Genworth Takes First Restructuring Step, Reduces Stake in Australian Mortgage …

The sale today represents an important step toward the execution of our strategic initiative to increase the financial flexibility and strength of Genworth. This transaction advances Genworths ability to support compliance with the [Federal Housing Finance Agencys] Private Mortgage Insurer Eligibility Requirements and reduce debt levels, said Tom McInerney, president and CEO in a press release Monday.

Genworth has been trying to reduce its debt, possibly with an eye toward spinning off its US mortgage insurance unit as a standalone entity. Hedge fund manager John Paulsonhad tried to push Genworth to spin out the unit last year, but management resisted and he sold his stake. Genworth management now says it is open to several possible moves to try and unlock value in its business, including the sale of individual business units and taking the company private.

Mondays announcement is the first of several steps expected over the next 12 months, including the sale of the remaining 52% Australian stake, Devine stated in his report. Genworth is also shopping its US life and annuity business and a lifestyle protection unit principally based in Europe.

Goldman Sachs is advising on the life and annuity unit sales, according to a banker not involved in the deal. Bloomberg reported on Goldmans involvement last month. A Goldman Sachs spokesman declined comment.

Two insurance industry sources not directly involved in the potential transactions said logical buyers for the life insurance business would be Protective Life
(PL), Wilton Re and Reinsurance Group of America
(RGA). The annuity business might be of interest to Athene Holding, owned by private equity giant Apollo Global Management
(APO). Calls to those companies were not returned. Barclays is advising on the lifestyle protection unit sale, Sky News reported, but that could not be confirmed. Barclays declined comment.

Other moves Devine expects over the next year include the separation and reserve strengthening of Genworths troubled long-term care liabilities, the sale or discontinuation of all European mortgage insurance operations, the sale or transfer of its US mortgage insurance business to a Canadian subsidiary and the retirement of more than $2 billion in debt.

Once completed, the remaining company will be more finely focused on US/Canadian [mortgage insurance] and US [long-term care] with significantly stronger balance sheet and capital position, Devine wrote on Monday. He rates Genworth a buy with a $12 price target.

Other Genworth watchers are not so sanguine. Macquarie analyst Sean Dargan, who downgraded Genworthlast week, believes Genworth has limited flexibility do to its corporate structure and regulatory requirements that it meet the ever-growing liabilities in its long-term care business.

Must Read: Bond Market Strategies for the Coming Rise in Interest Rates

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Pleasant Hill, Carlisle councils asked to issue bonds for Wellmark YMCA

City councils in Carlisle and Pleasant Hill were asked this week whether they wanted to help convert a large chunk of bank financing for the Wellmark YMCA into low-interest bonds.

The Carlisle City Council voted Monday to approve $5 million in what are called bank-qualified revenue bonds. The Pleasant Hill City Council voted Tuesday to approve the issuance of $3.5 million in bonds.

Late last year, the city of Norwalk approved $6 million in bank-qualified revenue bonds to help the YMCA of Greater Des Moines reduce its interest debt on a $25.5 million construction loan for the conversion of the former Polk County Convention Complex at 501 Grand Ave. into a state-of-the-art YMCA.

In all, the communities will have approved $14.5 million in bonds for the project.

YMCA President and CEO Vernon Delpesce said the request to certain cities is part of an overall plan to convert its bank debt, with its higher interest fees, into low-interest bonds.

Under a 29-year-old tax law, municipalities that carry no more than $10 million in bond debt per calendar year can issue the bonds. The government bodies are not responsible for the repayment of the bonds. Banks receive a tax break on the deals.

The only risk to a city is that the issuance counts against the $10 million in bonds that it can issue during a calendar year. In Pleasant Hills case, there is little likelihood the city will be asked to issue more than $6.5 million in revenue bonds for the remainder of the year. Carlisle City Administrator Andrew Lent said issuing the bonds will not threaten his citys debt limit.

Sandor said it is not unusual for communities such as Pleasant Hill and Carlisle to be asked to issue the bonds as a way to lower debt for special projects.

