EXHIBIT 20
NOTICE OF REDEMPTION
7% Convertible Subordinated Notes Due 2003
Cusips: U85969AA8, 86074QAC6, 86074QAA0
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The conversion privilege described below expires at
5:00 p.m. (New York City time)
April 28, 1999
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Notice is hereby given that pursuant to the provisions of Article III of
the Indenture dated as of April 29, 1996 (the "Indenture") between Stillwater
Mining Company (the "Company") and U.S. Bank National Association as Trustee,
relating to the Company's 7% Convertible Subordinated Notes due 2003 (the
"Notes"), the Company has called for redemption and will redeem on May 1, 1999
(the "Redemption Date") all outstanding Notes at a redemption price of $1,040
per $1,000 principal amount, together with the semi-annual interest payment of
$35 per $1,000 principal amount, for a total redemption payment of $1,075 per
$1,000 principal amount (the "Redemption Payment").
Payment of the Redemption Payment will be made after the Redemption Date,
but in no event prior to May 3, 1999, upon presentation and surrender of Notes
at the offices of U.S. Bank National Association (the "Exchange Agent"), as
follows:
By Mail: By Overnight Courier or Hand Delivery:
U.S. Bank National Association U.S. Bank National Association
Attn: Specialized Finance Unit Attn: Specialized Finance Unit
P.O. Box 64485 180 East 5th Street
St. Paul, MN 55101-9549 St. Paul, MN 55101
For information, you may call (800) 934-6802
On the Redemption Date, the Redemption Payment will become due and payable
on each Note, interest will cease to accrue, and the holders thereof will be
entitled to no rights as such holders except the right to receive payment of the
Redemption Payment.
The Notes are convertible into the Company's Common Stock, par value $.01
per share (the "Common Stock"), at a conversion price of $17.87 per share
(equivalent to approximately 55.96 shares of Common Stock for each $1,000
principal amount of Notes). The right to convert Notes into Common Stock will
terminate at 5:00 p.m., New York City time, on April 28, 1999.
ALTERNATIVES AVAILABLE TO HOLDERS OF NOTES
Holders of Notes have the following alternatives, each of which should be
considered carefully:
1. CONVERSION OF NOTES INTO COMMON STOCK
Pursuant to Article V of the Indenture, until 5:00 p.m., New York City
time, on April 28, 1999 (the third business day immediately preceding the
Redemption Date), the Notes are convertible at the option of the holder, in part
or in whole, in integral multiples of $1,000, into fully paid and nonassessable
shares of Common Stock at a conversion price of $17.87 per share (equivalent to
approximately 55.96 shares of Common Stock for each $1,000 principal amount of
Notes). In the event such conversion would result in a fractional share of
Common Stock, an amount equivalent to the value of the fractional share will be
paid in cash by the Company. Such amount will be determined on the basis of the
last reported sales price on the American Stock Exchange on the trading day
prior to the date of conversion. On the basis of the $26.375 closing price of
the Common Stock as reported on the American Stock Exchange on March 31, 1999,
55.96 shares had a market value (including cash in lieu of the fractional share)
equivalent to $1,475.95 (without giving effect to commissions and other costs
which would likely be incurred on sale).
The record date for the May 1, 1999 interest payment of $35 per $1000 in
principal amount of Notes is April 15, 1999 (the "Record Date"). Holders of the
Notes on the Record Date are entitled to receive the interest payment. Those
holders that hold their Notes on the Record Date may convert the Notes on or
before April 28, 1999 and receive Common Stock upon conversion in addition to
the interest payment. The payment date for the interest payment is May 3, 1999
(the "Interest Payment Date"). No payment or adjustment will be made to holders
that convert their Notes into Common Stock on or before April 15, 1999.
So long as the market price of the Common Stock is at least $18.59 per
share, a holder of Notes who converts after April 15, 1999 will receive shares
of Common Stock having a current market value (plus cash paid in lieu of any
fractional share and cash paid for the semi-annual interest payment on the
Interest Payment Date), greater than the amount of cash the holder would be
entitled to receive upon redemption. A holder of Notes who converts on or
before April 15, 1999 will not receive an interest payment. A holder of Notes
who converts after April 15, 1999 will be entitled to receive a semi-annual
interest payment of $35 per $1,000 of principal on the Interest Payment Date.
Holders of Notes are urged to obtain current market quotations for the Common
Stock. It should be noted that the price of the Common Stock received upon
conversion will fluctuate in the market. No assurance is given as to the price
of the Common Stock at any future time, and holders should expect to incur
various expenses of sale if the Common Stock received upon conversion of the
Notes is sold.
The conversion right expires at 5:00 p.m., New York City time, on April 28,
1999. From and after that date and time, holders of Notes will be entitled only
to the Redemption Payment.
