Apollo Gold Unwinds Foreign Currency Hedges and
Pays Down Debt by ~US$8 Million
Denver, Colorado; Halifax, Nova Scotia; April 26, 2010
– Apollo Gold Corporation (TSX: APG,
NYSE Amex: AGT) (“Apollo”) and Linear Gold Corp. (TSX:LRR) (“Linear”) announce that Apollo has
unwound its Canadian dollar currency hedges that were originally entered into in connection with
Apollo’s US$70 million Black Fox Project Facility Agreement (the “Facility Agreement”). As a result of
this action, gross proceeds to Apollo were approximately US$8.2 million, which will be used to reduce
the debt outstanding under the Facility Agreement.
Following this repayment, Apollo’s indebtedness will be reduced to approximately US$51.8 million.
Additionally, post closing of the proposed business combination of Apollo and Linear (the “Merger”),
expected to be completed by the end of the second quarter of 2010, the combined company will further
repay US$10 million to the project lenders to reduce the Project Facility to approximately US$41.8
million.
Enhanced Financial Flexibility
R. David Russell, Chief Executive Officer (“CEO”) and President of Apollo, said, “We acted
opportunistically to close out our in-the-money foreign currency contracts in order to reduce our
indebtedness. This US$8.2 million repayment, together with the US$10 million repayment from proceeds
of Linear’s Cdn$25 million private placement on March 19, 2010, have reduced interest payments
annually by US$1.3 million.”
Wade K. Dawe, CEO and President of Linear, said, “The collapse of the foreign currency hedge to further
reduce debt is an important step in our plan to strengthen Apollo’s balance sheet. Following completion
of the Merger, we believe that the recapitalized company will be in a strong position to emphasize
underground production at Black Fox and to take advantage of growth opportunities for our shareholders
going forward. Having significantly deleveraged the balance sheet, our new company is well positioned
as an emerging Canadian mid-tier gold producer.”
Linear and Apollo entered into a definitive arrangement agreement (the “Agreement”), dated March 31,
2010, in respect of the previously announced business combination pursuant to which the businesses of
Apollo and Linear will be combined by way of a court approved plan of arrangement, subject to a number
of conditions precedent, including approval of the shareholders of each of Apollo and Linear. The
Agreement provides that Linear shareholders will receive 5.4742 Apollo shares for each Linear share.
Proposed Share Consolidation and Name Change
As a part of the Merger, Apollo and Linear believe that it is in the best interests of the combined company
(“New Company”) to effect a name change and share consolidation currently anticipated to be on the
basis of one post-consolidation New Company common share for every four Apollo common shares
outstanding immediately prior to the share consolidation.
Such consolidation and name change will be submitted to the Apollo shareholders for approval at the
shareholder meeting to approve matters relating to the Merger (the “Meeting”) and would only be
effective upon such approval and the closing of the Merger. Both Apollo and Linear believe that the
share consolidation will allow the combined company greater access to the capital markets, including
access to those institutions and investors who invest in stocks with a US$1 minimum price, and potential
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enhanced trading liquidity. The proposed new name for the New Company will be determined over the
coming weeks and included in the management information circulars to be mailed to shareholders.
If approved by the Apollo shareholders and implemented by the New Company, the proposed name
change and share consolidation would affect all New Company shareholders uniformly, including
existing Linear shareholders who, after giving effect to the Merger and the consolidation, will receive
approximately 1.37 New Company shares for each Linear share on completion of the Merger (5.4742
divided by 4).
The proposed share consolidation would not affect any New Company shareholder’s percentage
ownership interests or proportionate voting power, except to the extent that the share consolidation results
in any shareholders owning a fractional New Company common share (an “New Company Share”) (in
which case each fractional New Company Share that is less than one-half of one New Company Share
will be cancelled without any compensation therefor and each fractional New Company Share that is at
least one-half of one New Company Share will be adjusted upward to one whole New Company Share).
Following the share consolidation, the New Company Shares will have the same voting rights and will be
identical in all other respects to the Apollo shares now authorized.
Both the proposed share consolidation and name change must be approved by at least two-thirds of the
votes cast at the Meeting.
Proxy Solicitor
Both Apollo and Linear have engaged Laurel Hill Advisory Group, 200-366 Bay Street, Toronto, Ontario,
M5H 4B2, to assist in their respective proxy solicitation efforts.
Apollo shareholders with questions about the Merger may call the Proxy Solicitor at:
1-888-987-3940 or collect at 416-637-4661.
Linear shareholders with questions about the Merger may call the Proxy Solicitor at:
1-888-987-3949 or collect at 416-637-4661.