Last year, Pleasant Hill approved bonds for Valley View Village nursing home in Des Moines, he said.

Tim Oswald, a managing director who specializes in public finance for PiperJaffray in Des Moines, said nonprofit organizations have become skilled at monitoring the bond limits of smaller cities and asking them to issue bonds as a way to reduce debt.

Sandor noted that a city such as Des Moines routinely exceeds the $10 million limit.

Oswald pointed to a long list of Greater Des Moines nonprofit organizations that have used the funding mechanism for capital projects, including the Science Center of Iowa, Drake University and the Des Moines Art Center.

The bond issue will not help defray the $6.5 million shortfall the YMCA is facing in financing a swimming pool at the Wellmark YMCA, Delpesce said.

I have a lot of asks out for that, he said.

One of those is to the Iowa Economic Development Authoritys Community Attraction and Tourism Committee, which will take up the YMCAs request for $1 million toward the cost of the pool when it meets Wednesday. The YMCA also is waiting to hear whether it qualifies for federal New Market Tax Credits after being turned down on an earlier request.

Eventually, it will all come together, Delpesce said of total financing for the Wellmark YMCA. These projects are big and they are complex. … There are a lot of moving parts.

Moody’s changes Vale’s outlook to negative; affirms all ratings

New York, May 12, 2015 — Moodys Investors Service changed the rating outlook for Vale SA
(Vale) and related ratings to negative from stable. At the same
time, Moodys affirmed Vales Baa2 senior unsecured rating,
its (P)Baa2 senior unsecured rating under its well-known seasoned
issuer shelf registration, and the Baa2 ratings on the foreign currency
debt issues of Vale Overseas (guaranteed by Vale) as well as Vale Overseas
(P)Baa2 senior unsecured shelf rating. Moodys also affirmed the
Baa2 senior unsecured ratings of Vale Canada (not guaranteed by Vale).

At the same time, Moodys America Latina affirmed Vales
Baa2 global scale local currency rating and Aaa.br National Scale
Rating (NSR) as well as the Baa2 global scale local currency rating and
Aaa.br NSR on Vales BRL 750 million senior unsecured notes (Debentures
de Infraestrutura). For further information, please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.br.

Outlook Actions:

..Issuer: Vale Canada Ltd.

….Outlook, Changed To Negative From
Stable

..Issuer: Vale Overseas Limited

….Outlook, Changed To Negative From
Stable

..Issuer: Vale SA

….Outlook, Changed To Negative From
Stable

Affirmations:

..Issuer: Vale Canada Ltd.

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Sep 15, 2032, Affirmed Baa2

..Issuer: Vale Overseas Limited

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Jan 17, 2034, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Jan 11, 2016, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Jan 17, 2034, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Jan 11, 2022, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Sep 15, 2019, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Sep 15, 2020, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Jan 23, 2017, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Nov 10, 2039, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Nov 21, 2036, Affirmed Baa2

….Senior Unsecured Shelf (Foreign Currency)
Oct 22, 2015, Affirmed (P)Baa2

..Issuer: Vale SA

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Sep 11, 2042, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Mar 24, 2018, Affirmed Baa2

….Senior Unsecured Regular Bond/Debenture
(Foreign Currency) Jan 10, 2023, Affirmed Baa2

….Senior Unsecured Shelf (Foreign Currency)
Oct 22, 2015, Affirmed (P)Baa2

The affirmation of Vales Baa2 ratings and change in outlook to
negative from stable reflect Moodys view that the companys
credit profile and operations remain solid, but incorporate the
deterioration in market fundamentals for iron ore and base metals,
pressuring commodity prices in a period in which Vale is undergoing a
large expansion phase with substantial capital expenditures. Iron
ore prices are expected to remain under pressure at least through 2016
and, as a consequence, Vales credit metrics,
particularly margins, leverage and interest coverage, will
continue to be challenged, with Ebitda margins declining to around
20% and leverage (total debt to Ebitda) likely trending towards
5x-6x. These metrics incorporate Moodys standard
adjustments. The increase in volumes and ore grades resulting from
ongoing investments will partially offset low commodity prices,
but will not be fully reflected in the companys credit metrics
until 2017-2018.

