capitalisation Issue 
 
The Company has reached an agreement with the Lenders to capitalise 
amounts owing by the Company to the Lenders pursuant to the Loan 
Agreement through the issue of new Ordinary Shares in consideration 
for the release of amounts owed by the Company.  In aggregate, an 
amount of up to GBP1,321,359 owing to the Lenders will be released in 
consideration for the issue of up to 132,135,900 new ordinary shares 
of 1p each ("Ordinary Shares") at a price of 1p each (the "Debt 
Capitalisation Issue"). 
 
Of this amount, 59,000,000 Ordinary Shares (resulting in the release 
of GBP590,000) (the "First Subscription") have been placed with the 
Lenders by utilising the Board's current authority to allot Ordinary 
Shares and is therefore conditional only on the new Ordinary Shares 
being admitted to trading on AIM ("Admission") on or before 7 May 
2009.  The balance of the Debt Capitalisation Issue, being 73,135,900 
Ordinary Shares (resulting in the release of GBP731,359) (the "Second 
Subscription") is conditional upon: 
 
(a)     the passing of the resolutions to be proposed at a general 
meeting of the Company to be held on 20 May 2009 (the "General 
Meeting"); 
 
(b)     either (i) the Lenders not being deemed to be acting in 
concert with each other for the purposes of the City Code on 
Takeovers and Mergers (the "City Code"); or 
 
(ii) if the Lenders are so deemed, to the extent that such 
subscription would result in the Lenders having an interest in 
Ordinary Shares which carry 30 per cent. or more of the voting rights 
in the Company, the Panel on Takeovers and Mergers (the "Panel") 
waiving the obligation of the Lenders to make a general offer that 
would otherwise arise as a result of the Second Subscription and such 
waiver being approved by independent shareholders voting on a poll at 
a further general meeting of the Company on or before 30 June 2009; 
and 
 
(c)     save in respect of any Ordinary Shares that are only to be 
subscribed by the Lenders following the waiver referred to in 
paragraph (b)(ii), Admission of such Ordinary Shares becoming 
effective on or before 21 May 2009 (or such later date as the Lenders 
and the Company may agree, being not later than 29 May 2009). 
 
Hamilton has conditionally agreed to subscribe for an aggregate of 
GBP363,790 corresponding to 36,379,000 new Ordinary Shares.  Of this 
amount, 17,000,000 Ordinary Shares (resulting in the release of 
GBP170,000) will be subscribed for pursuant to the First Subscription 
and the balance of 19,379,000 Ordinary Shares (resulting in the 
release of GBP193,790) would be subscribed for pursuant to the Second 
Subscription.  As at the date of this announcement, Hamilton holds 
21,961,675 Ordinary Shares, which equates to 7.90 per cent. of the 
Company's current issued share capital.  Following completion of the 
First Subscription, Hamilton will hold 38,961,675 Ordinary Shares 
(equating to 11.56 per cent. of the Company's then issued share 
capital) and following completion of the Second Subscription it would 
hold 58,340,675 Ordinary Shares (equating to 14.22 per cent. of the 
Company's then issued share capital). 
 
George Robinson has conditionally agreed to subscribe for an 
aggregate of GBP259,131 corresponding to 25,913,100 new Ordinary 
Shares.  Of this amount, 12,500,000 Ordinary Shares will be 
subscribed for pursuant to the First Subscription and the balance of 
13,413,100 Ordinary Shares (resulting in the release of GBP134,131) 
would be subscribed for pursuant to the Second Subscription.  As at 
the date of this announcement, George Robinson holds 16,892,352 
Ordinary Shares, which equates to 6.07 per cent. of the Company's 
current issued share capital.  Following completion of the First 
Subscription, George Robinson will hold 29,392,352 Ordinary Shares 
(equating to 8.72 per cent. of the Company's then issued share 
capital) and following completion of the Second Subscription he would 
hold 42,805,452 Ordinary Shares (equating to 10.43 per cent. of the 
Company's then issued share capital). 
 
