Hecla Mining Co., of Coeur dAlene, would cut its annual obligations by $8 million if it succeeds in persuading holders of its Series B cumulative convertible preferred stock to exchange their shares for common stock.


Hecla announced June 13 that it would offer to trade seven shares of its common stock for each share of the preferred, which it issued in 1993. It said its offer would go into effect as soon as it mailed out offering materials, which it expected to do this week.


At the closing price of the companys common shares the day before it announced the offer, the exchange would equate to $29.54 in common stock for each share of preferred, Hecla said.


We believe acceptance of this offer will bring value to common shareholders by removing the dividend associated with the preferred stock, which is currently a total of $8 million annually, Hecla Chairman and CEO Art Brown says. Hecla, however, hasnt paid the dividend on the preferred stock for seven quarters, and while the board of directors must decide each quarter whether to pay the dividend, we have many priorities for our cash and do not intend to resume payment of preferred dividends at this time, Brown said.


With the companys common stock having shot up to $4 a share recently from $1 a share in February, the offer will be far more appealing to preferred shareholders now than it would have been just a few months ago.


Its been a happy time, Hecla spokeswoman Vicki Veltkamp says of the escalation in the companys share price.


The entire precious-metals sector has increased since the beginning of the year.


Heclas shares have gone up more than those of most mining companies because of the companys turnaround in the past year, Veltkamp says.


The Coeur dAlene company reported net income of $2.3 million, or 3 cents a share, in 2001, compared with a net loss of $84 million, or $1.26 a share, the year before.


It improved its gold production by a third, cut its costs of producing both gold and silver, increased its cash horde, slashed its debt, and increased proven and probable reserves at two South American deposits.


Brown says Heclas offer to trade common shares for preferred is at a discount to the $50 face value of the preferred shares when they were issued, but is higher than the low range at which the preferred shares have traded in the last year.


Still, if all of the preferred shareholders accept the offer, they will have close to the same percentage ownership of the company that they had when the shares were issued, he says.


In the meantime, Brown says, the preferred shareholders had been paid $58 million in dividends before Hecla suspended payment of the preferred dividend.


Veltkamp says the preferred-stock series is the only one that Hecla has outstanding.