RATINGS RATIONALE

Vales Baa2 rating is supported by the companys diversified product base
and competitive cost position, and substantive portfolio of long
lived assets. While Vale has diversified its geographic footprint
through various acquisitions in Canada, Australia and elsewhere,
the dominant revenue, earnings and cash flow driver continues to
be its Brazilian-based iron ore operations and its major position
in the seaborne iron ore markets (Vale, Rio Tinto and BHP Billiton
combined having an approximate 70% – 75% market share).
The companys strong liquidity position with USD 5 billion in revolving
credit facilities (unused) is also a positive consideration in the rating.

The rating acknowledges Vales more focused and disciplined approach to
project development, capital allocation, resizing of its asset
portfolio to strategically important business segments, divestiture
of such non-strategic assets, and focus on cost reduction,
which better positions Vale to withstand the challenges of prices for
the companys major products over the next twelve to eighteen months.

Constraining the ratings are the negative outlook for iron ore prices,
and our expectation that prices will not experience any meaningful recovery
before 2017, as a consequence of the slowdown in Chinas economic
growth and steel production. The new iron ore industry wide production
coming on line in the 2015-2018 period (adding about 260 mm tons
of new capacity) will also contribute to continued pressure in iron ore
prices. Low iron ore, base metals (nickel/copper) and coal
prices for a prolonged period will pressure Vales credit metrics
and cash flow generation ability, increasing leverage and weakening
interest coverage.

Although Vale does not guarantee the debt at Vale Canada, the equalization
of Vale Canadas senior unsecured rating (Baa2) to that of its parent
reflects this subsidiarys major position in the global nickel market,
the strength of its asset base, and its strategic importance to
its parent.

Although the likelihood of an upgrade is limited in the next 12 to 18
months, given the challenges faced by Vale and its main markets,
a stabilization of the outlook could be considered if iron ore and base
metals prices improve and are sustained above our sensitivity ranges (from
USD 40 to USD 50/ton for iron ore), easing existing pressure on
metrics. An upward rating movement would require that Vale maintain
a strong liquidity position and maintain or reduce debt levels during
the execution of its major capital expansion, and EBIT margins above
13%. In addition, a sustainable cash from operations
less dividends to debt ratio trending towards 35% and EBIT/interest
expense above 7 times, at a minimum.

The ratings or outlook could suffer negative pressure should conditions
in iron ore and base metals remain weak, leading to lower profitability,
and Vale is not able to make meaningful progress in cost reduction.
Downward pressure could also affect the ratings if the company is unable
to continue with its asset divestiture and partnership strategies,
which will help Vale to maintain stable debt levels and reduce pressure
on leverage. A downgrade could be considered if leverage ratio
(total debt to Ebitda) does not return to 3x on a sustainable basis over
the long-term. A marked deterioration in the companys liquidity
position, or dividends at levels such that the cash from operations
less dividends to debt ratio remains below 25% for a prolonged
period, could also precipitate a downgrade.

The principal methodology used in these ratings was Global Mining Industry
published in August 2014. Please see the Credit Policy page on
www.moodys.com for a copy of this methodology.

Headquartered in Rio de Janeiro, Brazil, Vale is one of the
largest mining enterprises in the world, with substantive positions
in iron ore, nickel, copper, and coal, as well
as supplemental positions in energy production and positions in steel
production. Vale is the largest global supplier of iron ore,
with approximately 337 million metric tons of production in the last twelve
month ended March 2015 (including its share of Samarco), and the
largest global producer of nickel, with around 277,000 metric
tons produced in the same period. The companys principal mining
operations are located in Brazil, Canada, Australia,
Indonesia, and Mozambique. In addition, the company
is active in exploration activities in a number of countries. For
the twelve months through March 31, 2015, Vale had net operating
revenues of USD 34.3 billion.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moodys
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support providers credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.

Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moodys legal entity that has issued
the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.

Barbara Mattos
Vice President – Senior Analyst
Corporate Finance Group
Moodys America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

Marianna Fernandes Rodrigues Waltz
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

Releasing Office:
Moodys Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
USA.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Turkey farmer hit by bird flu sees emotional, financial toll

Lifelong turkey farmer Greg Langmo knew as soon as the young flock that usually clustered around him like curious little puppies turned lethargic and stopped eating that his Minnesota farm had been struck by the bird flu that has shaken the poultry industry.

Part of the loss is financial: Langmo lost more than 30,000 turkeys at his farm near Litchfield, and expects to lose well over $100,000 even after partial government compensation. But a big part is emotional, too, even for large-scale farmers, who take pride in caring for their birds.

They looked just awesome — clean-feathered and red-headed. They were really a nice flock to be around. We really enjoyed them, and that came to a screeching halt, Langmo, 57, told The Associated Press.

Bird flu has badly shaken the Midwest poultry industry, which has lost nearly 28 million chickens and turkeys already. Farmers are facing huge losses, and one plant laid off workers Tuesday because of short supplies.

The US Department of Agriculture has confirmed outbreaks of the highly pathogenic H5N2 avian influenza virus on more than 100 Midwest farms since early March. Hardest hit have been Minnesota, the countrys top turkey producing state, and Iowa, the No. 1 egg producer.

Scientists believe migratory waterfowl carry the virus. Wild ducks and geese dont become sick from it, but can spread it via their droppings. The virus then finds its way into poultry barns despite tight biosecurity, perhaps carried in on workers footwear or clothing, or maybe hitchhiking on contaminated dust whipped up by the wind.

The 13-week-old toms Langmo lost were meant to be slaughtered and turned into sandwich meat at around 18 to 19 weeks old. One of Langmos employees first noticed that something wasnt right in one of his barns two weeks ago. Test results quickly confirmed the devastating news. A few days later, turkeys started getting sick in his two other barns.

While the federal government will compensate Langmo for his birds that were euthanized, he gets nothing for birds killed by the flu itself. No insurance covers such losses either. Add to that the threat of a resurgence of the virus this fall when birds fly south for the winter and the lack of a vaccine, and Langmo fears that banks wont risk lending to help keep affected producers like him afloat.

Langmo plans to cut every possible expense until he can start raising and marketing turkeys again. But if his bank account runs dry first, hes finished.

Were going to spend the checkbook to zero and at that point were going to have to close, he said.

And its not just farmers who are feeling the pain. Jennie-O Turkey Store, the countrys second-largest turkey processor, said Tuesday it will lay off 233 employees at its plant in the southern Minnesota city of Faribault because bird flu outbreaks have cut supplies.

For farmers, the emotional and financial stresses are adding up, said Steve Olson, executive director of the Minnesota Turkey Growers Association and the Chicken and Egg Association of Minnesota. Producers are trying everything they can think of to keep the virus off their farms and wondering if their flocks will become infected anyway, he said.

Theyre on high alert, and on high alert for an extended period of time, Olson said.

Among those whose flocks get sick, Olson said the most common initial reaction is dismay because they cant do much except watch their birds die. Its a pretty traumatic experience to go through, Olson said.

Hes welcoming new efforts by local mental health agencies in some affected counties to ensure that counseling is available to farmers who need it. He also cited business, legal and mental health services available through the state-sponsored Minnesota Farmer Assistance Network.

Its really difficult, Langmo said. Ive spent an entire career making sure turkeys were comfortable and happy and had whatever they needed, from heat to light to vaccine or new bedding. And to know theres nothing you can do for them, its a helpless feeling.

Investors flee US stocks at financial-crisis levels

Many investors appeared to ditch American stock funds in April, in the biggest exodus since the financial crisis. But far from taking that as a bad sign, some investors view the news as an indication that stocks have more room to run.