Abdul Rahman Kayed has conditionally agreed to subscribe for an 
aggregate of GBP698,438 corresponding to 69,843,800 new Ordinary 
Shares. Of this amount, 29,500,000 Ordinary Shares (resulting in the 
release of GBP295,000) will be subscribed for pursuant to the First 
Subscription and the balance of 40,343,800 Ordinary Shares (resulting 
in the release of GBP403,438) would be subscribed for pursuant to the 
Second Subscription.  Following completion of the First Subscription, 
Abdul Rahman Kayed will hold 29,500,000 Ordinary Shares (equating to 
8.75 per cent. of the Company's then issued share capital) and 
following completion of the Second Subscription he would hold 
69,843,800 Ordinary Shares (equating to 17.03 per cent. of the 
Company's then issued share capital). 
 
The Placing 
 
The Board is also proposing to raise up to approximately GBP750,000 
(before expenses) by the placing of new Ordinary Shares at a placing 
price of not less than 1p per share (the "Placing"). 
 
The Board is currently in discussions with existing shareholders and 
other investors regarding their participation in the Placing. 
However, as at the date of this announcement, the Company has not 
entered into any definitive documentation regarding the Placing. 
Should the Board decide to proceed with the Placing, it will use the 
net proceeds to provide further working capital and strengthen the 
Company's balance sheet. 
 
To the extent that any of the Lenders intend to subscribe in the 
Placing, such subscription would be dependent either on the Lenders 
not being deemed to be acting in concert with each other for the 
purposes of the City Code or on the subscription in the Placing by 
the Lender(s) being included within the Panel's waiver and approval 
by independent shareholders described in sub-paragraph (b)(ii) above. 
 
The ability of the Board to proceed with the Placing is conditional, 
inter alia, on the passing of the necessary resolutions to be 
proposed at the General Meeting. 
 
General Meeting 
 
A notice convening a general meeting of the Company to be held at 
9.30 a.m. on 20 May 2009 will shortly be sent to shareholders.  The 
resolutions to be proposed at the General Meeting will permit the 
Debt Capitalisation Issue and the Placing to proceed and give the 
Directors the flexibility to raise additional funds in the future, as 
and when suitable opportunities may arise.  However, other than the 
Debt Capitalisation Issue and the Placing, the Board has no current 
intention to issue any shares in the Company. 
 
Related Party Transactions 
 
The Directors other than Kenneth P. Judge (the "Independent 
Directors") consider that the resolutions to be proposed at the 
General Meeting are necessary to facilitate the Company's requirement 
to raise additional funds to meet its debt repayment obligations and 
to provide the funding required to meet the costs of carrying out the 
Company's exploration activities for the benefit of the members as a 
whole. 
 
Without the approval of the resolutions, the Company's ability to 
raise additional funding will be materially and adversely affected 
and the Company will have to examine closely whether its ability to 
remain a viable, independent exploration company has been 
compromised. 
 
As Kenneth P. Judge is deemed to be a person connected to Hamilton, 
it is a related party under the AIM Rules.  Each of the entry into 
the Loan Agreement by the Company and the subscription for Ordinary 
Shares by Hamilton pursuant to the Debt Capitalisation Issue 
constitute related party transactions.  Accordingly, Kenneth P. Judge 
has not taken part in the consideration and approval of the 
above-mentioned related party transactions in his capacity as a 
Director. 
 
The Independent Directors consider, having consulted with Hanson 
Westhouse Limited, the Company's nominated adviser that the 
transactions with Hamilton referred to above are fair and reasonable 
insofar as Shareholders are concerned. 
 
 
Enquiries: 
 
 
Hidefield Gold plc 
Ken Judge, Chairman                         + 44 773 300 1002 
Investor Relations                          + 44 20 7590 5503 
Paul Ensor 
 
Hanson Westhouse Limited (Nomad and Broker) + 44 113 246 2610 
Tim Feather / Matthew Johnson 
 
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This announcement was originally distributed by Hugin. The issuer is 
solely responsible for the content of this announcement.
Hidefield Gold (LSE:HIF)
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