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2. REDEMPTION OF NOTES ON MAY 1, 1999
Any Notes that have not been converted into Common Stock by 5:00 p.m., New
York City time, on April 28, 1999, will be redeemed. Upon redemption, a holder
will receive $1,075 per $1,000 principal amount of Notes (consisting of $1,040
per $1,000 principal amount plus the semi-annual interest payment of $35 per
$1,000 principal amount). Unless the Company defaults in making the Redemption
Payment or U.S. Bank National Association is prohibited from making the payment
under the terms of the Indenture, interest will cease to accrue on the
Redemption Date and holders of Notes will not have any rights as such holders
other than the right to receive payment of the Redemption Payment, without
interest, upon surrender of their Notes. The initial payment date for the
Redemption Payment is May 3, 1999.
3. SALE OF NOTES THROUGH ORDINARY BROKERAGE TRANSACTIONS
Sales of Notes may be made through open market brokerage transactions and,
if sales are made sufficiently in advance of 5:00 p.m., New York City time, on
April 28, 1999, buyers thereof may convert Notes into Common Stock in the manner
described below. After 5:00 p.m., New York City time, on April 28, 1999, no
holder of Notes will be entitled to convert Notes into Common Stock.
Holders of Notes who wish to make sales should consult with their own
brokers concerning if and when their Notes should be sold.
MANNER OF CONVERSION
To convert Notes into Common Stock, such Notes, duly endorsed, must be
received prior to 5:00 p.m., New York City time, on April 28, 1999 by the
Company's Exchange Agent, U.S. Bank National Association, at the address set
forth above, accompanied by written notice to the Company that the holder elects
to convert such Notes, or, if less than the entire principal amount thereof is
to be converted, the portion thereof to be converted. Such notice must also
state the name(s) (with address) in which the certificate(s) for shares of
Common Stock issuable upon conversion are to be issued. Each Note surrendered
for conversion must, unless the shares issuable on conversion are to be issued
in the same name as the name in which such Note is registered, be duly endorsed
by, or accompanied by instruments of transfer, in form satisfactory to the
Company, duly executed by, the holder or his or her duly authorized attorney.
The notice that must be given to the Company may be provided by surrendering
Notes accompanied by the enclosed Letter of Transmittal to the Exchange Agent.
As promptly as practicable after the surrender of such Note and the receipt
of such notice, the Company will issue and deliver in accordance with the
instructions contained in the notice, a certificate or certificates for the
number of full shares of Common Stock issuable upon the
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conversion of the Note and a check for the amount payable in lieu of any
fractional share. Holders are also entitled to convert fewer than all Notes they
hold provided that any conversions are for principal amounts of Notes in
integral multiples of $1,000, in accordance with the terms of the Indenture.
Holders of Notes that are converted after April 15, 1999 are entitled to receive
the semi-annual interest payment on the Interest Payment Date. No payment or
adjustment will be made on conversion for interest accrued on Notes that are
surrendered for conversion on or before April 15, 1999.
The Notes may be converted into Common Stock only by delivery of Notes,
accompanied by the notice as described above, to the Exchange Agent prior to
5:00 p.m., New York City time, on April 28, 1998. Since it is the time of
receipt, not the time of mailing, that determines whether Notes have been
properly tendered for conversion, sufficient time should be allowed for Notes
sent by mail to be received by the Exchange Agent prior to 5:00 p.m., New York
City time, on April 28, 1999.
Any Notes that have not been properly presented for conversion prior to
5:00 p.m., New York City time, on April 28, 1999, will be automatically redeemed
as set forth herein upon surrender of the Note.
MANNER OF REDEMPTION
To receive the Redemption Payment specified above for any Notes being
redeemed, the holder thereof must surrender such Notes to U.S. Bank National
Association at the address set forth above.
IMPORTANT INFORMATION FOR HOLDERS OF NOTES
MARKET CONSIDERATIONS
On March 31, 1999, the reported closing price of the Common Stock on the
American Stock Exchange was $26.375 per share. During the period from January 1,
1998 through March 30, 1999 the high and low closing sales prices per share of
the Common Stock as reported on the American Stock Exchange were $29.125 and
$10.58, respectively. As long as the market price of the Common Stock is at
least $18.59 per share, holders who elect to convert their Notes after April 15,
1999 will receive shares of Common Stock having a current market value (plus
cash paid in lieu of any fractional share and cash paid for the semi-annual
interest payment on the Interest Payment Date) greater than the amount of cash
they would be entitled to receive upon redemption.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is for general information and is based on the
provisions of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), the applicable regulations promulgated thereunder, and published
administrative and judicial decisions, all as they exist at the date of this
Notice. Changes in the law could affect the federal income tax consequences
discussed below.