In April, US equity mutual funds and ETFs saw outflows of $35.8 billion, according to TrimTabs. Thats the biggest move away from American stocks since October 2008. And the bearish tone is confirmed by the flows in the leveraged ETF space, where leveraged short ETFs saw an increase in assets of 4.6 percent, while leveraged long ETFs saw assets dip by 2.5 percent.

While flows information is by nature backward-looking and thus a poor trading catalyst, this bearish tone does stand in stark contrast to recent warnings that stocks are in an exuberant or bubbly condition.

I actually think it could be a positive for US stocks, because the more people are fleeing equities, the less likely we are to have a crash instantaneously, Boris Schlossberg of BK Asset Management said Monday on CNBCs Trading Nation. Its only when we have bubble-kind-of-conditions that leads to very sharp corrections in equities.

Read MoreMarc Faber: Stocks are about to fall 40%–at least!

Andrew Burkly, head of portfolio strategy at Oppenheimer, takes the outflows as yet more evidence that this continues to be one of the most unloved bull markets in history.

If we just look at the flow data throughout the course of the last several years, we have not had those robust flows that weve seen in prior bull markets, Burkly said. Every time we go out to make 52-week highs, people are just concerned that they missed it, and theyre not putting new money to work. And that just keeps perpetuating itself and theres no opportunity.

Balancing Act: Senate Appropriations Subcommittee Hearing on FY 2016 NASA …

Yesterday afternoon the Senate Commerce, Justice, Science Appropriations Subcommittee met to review the FY 2016 budget request for NASA. The hearing was friendly and low-key, with NASA Administrator Charles Bolden as the only witness to discuss the $18,529.1 millionrequest, up $518.9 million or 2.8 percent over the current budget.

The subcommittee is chaired by Richard Shelby (R-AL); Barbara Mikulski (D-MD) is the Ranking Member. Both are long-standing supporters of NASA, and there were few or no differences that were expressed between them in their statements or lines of questioning.

Shelby opened the hearing, as have other chairman, with the customary statement about the need for appropriators to set priorities, saying that was true for NASA as well. He faulted the request for what he said was its lack of balance, with proposed sizeable growth in commercial crew and space technology while other programs, such as science missions (a proposed 0.8 percent increase) and exploration systems development did not fare as well. Requested funding for the exploration budget was, Shelby said, of particular concern to the subcommittee, mentioning the Space Launch System and the Orion capsule.A lot of us are troubled by the overall priorities included in this budgetShelby declared. While saying that the level of the request was a good start, Shelby gave notice that the committee would be adjusting program funding levels to achieve a better balance.

Mikulski also referred to balance, saying I have very deep concerns. She criticized the request for human space flight programs, and was highly critical of the proposed $300 million cut for Marylands Goddard Space Flight Center, saying I dont think it is a fair shake. Mikulski was also critical of the requested reduction of $65 million for satellite servicing, referring to it a number of times throughout the hearing.Do we have a balanced space program, or not,she said concluding her opening remarks.

Americas space program is not just alive . . . but thrivingBolden told the appropriators, describing what he said was landmark progress on the Administrations goal of a manned Mars mission. Bolden highlighted the International Space Station, commercial cargo and commercial crew programs.

As has long been true at NASA appropriations hearings, questions were asked about the agencys future budgeting for various programs, with Shelby referring to a GAO report raising significant concerns about funding for the Space Launch System and Orion beyond their first test flight. Boldens reply was, as expected, budget constraints. Shelby also asked about continued Russian cooperation on the space station, Bolden replying that he was very encouraged by a recent Russian statement on continuing station operations through 2024.

Mikulski returned to the subject of Goddard funding in her first line of questions, with Bolden saying its future funding would be determined by the missions it oversees. Mikulski again spoke of satellite serving, with Bolden saying he would like to meet with her privately to discuss the future budget profile. Ive got satellites on my mind,said Mikulski.

