Colossus Minerals seeks creditor protection, shares -25%

Colossus Minerals (COLUF -25%), a former star of the junior mining sector, says it will seek creditor protection after failing to make a small interest payment due at the end of 2013.

Colossus expects to receive short-term financing from noteholders and from Sandstorm Gold (SAND -2.6%) to stay afloat during the next six weeks, buying Colossus time to either sell itself or convert its debt into equity.

If Colossus opts for a debt-for-equity swap, noteholders would own 51.5% of the stock, SAND would own 38.8%, lenders under a bridge loan would own 8%, and current shareholders would own just 1.7%.

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