Certain holders (including insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, foreign corporations and persons who are
not citizens or residents of the United States or other foreign persons) may be
subject to special rules not discussed below. Each holder should consult his or
her own tax advisor as to the particular tax consequences of the sale or
conversion of the Notes, including the applicability and effect of any state,
local or foreign tax laws, and any changes in applicable tax laws.
For federal income tax purposes, the conversion of Notes into Common Stock
should not result in a taxable gain or loss with respect to the Common Stock
received, except to the extent of accrued interest on the converted Notes which
will not be paid (which would exist if the holder converted Notes on or prior to
April 15), and except that gain or loss must be recognized with respect to cash
received in lieu of fractional shares upon conversion. If there is any accrued
interest on converted Notes that will not be paid, there is some risk that
Common Stock received in the conversion will be taxable as ordinary income in
the nature of interest to the extent of such accrued but unpaid interest. The
amount of gain or loss attributable to the receipted cash in lieu of fractional
shares will be equal to the amount of cash received less the basis attributable
to such fractional shares and will be capital gain or loss if the Notes are
capital assets in the hands of the holder unless the notes have market discount
(as discussed below) and except that if the holder held Common Stock prior to
the conversion (either directly or by attribution), such amount might, in
certain circumstances, be ordinary income. A holder's basis for the Common Stock
received upon conversion of Notes will be equal to the basis of the Notes
surrendered, reduced by the portion of the basis allocated to any fractional
share and increased by the amount of any interest income recognized in the
conversion by holders who convert on or before April 15. Assuming that the Notes
are capital assets in the holder's hands, the holding period for the Common
Stock should include the holding period for those Notes. If Notes that are
converted into Common Stock have market discount (i.e., were purchased by
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the holder for an amount less than their issue price if purchased at original
issue, or for an amount less than their redemption price at maturity if
purchased after original issue) cash received in lieu of fractional shares would
be ordinary income to the extent of accrued market discount, and the remaining
amount of market discount that has accrued at the time of the conversion will
carry over into such Common Stock and be taxed as interest income to the
converting holder when that Common Stock is disposed of by sale or other
disposition. The foregoing result will not apply if the holder timely elected to
include in income currently the market discount as it accrued.
A sale of Notes or surrender of Notes for redemption will be a taxable
transaction on which gain or loss, if any, will be recognized. The gain or loss
will be a capital gain or loss, provided the Notes are a capital
asset in the hands of the holder any such capital gain or loss will be
long-term capital gain or loss if the Notes were held for more than one year
prior to the sale or redemption. The gain or loss recognized upon sale of Notes
or surrender thereof for redemption will be the difference between the holder's
basis
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in the Notes and the sale price or redemption price, as the case may be,
received in respect thereof, exclusive of accrued interest, which will be
taxable as ordinary income. However, if the Notes that are redeemed have market
discount (i.e., were purchased by the holder for an amount less than their issue
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price if purchased at original issue, or for an amount less than their
redemption price at maturity if purchased after original issue), the Redemption
Payment will be treated as ordinary income to the extent of the accrued market
discount on the Notes at the time of the Redemption. The foregoing result will
not apply if the holder timely elected to include in income currently the market
discount as it accrued. If Notes that were purchased at a premium are redeemed,
and if the holder has elected to deduct the bond premium, the holder may be
permitted to deduct any remaining unamortized bond premium as an ordinary
income loss in the year of redemption.
Holders who are treated as foreign persons for U.S. income tax purposes
may, in certain circumstances, recognize gain or loss upon the redemption of the
Notes. Such holders are urged to obtain advice concerning U.S. tax consequences
of converting or redeeming their Notes.
The federal income tax discussion set forth above is included for general
information only. Holders should consult their tax advisors to determine
particular tax consequences to them (including the application and effect of
market discount and backup withholding rules, state and local income and other
tax laws) prior to any conversion, sale or surrender for redemption of the
Notes. Holders who do not provide a Taxpayer Identification Number or who
provide an incorrect Taxpayer Identification Number on the Substitute Form W-9
provided in the Letter of Transmittal may be subject to a 31% backup withholding
tax on the Redemption Payment and on any cash received in lieu of a fractional
share and other penalties.
GENERAL
A copy of this Notice of Redemption and a form of Letter of Transmittal to
accompany Notes surrendered for redemption or conversion is being sent to all
holders of the Notes. Additional copies of such documents may be obtained from
U.S. Bank National Association at the addresses set forth above or by telephone
at (800) 934-6802.
STILLWATER MINING COMPANY
James A. Sabala
Vice President and Chief Financial Officer
April 1, 1999