Other topics covered during this hearing were increasing the diversity of NASAs workforce, the status of the James Webb Space Telescope (which Bolden assured was on target), and the purchase of Russian transportation to the space station.

The hearing concluded in under an hour. The House Commerce, Justice, Science Appropriations Subcommittee held itshearingin early March. The next stage in this process is for each full appropriations committee to meet and decide how much money each of the twelve subcommittees will receive for their individual funding bills. House appropriators are scheduled to make these decisions next week.

Contact

Richard M. Jones
Government Relations Division
American Institute of Physics
rjones@aip.org
301-209-3095

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Turkey farmers hit by bird flu see emotional, financial toll

MINNEAPOLIS — Lifelong turkey farmer Greg Langmo knew as soon as the young flock that usually clustered around him like curious little puppies turned lethargic and stopped eating that his Minnesota farm had been struck by the bird flu that has shaken the poultry industry.

Part of the loss is financial: Langmo lost more than 30,000 turkeys at his farm near Litchfield, and expects to lose well over $100,000 even after partial government compensation. But a big part is emotional, too, even for large-scale farmers, who take pride in caring for their birds.

North American Palladium Announces Recapitalization Transaction

North American Palladium Announces Recapitalization Transaction

April 15, 2015: 08:00 AM ET

North American Palladium Ltd. (“NAP”) (TSX:PDL)(NYSE MKT:PAL) (“the Company”) announced today that, following discussions with Brookfield Capital Partners Ltd. (“Brookfield”), the Company has entered into an agreement with Brookfield aimed at significantly reducing the Company’s debt and enhancing the Company’s liquidity (the “Recapitalization”).

The Company has retained CIBC World Markets Inc. to act as its financial advisor in connection with the Recapitalization and to conduct a strategic review process to solicit interest in a sale of the Company. The Company has until June 30, 2015 to obtain a superior proposal to the Recapitalization, with closing to occur within a specified timeframe thereafter.

The Company has obtained covenant relief from its senior secured lenders in respect of certain financial and other covenants until August 15, 2015. Although the Company produced approximately 45,600 payable ounces of palladium in the first quarter of 2015, covenant relief was required as a result of a decline in palladium prices and weakening of the Canadian dollar, and lower production volumes in March combined with higher expenses, which impacted the minimum shareholders’ equity and leverage ratio covenants.

The Company has also entered into an immediately available US$25 million interim credit facility with Brookfield. NAP is continuing normal business operations at its Lac des Iles mine and the Company’s obligations to employees, trade creditors, equipment leases and suppliers will not be affected by the Recapitalization.

If no superior transaction emerges from the strategic review process by June 30, 2015, the terms of the Recapitalization will be as follows:

The terms of the Recapitalization are outlined in an agreement the Company has entered into with Brookfield. A copy of the Recapitalization term sheet has been filed with regulators and is available on SEDAR at www.sedar.com and EDGAR at www.edgar.com.

The Recapitalization is subject to receipt of customary approvals, including convertible debenture holder and shareholder approval, as well as customary closing conditions. A holder of convertible debentures holding approximately 54% of the Company’s convertible debentures has executed an agreement to support the Recapitalization.

“The sale process and Recapitalization plan represent the best alternatives available at this time to preserve substantial value in the assets and operations of the Company, and to pursue longer-term growth and expansion opportunities at LDI,” said Phil du Toit, President and CEO. “We believe decreasing the debt burden and strengthening the capital structure is essential for the Company’s future.”

Technical Information and Qualified Persons

Mr. James Gallagher, the Company’s Chief Operating Officer and a Qualified Person under National Instrument 43-101, has reviewed and approved all technical items disclosed in this news release.

About North American Palladium

NAP is an established precious metals producer that has been operating its Lac des Iles mine (LDI) located in Ontario, Canada since 1993. LDI is one of only two primary producers of palladium in the world, offering investors exposure to palladium. The Company’s shares trade on the NYSE MKT under the symbol PAL and on the TSX under the symbol PDL.

