Sunshine Deal Would Settle Suits

Sunshine Mining & Refining Co. said Monday that it has reached agreements with its three largest preferred shareholders to convert all preferred shares into common stock in a deal that could net them $2 a share or more.

In exchange for the conversion premium, the three large shareholders agreed to drop unspecified lawsuits against Sunshine that had cast a pall over the company.

Sunshine, which operates a silver mine near Kellogg, has nearly 7.2 million shares of preferred stock outstanding. It also lost $4.6 million in the second quarter of this year.

“Now was a good time to address the issue,” said John Simko, president and CEO of the Boisebased company. “While the preferred stock did not represent an inhibition to our company’s ability to operate effectively, or raise capital, its potential diluting effect on our common stockholders was, we felt, acting as a depressant to the common stock price.”

Sunshine’s common shares closed unchanged at $1.75 Monday; preferred shares closed at $7.87-1/2, down 12.5 cents.

If approved by majorities of both common and preferred shareholders, the company will issue at least six shares of common stock for each preferred share. At the current price, six shares of common stock would fetch $10.50, a $2.50 premium above the current price of preferred shares.

The proposed transaction would eliminate preferred shareholders’ first rights to proceeds from liquidating the stock and any special voting privileges.

To accomplish the conversion, Sunshine would merge into a wholly owned subsidiary, but keep the same name.

The three major preferred shareholders who agreed to support the transaction are Grace Holdings LP, Elliott Associates, and Lloyd Miller, a Florida investor. They represent 25 percent of preferred shares outstanding.

, DataTimes