Cautionary Statement on Forward-Looking Information

Certain information contained in this news release constitutes ‘forward-looking statements’ within the meaning of the ‘safe harbor’ provisions of Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. The words ‘potential’, ‘preliminary’, ‘believe’, ‘forecast’, ‘will’, ‘anticipate’, ‘expect’, ‘would’, ‘could’, ‘estimate’ and similar expressions identify forward-looking statements. Forward-looking statements in this news release include, without limitation: information pertaining to the Company’s strategy, plans or future financial or operating performance, such as statements with respect to the Company’s strategic review process, the Company’s ability to consummate a strategic transaction, projected production, operating and capital cost estimates, project timelines, mining and milling rates, cash flows, projected grades, mill recoveries, metal price and foreign exchange rates, and other statements that express management’s expectations or estimates of future performance. Forward-looking statements involve known and unknown risk factors that may cause the actual results to be materially different from those expressed or implied by the forward-looking statements. Such risks include, but are not limited to: the risk that the LDI mine may not perform as planned, the possibility that commodity prices and foreign exchange rates may fluctuate, the possibility that the Company may not be able to generate sufficient cash to service its indebtedness and may be forced to take other actions, and uncertainty regarding the ability to consummate the Recapitalization. For more details on these and other risk factors see the Company’s most recent Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the SEC.

Forward-looking statements are also based upon a number of factors and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The factors and assumptions contained in this news release include, but are not limited to: that the Company will be able to consummate the Recapitalization or other strategic transaction on the terms described in this news release, the Company’s ability to continue normal business operations at its Lac des Iles mine, that metal prices and exchange rates between the Canadian and United States dollar will be consistent with the Company’s expectations, that there will be no significant disruptions affecting operations, and that prices for key mining and construction supplies, including labour, will remain consistent with the Company’s expectations. The forward-looking statements are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except as expressly required by law. Readers are cautioned not to put undue reliance on these forward-looking statements.

 

Today’s Market Puts Financial Advisors and Planners On Notice About Client …

Perhaps you’ve heard of the Loss Aversion bias, established decades ago, that found individuals tend to feel the pain of a loss about twice as intensely as they feel any upside from a gain.

That two-to-one bias is enough to foul up anyone’s risk-reward assessment. But suppose your Loss Aversion was turbocharged, as researchers have found it is for retirees, and you felt the pain of a $1 loss equal to the joy of a $10 gain? It’s enough to freeze an investor into inaction. And if one is already fully invested, and not cognizant of the Loss Aversion, it could produce particularly gruesome emotions during a market correction or other extreme volatility.

Loss Aversion is one of a range of behavioral financial biases, the topic of a YCharts White Paper. It is written for Financial Advisors but will be helpful to all. Understanding the irrational beliefs that color investment decisions can help individuals make smarter and more informed decisions, and to seek our objective advice; and it can help financial planners and RIAs to better recognize problem tendencies – and correct them – among clients.

AGG data by YCharts

If you’re even close to being that sensitive to losses, now’s a good time to do a portfolio check, given the market highs we’ve enjoyed. The chart above, for instance, shows the total return — of ETFs representing US high-grade bonds (corporate and government), an all-Treasury intermediate-term portfolio, high yield junk bonds and dividend-paying stocks — during the worst of the 2008-2009 financial meltdown. If the income-producing securities you’re holding today suffered losses like those that hit the junk bonds and dividend-paying stocks, would that be too much pain for you?

Shown are the iShares Core Total US Bond Market ETF (AGG), SPDR Barclays Intermediate Term Treasury (ITE), SPDR Barclays High Yield Bond (JNK), iShares Dow Jones Select Dividend Index (DVY).

That’s not to suggest the next decline would be of the same proportion. But retirees who’ve enjoyed a smooth ride in dividend paying stocks and junk the past five years may not clearly grasp the different risk profiles.

From the editors of YCharts. We can be reached at editor@ycharts.com.